The Hershey ERP case study continues
The Hershey Company oversaw an enterprise resource planning disaster back in 1999, rolling out an expansive $112 million solution that unraveled within months of deployment. The adoption failure, the consequence of an overly ambitious configuration timeline, an overlarge feature set and bad timing, prevented the confectioner from delivering $100 million in product during Halloween season, torpedoed its stock price and went down in project management lore. Hershey bounced back following this episode and is now poised to move forward with another challenging ERP initiative.
The organization in February 2019 announced that information technology personnel had begun work on a $350 million ERP initiative, CIO Dive reported. However, Hershey seems intent on avoiding a repeat of 1999, per its Q4 2018 earnings call, during which leadership offered shareholders some key implementation details.
An extended timeline
The company expects the latest ERP adoption process to unfold over multiple years. In fact, Hershey CEO Michele Buck revealed that the business started preparing for implementation during Q2 2018 by upgrading some of its existing marketing framework. This pragmatic approach contrasts significantly with the accelerated 30-month strategy Hershey executives greenlit in 1999, a decision that ultimately doomed the ERP implementation effort before it even began.
This latest ERP project will unfold in phases, per Buck. In fact, the improvements Hershey made in Q2 2018 included the adoption of specialized marketing expenses and trade promotion modules, which have already yielded “promising results.” Here, the company is again taking the opposite route it embarked on in 1999, when IT stakeholders attempted to launch multiple ERP components via the so-called “Big Bang” method. This turned out to be an immensely problematic choice, resulting in complete project failure.
A trusted partner
Among the most captivating news items to come out of Hershey’s turn-of-the-millennium ERP trouble was the squabble between the parties involved, all of which sought to skirt responsibility for the blow up, The Wall Street Journal reported. This time around, the business is taking a collaborative approach and trusting its vendor to do what is best behind the scenes, something the Hershey executives who watched their ERP system implode back in 1999 failed to do.
In all, the organization projects it will net $150 million to $175 million in savings in the initial yearlong span following go-live, according to CIO Dive. Businesses would be wise to emulate Hershey this go around, especially when considering potential ERP implementation partners.
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