I have on many occasions wondered why over the years, there has been little if any coverage on the continuing (and still growing list of) failures on the part of ERP-centric initiatives to deliver results given the seemingly inexhaustible number of case references that have appeared in a variety of mediums including television news.
Like the proverbial 300 pound gorilla (or elephant depending on your personal preference) in the room, stories that might have helped to avert future disasters went largely unreported by industry pundits.
For example, here is a news report from November 2006 in which Siemens and SAP were sued by Collin County for fraud because, and despite claims that they could successfully install a new system, they were unable to do so:
Around the same time of the Collin County mess, another more significant storm was brewing on the SAP horizon called FoxMeyer Drugs.
In the following PI SlideShare Viewer I will share with you just one of the many documents that we uncovered in our research into failed ERP initiatives involving SAP. This one is from the ethanolresearch.com website;
Sued in 1998 by FoxMeyer’s bankruptcy trustees for $500 million, SAP paid a specified amount in 2004 to settle the case.
More recently, and as reported in this blog’s September 7th, 2010 post (Spend Matters’ Recent Guest Author Post Underlines How The Industry Has Lost Its Objectivity through Familiarity), according to a ZDNET article Marin County sued Deloitte alleging that Deloitte committed fraud and “misrepresented its skills and experience” for its role in an over-budget SAP implementation.
Now in this most recent story, one might maintain the position that Deloitte is the defendant in the Marin County suit, and not SAP but . . . while ZDNET’s Michael Krigsman reported that SAP’s name is “conspicuously absent from the complaint,” he rightfully pointed out that the company’s “brand equity takes a significant hit whenever a so-called “SAP project” fails.”
I am more inclined to fall back on the you are known by the company you keep axiom in that rarely if ever is the software vendor oblivious or for that matter so detached from the consultant that a claim of plausible deniability would ring hollow in market ears. In practical truth, although I do not have definitive proof, logic would dictate that Marin County omitted SAP from the suit so as to find a way to motivate the SAP powers that be to take ownership and work with them to resolve the issues. If said issues cannot be resolved to Marin’s satisfaction, then it is not out of the realm of possibility that the current suit (or even a new suit) could be expanded to include the vendor.
In such a case, it would be interesting to see what develops between SAP and Deloitte in terms of possible deflection and the ultimate assignment of blame.
The above cases (which are the tip of the proverbial ERP implementation iceberg), brings us back full circle in terms of the paucity of coverage within the industry as it relates to what is and is not reported . . . especially by bloggers and analysts.
So if they haven’t been covering these incredibly important stories, what have they been covering? Here is a list of posts from a variety of blogs and analyst headlines involving SAP:
Spend Matters (January 20th, 2010) – 2010 Prediction: The Year ERP (SAP, Oracle, and Infor) Get Spend Management Right, and (November 4th, 2010) – Enhancing SAP and Oracle with Supplier Onboarding, Catalog Management/MDM and Invoicing
FT.com/techblog (October 24th, 2010) – SAP’s biggest challenge: Silencing Ellison
Debbie Wilson (October 5th, 2010) – AECsoftUSA User Conference & News
Even historically speaking, the focus for the majority of those who cover the industry regarding SAP as well as other ERP vendors has been centered on anything and everything but these failures, as demonstrated by the following article on an Aberdeen report:
AMR Research (December 22nd, 2008) – ERP vendors looking more and more like Detroit
Once again, the question remains why is there a reluctance to tell it like it is and in the process help end-user clients to avoid the come on it, the water’s fine invitation to disappointing results?
Oh well, with the emergence of true SaaS-based solutions and the revolutionary non-consultancy models, selective reporting is ultimately going to become a thing of the past, and with it the high rate of (unreported) failures that continues to plague this industry.
To take a phrase from the original Poseidon Adventure movie . . . “There’s got to be a morning after!”
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Procurement Insights 
TBoehm30
November 15, 2010
That’s a pretty negative view of the universe. Sure there are plenty of failures out there, but there are more successes. Sure Tech projects, especially ERP, are over budget, that doesn’t make them useless.
Companies require good systems to keep them running, they need smart people to keep their systems running. It doesn’t always work that way, but I think that most of the time it does.
procureinsights
November 15, 2010
I would not say negative but perhaps prefer to consider it to be realistic and even necessary, as these case references paves the way for much needed improvement.
Without acknowledging our failures how do we do better in the future . . . what was that old baseball analogy about the Babe striking out more than any other player of his era . . . didn’t he for the longest time hold the HR record in major league baseball.
The real question is simply this, why are these obvious and costly failures generally ignored?
Failure alone is not the problem (although try convincing a FoxMyers or Marin County of this), but ignoring said failures.
Syed Khan MCIPS., C.P.P., C.P.M.
November 16, 2010
Hi Jon
this is an interesting subject, you will find a lot of information and both success and failure stories in Gartner and other forums. I have been involved with 4 major ERP MMS implementation and have learnt that one of the CSF is the architect, design and the quality of systems analyst and implementation teams. In most times I was dissapointed with the lack or narrow experience the consultants had and could add value in BPI and Enhancements, they were like masons and not Architects who can view and design a comprehensive plan, These projects have to be strategically driven top down, otherwise you donot get the end results in terms of information, statistics and controls you expected from the system as it requires the right organisation setup and the setup data to get the drill down information, i.e. its easier to get $ amounts or spend buckets but that would have limited benefit unless you have the commodity, vendor wise spend details on real time. dash boards to proactively manage the processes efficiently by exception, otherwise all process are pretty standard and Many ERP’s have default setup on standard industry type business models., and the shortest and best way is to move and adapt to the industry best practices, but many consultants and even the users would like to map their own processes which is quite tedious and time consuming.
While system failures are also attributed to lack of training and empowerment of end users, to me this should not be the factor in systems failures, but to be fair if some one cannot drive or crashes the car, the problem is not with the vehicle but with the quality and competency of the driver and should be treated separately.
And lastly its the type of ERP, I was surprised to see some really small and SME trying to implement SAP which I think its a real overkill, firstly the system is more complex than the requirements, and secondly the staff turn around or lack of training budgets does not help optimize get these companies any benefit from the systems.
I currenly work for a fortune 500 company and we donot even use the 20% of the system potential. So any one analysing this issue should wholistically look at all the systems enablers part of their ERP success strategy.
regards
procureinsights
November 16, 2010
Very well stated Syed. Thank you for sharing.