ERP Implementation Failure at HP
| Case Code: ITSY045
Case Length: 16 Pages
Period: 1998 - 2005
Pub Date: 2005
Teaching Note: Not Available
| Price: Rs.500
Organization: Hewlett Packard
Industry: Information Technology, Hardware
Countries: United States
Themes: Information Technology,
Abstract Case Intro Excerpts
"We executed poorly on the migration. The migration was more disruptive than we'd anticipated."
-Carly Fiorina, Former Chairman and Chief Executive Officer, HP.
"We are very well aware of the difficulty of integrating systems and business processes and are taking steps to fix it, but we weren't aware of this in time."
-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.
Industry analysts raised questions as to HP's credibility as a consultant for SAP ERP implementations. In the role of a consultant, HP's primary responsibility was to prevent exactly such execution problems on which it had faltered.
Its "Adaptive Enterprise" concept focused on the use of IT to help companies adapt to change in a quick and effective way (Refer Exhibit I for details). The failure demonstrated the adverse financial and business impact of poor ERP implementation for an IT company, especially if it took on the role of a consultant for implementations. HP conducted an internal investigation to review the causes of failure of the ERP project....
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