Subject: Managing The Value Chain
Name: ALOK KUMAR GUPTA
Enrollment No. 6010091106380
ERP IMPLEMENTATION FAILURE AT HP (ITYS045)
a. Analyze the limitation of IT project management. Discuss the importance of business contingency plans for enterprise projects. Justify your answer taking the example of HP
b. Examine the implementation of the ERP migration failure considering HP’s role as a third party implementer of SAP’s supply chain solutions. Can HP use this ERP implementation failure to its strategic advantage? Why / why not? Give reason for your answer
HP announced that their revenue has gone down by 5% to $3.4bn for the 3rd quarter ended July 2004. The reason proposed was due to the problem faced during the migration to the centralized ERP system. The total financial impact due to the failure was $160mn
Project management is a term including scheduling, cost control and budget management, resource allocation, collaboration software, communication, quality management and documentation of administration systems, which are used to deal with the complexity of large projects.
Limitation of IT project management:
It requires proper training and knowledge about the project
With single backbone, failure would be service
Difficulty in finding our programming errors and their rectification For successful implementation of IT projects management, defining the requirement developing a plan, and implementing it with technology is a difficult task Creating a cross-functional team is a difficult task
A contingency plan is a plan devised for a specific situation when things could go wrong. Contingency plans are often devised by business who wants to be prepared for anything that could happen as “Back-up plans” “worst-case scenario plans” Scrap situation or Plan B Contingency plans include specific strategies and actions to deal with specific variances to assumptions resulting in a particular problem, emergency or state of affairs. They also include a monitoring process and triggers for initiating planned actions. They are required to help governments, business or individuals to recover from serious incidents in the minimum time with minimum cost and disruption.
Technical glitches were small but contingencies planning were not addressed appropriately on SAP R/3 Implementation. Original Objectives were: Shorter lead & delivery time, Cost saving and Global Distribution system
In 1993, HP’s BCMO unit began with the implementation with several modules like – MM, PP, FI, CO. FI & CO modules were implementation on global basis & SD implemented as part of pilot project. By 1998, major migration to SAP R/3 completed. Major benefit are (i) Reduce huge cost incurred on IT support, (ii) all programs run on single browser, (iii) Eliminate need to create custom SAP interface, (iv) Greater speed in implementation and (v) With an option of query which would make it easier to use.
Questions were raised on failure of HP implementing ERP, as it was a consultant for SAP ERP implementation. HP’s responsibility as a consultant was to prevent the execution problems faced by the implementation Co. on which it itself failed While conducting an internal serve, HP revealed that there has been execution problem and not the fault of SAP
ERP Migration Failure:
There are several reasons for failure but the most popular one is project management. To justify this argument a study by Sweat (1998) revealed that despite project managers knowing the importance of considering critical success factors in ERP implementations, 75% of the implementations were regarded as failure by the organizations themselves. This is purely because project managers give least importance to these critical success factors during the implementation of an ERP package. Being an ERP project manager is very challenging and literature shows us there have been many cases where things have gone wrong because of incorrect approach. According to Scott (1999)...
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