3 Biggest ERP Failures That Caused Whopping Losses

Enterprise Resource Planning (ERP) has turned out to be a requisite requirement for every business and there’s no doubt that taking an ERP solution can prove to be a game changer for an emerging business. While it is primarily meant for increasing the overall productivity of a business by streamlining the business operations and automating tasks, it can also turn into a disaster when not handled with care. Experts believe that 30% of the ERP projects end up failing and there’s not proper explanation as to why it happens. Of course, you could blame those for not managing their ERP system the way it should have been. But then there several examples where the business failed despite taking the best possible measures.

However, you can always learn from the other failure stories and try not to repeat any such acts. As a business manager, it should be your topmost priority to make a judicious use of your ERP resources. Otherwise there are plenty of ERP failure stories involving some big names. In this blog, we’ll talk about 3 such stories where some leading companies suffered from colossal losses.

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#1 Hewlett Packard (HP)

The Computer hardware and IT consultancy firm, Hewlett Packard is the one that tops our list of ERP failure stories. The American company, in an attempt to move all the North American divisions into a single centralized ERP system ended up wrecking the entire project losing $160 million in process. The failure happened in 2004 during the attempt to transition a small region into a group of ERP applications as the link between both the software broke down. As the system broke down, the increased demand in the market made things worse for the company and it suffered massive losses.

#2 Nike

The world famous apparel and sports equipment company, Nike has also experienced a major ERP failure back in 2001. The disaster took place when Nike decided to upgrade their supply chain system with ERP. The company spent a whopping sum of $400 million on the project that failed badly. As a result of their actions, the company saw a 20% dip in their stock, losing over $100 million dollars in revenues and a number of class-action lawsuits. The main reason for this massive failure was that they implemented a new software system without testing it properly which ultimately brought disastrous results for the company.

#3 Hershey’s

The ERP failure of Hershey’s is the oldest and perhaps the most controversial one and it’s a perfect example of what happens when you miscalculate the business requirements and take steps in a jiffy. During the Halloween season in 1999, the company’s ERP, CRM and Supply Chain systems broke down altogether causing huge losses. As a result, the company failed to deliver $100 worth of chocolates which further led to 8% dip in the stock market.  

So these were the three biggest ERP failures in history that have set an example of what not to do in ERP and how costly it can be when you don’t make a judicious use of your ERP resources.