AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Motos… “The best as seen elsewhere, need not be the best for you.” “What is your best is what can be successfully implemented.” “IT GOES AGAINST human nature to always expect the worst. But with IT projects, pessimism—otherwise known as contingency planning—is the only way to keep small technology problems from becoming full-blown business disasters.” AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Introduction ERP Implementation (1/2)  “Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform” Benefits  Streamline different processes and workflows  Easily share data across various departments in an organization  Better tracking and forecasting  Improve efficiency and productivity levels  Lower costs  Improve customer service AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Introduction ERP Implementation (2/2) Drawbacks  Implementation is more costly than the product itself  Customization is limited replace existing information technology architecture  Reengineer business processes  Technical support can be shoddy  ERP's may be too rigid for specific organizations (e.g.new direction in the near future)  Total implementation cost 2% or 3% of company’s revenues  50% of ERP implementations fail Leaders: SAP, Oracle (PeopleSoft, J.D. Edwards), SSA Global, Microsoft Business Solutions, Geac…. AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Introduction Background 1938: HP started in California by Bill Hewlett & David Packard (electronic instruments company) 1970: first minicomputer 1980’s: major player in computer industry (successful products printers) 1989: close partnership with SAP (consulting services), SAP R\3 1992: acquire Verifone  internet commerce 1999: cut-throat competition in computer industry 2001: 2nd largest computer manufacturer in the world (150.000 empl.) 2002: merge with Compaq AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

The ERP & MySAP Implementation SAP R/3 Implementation 1992: due to increasing demand of it’s products  re-organize bunisses process  HP replace numerous legacy systems with SAP R/3 as a standard ERP solution worldwide. Goals of Business Process Reengineering: Shorter lead & delivery times Costs savings Establishment of a goal distribution system AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

The ERP & MySAP Implementation MySAP Implementation Internet-enabled technology product Reduce costs  everything run on a browser Provide employees with integrated front end + easier for users to access right information the right time 2001: demand’s on supply chain increased MySAP APO (Supply Chain Management) link employees, customers, partners First implement in European Imaging & Printing division  success!! 2002: Adaptive Supply Chain (e.g. printers: from contract manufacturers to customers) MySAP Product Life Cycle Management: integrate product lines of Compaq & HP.(challenge: 200.000 products & 100.000 suppliers) AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

HP ERP GOALS In 2003 Gilles Bouchard becomes the project manager of the supply chain and the ERP software implementations. In 2004 led to create a new organizational model. The aim was to reduce the ERP systems.  migrating the ISS (Industry Standard Server) onto an ERP system The ambition was to implement a single order management system (SAP FOM) with the following attributes : 1) Forecasting ability. 2) Short lead and delivering product times . 3) Increase efficiency and flexibility. Unification of HP’s legacy SAP order management systems with those of Compaq. Copmaq: Eίχε έσοδα $41,4 δισ αλλά το 2000 είχε χάσει $569 εκ ,προφανώς η HP δεν παραδειγματίστηκε από αυτό το γεγονός με αποτέλεσμα τις επόμενες επιπτώσεις για την οικονομική της κατάσταση AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

HP ERP FAILURE The Symptoms But the expectations of the HP officers failed .... The aim was to enable customers receiving exact product build and delivery dates without placing multiple orders. Nevertheless , the first symptoms turned up ! 20% of the customer orders could not be transferred from the old system to the new SAP system due to programming errors . Although HP fixed these errors in a month, the orders began to backlog. Dwindling manual processes were not able to meet the demand. The internal investigation started looking for causes AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

HP ERP FAILURE Why didn’t it work ? (1/2) Project team constitution. Data integration problem. Demand forecasting problems. Poor planning and Improper Testing. Inadequate Implementatiuon Support/Training. Project execution problems and not problems with the SAP software. AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

HP ERP FAILURE Why didn’t it work ? (2/2) Ultimately SAP was not a good choice. The experts of HP didn’t predict the impact in the supply chain. Employees of HP aware of SAP Fusion Order, suggested that there is a high risk of this migration. Despite this fact, they were ignored by the company. The implementation was not designed in detail. Bad collaboration among IT & Business groups. AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

The Impact of the ERP failure (1/2) Dissatisfied employees.  Employees had to hand label shipments of products Dissatisfied customers due to: delayed delivering, bad configuration, duplicate orders(!!!) Bad reputation. Unstable order system of ISS (Industry Standard Server):  problems with data integrity  simultaneous increase in demands for HP’s standard Servers AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

The Impact of the ERP failure (2/2) HP unable to fulfill all orders Loses according to HP $400m in revenue. $160m during the implantation. Lost market share to IBM, Dell. Doubtful future for next SAP implementations AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Learning (1/3) ERP involved a business change in many divisions of an organization.  there could be no standard approach to its implementation Always consider Business aspects along with Technical aspects  Business and IT alignment Make sure to have additional manufacturing capacity ready, BEFORE the ERP rollout. AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Learning (2/3) Decide upon all 3 basic factors before migrating: Define the requirements Develop a plan Implement the plan using IT integration & user training Consider time and resources to maintain and reconcile two different systems.  Data Integration Systems No need for merges with Companies of “unhealthy” financial status… AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Learning (3/3) The least you can do to a group (managers or staff) that have obsolete ideas when dealing with a huge task is not to assign a similar one to them… AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Agenda Introduction The ERP & MySAP Implementation HP ERP GOALS HP ERP FAILURE The Impact of the ERP failure Learning Q&A AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

A Q & Q U E S T I O N S A N S W E R S AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.

Q&A Who is to blame for the migration failure in HP’s ERP? Which of the “best in breed” or “single vendor” approaches would you use, were you in Gilles Bouchard’s shoes? Under which circumstances would you use an ERP system and why? AUEB IS Dept - ERP Implementation Failure at HP: Vougiouklidi N. - Raoulis D. - Papadakis K.