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Over the past 20-30 years, almost every major organization has been through the washing machine of implementing, upgrading, re-implementing and re-upgrading ad-infinitum their core ERP systems. Each transformation project begins with the promise of delivery to broad, sunlit uplands. However once complete, many areas of the business are left bereft of benefits which they were promised at the beginning. Often, at the end of line, left holding the tattered remnants of the program goals is the FP&A team.
It begins with ambition
The initial goals of a program are business wide, ambitious in reach and can be vague in nature, “improve the efficiency of team X in process 1,2,3…”. In many cases, from the beginning of the program, requirements are not fully documented, understood and defined adequately. Recent (and not so recent) examples of over-ambition in requirements gathering causing failures in project delivery can be observed at Nike (i2 SCM implementation), Hershey Foods (SAP CRM & Siebel) and Whirlpool (SAP ERP).
For Nike, the ambition was to replace legacy SCM applications (around 27) with a single instance of i2’s platform, enabling them to reduce the time taken to produce shoes, forecast demand more accurately whilst reducing inventory held all on a global scale. Initially conceived as a two-to-three-year project, eventually Nike realized that this would in fact take five to seven to complete. The cost for Nike $400 million spent on a project and for i2 a 22% decrease in share price. Ultimately, the resolution of Nike’s over ambition was to reverse their initial design decisions, moving away from i2’s algorithm-based forecasting model (which over predicted Air Garnett and under predicted Air Jordan) to SAP’s historical sales history-based model (which correctly predicts that Air Jordan’s will always outsell any other shoe that Nike manufacturers).
To read the full article, download the paper below
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