Erp on Nestle
ERP Implementation at Nestle
Derek S. Dieringer
Enterprise Resource Planning Systems
June 24, 2004
Introduction At first glance, Enterprise Resource Planning (ERP) systems seem to be the silver bullet for every company’s problems. In one fell swoop, implementation of an ERP system offers a company the chance to re-engineer business processes, coordinate the systems of geographically dispersed locations, consolidate data, and empower users by giving them access to all the company’s data in real time. Of course, these opportunities come at a high price in terms of financial cost, implementation nightmares, and human issues. Often these implementations fail miserably as they run behind schedule and over budget; other times they are successful. Regardless of the outcome, each ERP implementation holds valuable lessons to be learned for companies considering their own ERP implementation.
The Business Case for an ERP The business case for implementing an ERP system can be seen by examining any one of three Nestle stories. Nestle SA is the parent company of the candy-making giant and is headquartered in Switzerland (Konicki, pg 185). In 2000 Nestle SA decided that it wanted to leverage its size and begin acting like the giant it is. To do so, it signed a $200 million contract with SAP to roll out an ERP system to its 230,000 employees in 80 countries around the world (Olson, pg. 53). In addition to this sum, Nestle SA also committed to an additional $80 million to be spent on consulting, maintenance, and upgrades (Konicki, pg. 185). Executives at Nestle SA realized that the company needed to standardize its business processes if it wanted to be competitive. The rollout was scheduled to take three years for Nestle SA’s largest sites with the others to follow. Included in the implementation were the mySAP.com financials, accounts payable, accounts receivable, planning, production management, procurement, direct procurement,
Derek S. Dieringer
Enterprise Resource Planning Systems
June 24, 2004
Introduction At first glance, Enterprise Resource Planning (ERP) systems seem to be the silver bullet for every company’s problems. In one fell swoop, implementation of an ERP system offers a company the chance to re-engineer business processes, coordinate the systems of geographically dispersed locations, consolidate data, and empower users by giving them access to all the company’s data in real time. Of course, these opportunities come at a high price in terms of financial cost, implementation nightmares, and human issues. Often these implementations fail miserably as they run behind schedule and over budget; other times they are successful. Regardless of the outcome, each ERP implementation holds valuable lessons to be learned for companies considering their own ERP implementation.
The Business Case for an ERP The business case for implementing an ERP system can be seen by examining any one of three Nestle stories. Nestle SA is the parent company of the candy-making giant and is headquartered in Switzerland (Konicki, pg 185). In 2000 Nestle SA decided that it wanted to leverage its size and begin acting like the giant it is. To do so, it signed a $200 million contract with SAP to roll out an ERP system to its 230,000 employees in 80 countries around the world (Olson, pg. 53). In addition to this sum, Nestle SA also committed to an additional $80 million to be spent on consulting, maintenance, and upgrades (Konicki, pg. 185). Executives at Nestle SA realized that the company needed to standardize its business processes if it wanted to be competitive. The rollout was scheduled to take three years for Nestle SA’s largest sites with the others to follow. Included in the implementation were the mySAP.com financials, accounts payable, accounts receivable, planning, production management, procurement, direct procurement,
References: 1. Adshead, Antony. SAP: The Climb Gets Easier. Computer Weekly, Dec 12, 2002; pg. 26-27.