Whose fault, mine or yours?
Michael Krigsman at the IT Project Failures blog at ZDNet has an analysis of an ERP project failure: Customer blames bankruptcy on IBM IT failure.
American LaFrance (ALF), the “leading brand of custom-made fire fighting, fire rescue vehicles, ambulances, and heavy-duty work refuse vehicles,” has declared bankruptcy, blaming IBM and a failed ERP implementation.
Michael has gone to some effort to ferret out the details behind this particular project failure, but the numbers involved are pretty big. It doesn't help American LaFrance that the market for their products started dropping just as they did the switch to the new system. But does all the blame for the failure and subsequent bankruptcy lie on the head of the IT integrator? That said, if the new system got in the way of their ability to get components into their shop, something was seriously wrong.
And when I see ERP as the source of the problems, I immediately wonder about a Theory of Constraints view of the world. Rather than ERP, it sounded like they needed a good supply chain solution that replenished their parts inventory based on consumption and replenishment time. Most ERP systems operate on forecasts and variations on min/max.
2 Comment(s)
said:
Interesting comment draftkey. I suspect one of the other issues with "ERP" implementations is that they try to cover all the ground you mention -- and that they don't do any of it well. More accurately, they may do it well technically, but the implementations need to cover both the technical aspects and the work process aspects of the company in question. I worked with a company where the system had been mandated by their parent company and very little had been done to fit the system to how they actually did business. (Nor was there effort to change the business to fit how the system was supposed to work.)
Thanks for the comment.
The term "ERP" is used pretty loosely these days, and (unless using a pure AR/AP/GL perspective alone) tends to incorporate most Supply Chain functions as well. These days ERP can be used as an acronym to cover most aspects of CRM, ERP, MRP, and SCM.