ERP Implementation Failure at HP

Abstract

The case gives a detailed account of the failure of an ERP migration project at the US-based HP, a leading computer hardware and information technology company. The case traces the history of ERP implementations at HP and presents the rationale behind the decision to migrate to a centralized ERP system. It details the circumstances that led to the ERP migration failure and also examines the damage control efforts made by the company. The case highlights the barriers to successful ERP migrations including project management issues, poor contingency planning and cultural issues. Finally, the case explores whether there are chances of re-occurrence of such failures within the company.

"We executed poorly on the migration. The migration was more disruptive than we'd anticipated."

Carly Fiorina, Former Chairman and Chief Executive Officer, HP

Gilles Bouchard, Chief Information Officer, HP

In August 2004, HP announced that its revenues for the third quarter ended July 31, 2004, from its Enterprise Servers and Storage (ESS) segment had gone down by 5% to $3.4 bn, as compared to the same quarter the previous year. The company attributed this revenue shortfall mainly to the problems faced in migrating to a centralized ERP system at one of its North American divisions. The total financial impact of the failure including backlogs and lost revenue was pegged at $160 million, more than five times the cost of implementing the ERP project.

It was found that the technical glitches were small but the contingency planning for the ERP project implementation had left many issues unaddressed. HP claimed that the data modeling problems between the new SAP software and the legacy system involved were of a minor nature, and it did not hold SAP responsible for the failure. Commenting on the debacle, Joshua Greenbaum, Consultant at Enterprise Applications Consulting, California, said, "It's surprising that good software could take a company down like this. It doesn't get more embarrassing than that."

BACKGROUND NOTE

Stanford engineers Bill Hewlett and David Packard started HP in California in 1938 as an electronic instruments company. Its first product was a resistance-capacity audio oscillator, an electronic instrument used to test sound equipment. During the 1940s, HP's products rapidly gained acceptance among engineers and scientists. HP's growth was aided by heavy purchases made by the US government during the Second World War.

More>>

        Case Code   ITSY045
   Case Length    16 Pages
              Period    1998 - 2005
 Organization     Hewlett Packard, HP
        Pub Date     2005
Teaching Note    Not Available
     Countries    united States
      Industry    Information Technology, Hardware

Issues

Understand the rationale for implementing ERP software.

Study and analyze the problems faced in an ERP migration project.

Examine the reasons for ERP rollout failures.

Analyze the role of cultural issues in ERP implementation.

Critically examine the strategic impact of ERP implementation failures.

Hewlett-Packard Enterprise Resource Planning ERP Migration Failure Adaptive Enterprise Centralized ERP System.

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.