Comments on: An Appetite for Destruction: The ERP Implementation Lawsuits Continue…

By: Bill Wood

Bill Wood — Sun, 26 Dec 2010 21:54:30 +0000

I'm doing a series on the SAP implementation failures and the common denominators I can find fall broadly into 2 primary categories: 1. System integrator mismanagement (crummy consultants, poor project management, fouled up / faked testing, etc.) 2. Clients who do not adequately control their own projects (unrealistic expectations, poor management involvement, improper scope, allowing too much software engineering and not enough business process engineering - i.e. change management). Keep in mind, these are SAP specific evaluations and do not consider any other ERP application. SAP ERP Project Failure Lessons Learned and Mini Case Studies 1 http://www.r3now.com/sap-erp-project-failure-lessons-learned-and-mini-case-studies-1 SAP ERP Project Failures Lessons Learned and Mini Case Studies 2 http://www.r3now.com/sap-erp-project-failures-lessons-learned-and-mini-case-studies-2

By: Eric Kimberling

Eric Kimberling — Tue, 20 Jul 2010 16:34:00 +0000

Great points – thanks for all the stimulating comments. I quite frankly didn’t expect the post to generate this much discussion or interest!

I wanted to respond to a couple of points/responses. First, I completely agree with the points that poor organizational change management and mismanaged expectations are key contributors to these and other ERP failures. In fact, you could make a pretty strong argument that either one of those are the #1 contributor to any given ERP debacle.

Second, this is not by any means a comprehensive list. It is merely a list based on public records that one of our business analysts put together for us, so I’m sure that with enough digging we could find lawsuits for other vendors not listed here, such as MS Dynamics. Due to confidentiality and non-disclosure issues, we also intentionally left out cases where we have provided independent expert witness services to the cases.

Thanks again for the great comments – keep an eye out for a follow-up post in coming weeks.

Eric

By: Ron

Ron — Wed, 14 Jul 2010 20:56:42 +0000

We have just gone through a nightmare integration where the integrator had overpromised and under delivered. Whie I can agree with Dennis and Ken that the organizations who are looking at an ERP solution don’t understand the complexities or the resources that will be needed, it is also fair to assume that the Integrators, having experience with this time and time again, should be able to plan for that.

Organizations rely on the expertise of the itnegrator to put all the cards on the table. Unfortunately, many integrators, who are in a bidding process, will lower the price to something that they cannot afford to do. They then expend minimal resources and try to hold the organiztion over a barrel for “out of scope” fees.

The integrator we used did this as regular business practice. To this day, we still do not have the system we were promised and contracted for. We are suing our integrator for a severely botched implenatation in which we couldn’t bill for two months. Our company was in turmoil for almost two years because of over promising and under delivering.

By: Assad

Assad — Wed, 14 Jul 2010 08:57:35 +0000

Hi! I have been able to supervise two successful SAP implementations, although I have purely a finance background. In my opinion, top management can play a critical role in ERP implementation failures. Top management sometimes increases the scope of work beyond their actual requirements or restrict it to a very myopic view or has no idea as to the required scope of work which results in critical adjustments in ERP implementations. Top management in general has the capability of running out of patience very quickly if there is any crisis which affects the decision making process. As a result the implementation team may resort to work-arounds and short cuts to meet the targets. There is always a resistance to change in organizations. Sometimes top management is unable to handle this resistance and remain bowed to old practices. Failure to form a right team can cause serious issues as they may not be able to transform the user requirement into ERP functional utility. Finally, a lot of in-house pre-ERP studies must be initiated by the top management (which generally are not carried out) with respect to gap analysis between what is required and what is available. Deliverables must be defined with time frames. These deliverables can be vetted by an outside consultant as well.

By: Dennis Moore

Dennis Moore — Thu, 08 Jul 2010 20:21:44 +0000

I’m a little surprised to hear that Ken has litigated “hundreds of failed ERP implementations” – was that hyperbole? If that was meant to be an accurate statement, please contact me through my blog site (http://dbmoore.blogspot.com/) – I wanna know more!

Perhaps this table would be more useful if it were a bit more comprehensive, and if it showed the lead systems integrator on the project; after all, it is generally not the software which failed, but instead the project that failed.

Thanks for a good contribution on the topic.

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Dennis Moore

By: Denis Van Waetermeulen

Denis Van Waetermeulen — Thu, 08 Jul 2010 12:25:28 +0000

I fully agree with Ken , I have been implementing , mainly SAP solutions, for 15 years in Belgian SME businesses, and I see each time the same thing happening. Change is the biggest hurdle for those organisations, but not only in processes, also as an organisation and mainly for the people in it. Customers most of the time over-estimate the capability of their own organisation to cope with the change that will come when implementing ERP. They do not read and interprete the contract with scope and roles and responsibilties in it, and most of the time fail to comply with it. This puts them in a very weak position when the implementors need to be put under pressure to comply with their obligations.

I am surprised that none of the lawsuits are targeted at Microsoft ERP solutions , are there none ?

By: Indrajit

Indrajit — Thu, 08 Jul 2010 09:00:02 +0000

having experience of more than 10 yrs ERP implementation, i feel that the vendors are not giving the clear picture of expenditure or cost of ownership. At the end customer pays many many times higher than the initial cost envisieged. In general cost of communication, training, travellings are not considered too low….Customer also feel frustrated while they are not getting desired result but paying a exorbitant license maintenance cost.

By: Stuart Galloway-Walker

Stuart Galloway-Walker — Wed, 07 Jul 2010 23:17:10 +0000

Eric,
Thanks for another interesting post.
I’m just not clear what were the criteria for inclusion in the table.
It certainly doesn’t appear to be a comprehensive list.
Are these just the ones you have provided evidence for?

By: Ken Richard

Ken Richard — Wed, 07 Jul 2010 19:58:12 +0000

Having litigated hundreds of failed ERP implementations, I agree with your reasons, but the biggest reason by far in my experience is the utter failure of the customer in the sales cycle to vet the vendor enough to understand how the software works and what it will take to get to where the customer wants to be. All other reasons are very valid, but most of them are eliminated if the customer does what it should do before it signs the contract. This is easily exposed during the litigation process. Not to say that vendors are perfect, they certainly are not, but the “expectation gap” is often too big to overcome. Customers do not read their contracts, nor do they want to.