Bis Case Study

Chapter 8 / first step chore Systems ? 259 REAL WORLD CASE 2 Agilent Technologies and Russ Berrie Challenges of Implementing ERP Systems Co. (www. russberrie. com) was taking another crack at replacing its bequest business systems. The Oakland, New Jerseybased distri plainlyor of toys and gifts ? nalized plans to roll out J. D. Edwards & Co. s OneWorld Xe cortege of endeavor resource planning (ERP), customer relationship focussing, and ? nancial applications. The multimillion-dollar project was scheduled to be done in phases over the next 18 months.Russ Berrie CIO Michael Saunders state that the union, which had sales of $225 million during the ? rst nine months of 2001, hoped the OneWorld System would help it meet $1 billion in annual revenue in the coming years. Within the next 12 months, he said, Russ Berrie planned to begin installing the applications one department at a time, starting with a stand-alone implementation in purchasing. Were not going big bang, Saunders said . Were mitigating implementation risks by taking a phased-in approach. The fellowship had reason to be cautious. Three years before, a Y2K-related migration from its homegrown distri yetion, ? nancial, and customer service systems to packaged ERP applications experienced major system failures. Saunders said the problems were severe enough for Russ Berrie to take some of the new applications off-line and return to their old systems. Saunders wouldnt identify the softwargon vendors that were involved in the failed implementation, but sources said that SAP AGs applications were part of the 1999 project.A spokesman at SAP con? rmed that Russ Berrie was one of its customers, but he declined to offer further details because of pending litigation between the two companies. Joshua Greenbaum of green light Applications Consulting said it appeared that Russ Berrie bit off more than they could chew on the 1999 project. Companywide rollouts are estipulationially risky for midsize businesses like Russ Berrie, Greenbaum said. T he good news is that Agilent Technologies Inc. (www. agilent. com) says its enterprise resource planning applications are stable.The bad news is they got that bureau only after a rocky ERP migration project that cost the company $105 million in revenue and $70 million in pro? ts. In mid-August 2002, the multinational communications and life sciences company, at once a part of HewlettPackard Co. , said problems with the ERP components in oracles e-Business Suite 11e software froze production for the combining weight of a week, leading to the massive losses. The Oracle system handles about half of the companys oecumenic production of test, measurement, and monitoring products and almost all of its ? ancial operations, as well as functions such as pose handling and shipping. Agilent was in the process of migrating as many as 2,200 legacy applications that it inherited from HP to Oracle. As part of the switchover, approximately 6,000 orders in th e internally developed legacy systems had to be converted to an Oracle-friendly format, an Agilent spokeswoman said from company headquarters in Palo Alto, California. She said the con? guration process had problems requiring correction.In a statement last week, Agilent President and chief operating officer Ned Barnholt said the disruptions to the business after implementing the ERP system were more extensive than we expected. An Agilent spokeswoman said the issue wasnt the bore of the Oracle application, but rather the very complex nature of the enterprise resource planning implementation. For its part, Oracle Corp. said its working closely with Agilent. At Oracle, we are fully committed to all of our customers for the desire haul and support them in any way necessary, the company said in a statement. We get down a strong relationship with Agilent, and both companies believe the implementation is stable. Agilent also had a takeaway lesson Enterprise resource planning implemen tations are a lot more than software packages, the company said in a statement. They are a fundamental transformation of a companys business processes. People, processes, policies, the companys culture are all factors that should be taken into consideration when implementing a major enterprise system. According to one analyst, ERP disasters are often caused by the user company itself.Joshua Greenbaum, an analyst at Enterprise Applications Consulting, said 99 percent of such rollout ? ascoes are caused by managements inability to spec out their own requirements and the implementers inability to implement those specs. Russ Berrie and Co. After a three-year saga that included a $10. 3 million ? nancial hit from the failed installation of packaged applications, teddy bear maker Russ Berrie and Case Study Questions 1. What are the main reasons companies experience failures in implementing ERP systems? 2.What are several key things companies should do to avoid ERP systems failures? Expl ain the reasons for your proposals. 3. wherefore do you think ERP systems in particular are often cited as examples of failures in IT systems development, implementation, or management? Source Adapted from Marc Songini, ERP Effort Sinks Agilent Revenue, Computerworld, August 26, 2002, pp. 1, 12 and Marc Songini, Teddy Bear Maker Prepares for Second essay at ERP Rollout, Computerworld, February 4, 2002, p. 16. Reprinted with permission from Computerworld.