Rough ERP go-live leads to 25% decrease in stock price
In October 2015 Select Comfort went live with a big bang ERP implementation linking 3 manufacturing plants, 20 distribution hubs, and over 475 company stores. Select Comfort, with just over $1 billion in sales, spent more than $30 million on the project in 2015, with estimated spending nearing $100 million over the last 3 years.
Although the CEO had said things were going well with the ERP implementation, a different picture emerged in the January 2016 quarterly earnings release. Overall, sales were down by $83 million, and earnings were $21 million lower than expected. While the worst of the problems caused by the ERP implementation appear to be over, the company was expecting to take a hit of around $45 million more in the next quarter.
Select Comfort has experienced ERP problems before. In 2008 the company halted an SAP ERP implementation because they were over budget and behind schedule, which resulted in a $25 million write-off.
Avon's Failed SAP Implementation A Perfect Example Of The Enterprise IT Revolution
The Wall Street Journal covered the news that Avon Products Inc. is halting a massive multi-year software project. Avon’s new management order system was rolled out initially in Canada and was to be extended globally thereafter. Avon balked however when the software rollout not only disrupted regular operations, but when implemented was so difficult to use that Avon representatives left the company “in meaningful numbers”. Avon was forced to write down somewhere between $100M and $125M on its balance sheet.
Waste Management sues SAP over ERP implementation
Waste Management sued SAP for fraud over an allegedly failed implementation of its ERP software. The trash-disposal conglomerate had claimed it suffered significant damages, including more than $100 million it spent on the project, which it has dubbed "a complete and utter failure," and more than $350 million for benefits it would have realized if the software had been successful. SAP fired back with charges that Waste Management didn't "timely and accurately define its business requirements" nor provide "sufficient, knowledgeable, decision-empowered users and managers" to work on the project.
Waste Management wanted an ERP package that could meet its business requirements without large amounts of custom development. SAP used a "fake" product demonstration to trick Waste Management officials into believing its software fit the bill, the complaint states. In addition, SAP's technical team had "recommended that SAP deliver to Waste Management a later version of the software than the version SAP in fact delivered," according to the lawsuit.
Bridgestone sues IBM for fraud in $600 Million lawsuit over failed SAP implementation
This is already turning into one nasty, public fight. The Tennessean ran an article about Nashville-based Bridgestone Americas, Inc., which is part of the Japanese firm Bridgestone Tire and Auto-service Corporation, bringing a US$600 million lawsuit against IBM. Bridgestone alleged in its complaint that when the new US$75 million plus SAP-based invoicing, accounting, and product delivery system went live, it found "that there were extremely serious defects in the IBM SAP design solution as implemented which Bridgestone had no reason to expect and for which IBM offered no explanation consistent with the purported concerns IBM had raised.”
As a result, the lawsuit states, “Bridgestone has suffered damages in excess of $200 million and continues to suffer damages from injury to its reputation and customer relations.”
Price tag for troubled SAP project will skyrocket to nearly $1 billion, audit says
An 'overly ambitious design' and poor training are cited as reasons for the mess at a New York gas utility. The cost of finishing a massive SAP software overhaul at National Grid, a New York gas utility, will rise to nearly $1 billion from an original estimate of $383.8 million, a newly released audit report has found.
Immediately upon the go-live, the SAP system was wracked with issues, particularly related to payroll. National Grid ended up bringing in 450 additional contractors to work on the payroll problems, along with 400 more to help out with issues related to supply chain and financial closes, according to the audit by the New York Public Service Commission.
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