Hershey’s – Just prior to Halloween 1999, Hershey’s reported a 19% drop in 3^rd quarter net earnings, and placed part of the blame on "computer problems". The problems facing the maker of Hershey’s chocolate bars and Kisses, Reese’s Peanut Butter Cups and Kit Kats could continue through the high margin Christmas season and on through to Easter 2000. Analysts have estimated that the loss in sales could be $100 in the fourth quarter alone, and that they could wind up losing 0.5% market share in the US. According to Hershey’s, the problems lie within their new order-and distribution system that uses software from both SAP and Siebel Systems. Since the system went live in July 1999, Hershey’s have been unable to fill orders 100% and get their products onto the shelves. SAP have been working with Hershey’s to fix the problems, and - as far as we know - Hershey’s have not actually blamed anyone for their troubles.

Whirlpool – In early November 1999, the Wall Street Journal ran a story about Whirlpool blaming delays in shipping it’s appliances in part to it’s SAP implementation which went live two months prior. Apparently, orders for quantities smaller than one truckload had faced snags in the areas of order processing, tracking, and invoicing. CNET have reported that SAP "gave Whirlpool the red light" twice prior to their go-live, saying that their supply chain was not ready.

Other companies (including Allied Waste) have joined in the chorus, but with little detail.

One company – W.L. Gore and Associates have even filed a lawsuit. Bloomberg News reported at the end of October that the makers of Gore-Tex (a waterproof, Teflon-based fiber used in outdoor wear such as Timberland boots) had filed suit against PeopleSoft and Deloitte & Touche over an allegedly botched attempt to install PeopleSoft’s HR module. Gore apparently ended up paying D&T twice D&T’s original estimate, and in the end had to bring in another implementor to "re-implement" the system. PeopleSoft are being sued as well because – it seems – they recommended D&T. According to the report, "Gore seeks compensation in the millions of dollars for damages it suffered because of PeopleSoft’s and D&T’s scheme to defraud and failure to perform as promised". Harsh words indeed.

This is all on top of the still unresolved $500 million lawsuit filed by the bankruptcy trustee for FoxMeyer (a former $5 billion drug distribution company) against Andersen Consulting, "alleging the company’s botched implementation of SAP’s R/3 software helped send FoxMeyer into bankruptcy in 1996." It is interesting to note that, according to CNET, at the time Andersen called the claims "outlandish and totally at odds with facts".

So. What does this all mean? Who is at fault? How many more are going to come out of the woodwork? Is this Y2K related? What can be done to prevent these problems in the future? So many questions …

Of course no one has all the answers, but we would suggest that it is critical for customers, consultants and SAP (and other ERP vendors) to hold open, honest dialogue at the start of the project, and nail down the critical success factors of the implementation, including:

• The customer’s expectations
• SAP product capabilities, and gaps

• The level of change the customer has to go through to make the system fit
• The level of commitment within the customer organization to see the project through to completion
• The customers organization and culture, and the fit between the customers organization and culture and the project organization and culture
• The risks presented by politics within the customer organization, and
• The consultant’s capabilities, responsibilities and role (if applicable)