Abstract

The case examines in detail the reasons behind the failure of ERP implementation at the US based Hershey Foods Corporation. In late 1996, Hershey began modernizing hardware and software systems in the company. The company was running on legacy systems, and with the impending Y2K problems, it chose to replace those systems and shift to client/server environment. As per the original plan, it was to switch over to the new ERP system by April 1999. It chose three software vendors - SAP, Manugistics, and Siebel for implementing different software modules. The project was running as per schedule till January 1999, and when it came to the last leg of implementation, the company faltered and could switch over to the new system only in July 1999. Hard pressed for time, Hershey went in for Big Bang ERP implementation which led to several problems pertaining to order fulfillment, processing and shipping. The retailers who ordered for Hershey’s products could not get them on time, even though the company had ample supplies stocked at its warehouses. Hershey’s revenues dropped by 12% during the third quarter of 1999 compared to the third quarter of 1998. The case explains in detail, the events leading to the failure of ERP implementation and examines the reasons behind it.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the process of ERP implementation in a large organization. Study the circumstances that led to ERP implementation failure at Hershey. Evaluate the role played by top management in ERP implementation. Examine the factors that lead to success or

Keywords

Hershey Foods, Enterprise Resource Planning, Enterprise-wide Information System, mySAP.com, Legacy Systems, Enterprise 21 Project, Manugistics, SAP Modules, Big Bang Approach, SAP R/3 Software, Inventory Problems, Integration Issues, Program Management, Executive Leadership, Testing and Training Plan