Silver bullet for companys problems

Reengineers the business processes

Coordinate systems geographically Empowers users by giving access to data in real time

Can ERP lead to

FAILURE???

Revenue - CHF 109.9 billion Market capitalization - 87 billion Swiss francs Seven Business Divisions Beverages, Confections & snacks, Food services, Foreign trade, Nutrition, Prepared food and Sales US Subsidarys Annual Revenue - $8.1 billion No of Employees 16000 I.T. Professionals 250 (including the consultants)
Source: www.nestle.com/

9 different general ledgers and 28 customer entry points Goal - reduce these numbers down to 1 Nestle USA multiple companies under one roof, each factories acting as an autonomous unit Nestle faced severe competitive disadvantage Solution - one system used by all more efficient & to survive in global market.

29 different prices for vanilla to the same vendor Discrete deal by each factory Distinguished ways of reference

Vanilla is No.1234 for one factory and No.7778 for other.

Business Excellence through Systems Technology - BEST Scheduled to run over 6 years from 1997 to 2003 Budgeted at $200 million

Sales and Distributions

Financials Accounts Payable

Purchasing

BEST

Accounts Receivable

transforming the separate brands into one highly integrated company - Nestle USA Chairman and CEO Joe Weller Consolidate the operations of different locations to leverage their size and buying power Centralize and control data to predict financial, reporting, and forecasting numbers more accurately.

BIG FAILURE Coz there is a big difference between installing software and implementing a solution

Failed to implement broad business process before the roll-out Underestimated budget planning 5% increase of actual $200 million budget Unrealistic time constraints implementation deadline set to Y2K instead of planned 2003

Inadequate training of core staff before roll-out, with implementation team involving

50 top business executives 10 senior IT executives 0 key stakeholders who use the system directly

Attempt of plunge approach instead of parallel, pilot or phased approach Employee turnover rocketed to 77%

Poor communication to the key stakeholders Less involvement of the key stakeholders Failed to evaluate the legacy IT infrastructure Failed to assess effect of new system on the legacy system

June 2000, roll-out force halted Jeri Dunn, CIO, discussed the future of the project with 19 key stakeholders & executives Business requirements redefined

Project timeline reshaped around requirements rather than predefined end-date Detailed blueprint was prepared Tom James, Directors of Process Change liaison between project team & divisions

Support from Executive leadership & Stong management Adjustment of the business process to reflect new realities of new system Learning from mistakes involve everyone related to particular system Willingness to spend money

Support & guidance from experienced SAP Belief that ROI will be higher than cost overruns Nestle claims $325 million made of $210 million Approach of key stakeholders to analyze the divisions atmosphere before roll-out Changing to phased roll-out approach

Readiness of the lead, Jeri Dunn, to admit mistake & revise plans accordingly Leniency in deadline worthy waits for feedback from end users of roll-out Being inline with global implementation

ERP is not a solution. Just a tool to use in changing business process Must be installed as part of overall business process redesign effort and not an independent activity If used properly ERP is a powerful tool to aid in BPR.

Involve right individuals from the beginning No forcing on timelines Large focus on training Conjugate business process re-engineering with the roll-out Limit number of customizations done on the system Obtain universal buy-ins with everyones support

Gene Leshinsky, "Nestle and Nike: How they almost failed...", http://www.boston-technical-recruiter.com/2008/02/18/nestleand-nike-how-they-almost-failed/ Derek S. Dieringer, "ERP Implementation at Nestle", Enterprise Resource Planning Systems, June 24, 2004, http://www.uwosh.edu/faculty_staff/wresch/ERPNestle.htm Paul Harmon, "Nestle USA Installs SAP", Trends Newsletter, November 2002, http://www.bptrends.com/publicationfiles/BPT%20Case%20Stu dy%2DNestle%20USA%20SAP%2011%2D02%2Epdf Ben Worthen, Nestls ERP Odyssey, CIO Magazine, May 15, 2002, http://www.cio.com/article/31066/Nestl_eacute_s_Enterprise_R esource_Planning_ERP_Odyssey?page=2&taxonomyId=3000 William Echikson, "Nestl: An Elephant Dances," Business Week Online, December 11, 2000, http://www.businessweek.com/2000/00_50/b3711064.htm