Why Erp Systems Fail?

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Why Do ERP Systems Fail
ERP is a huge resource managing tool used by companies today. Some systems preform general ledger, accounting and order management for the company. ERP systems are a great asset and greatly improve a company, so a company should defiantly look into implementing ERP systems! However, Gartner estimates that 75% of all ERP projects fail. Why is there so much of a high failure rate? This paper will take an in depth look at reasons to why ERP systems fail.
Ziff Davis, an American publisher and internet company, wrote a small document on the top 5 reasons ERP systems fail and how to fix those reasons. The document makes an interesting point of “failure is often a perception, rather than a quantifiable measure of outcomes (Ziff Davis 2),” meaning companies may think they have failed by their perception, when in actuality they didn’t proper measure their outcomes or potential outcomes. The first reason the document goes over is “setting unrealistic expectations at the outset. (3)” The document claims that a company is eager and excited to implement the system without fully defining business requirements and goals (3). This ties back with that perception and measurement dilemma. The company perceived everything was going to be well with the implementation, but failed to measure out goals and requirements. Ziff Davis goes into the fact that companies fail to realize “the level of resource commitment the project will take (5)” and that “Done properly ERP can and will transform your business by automating and re-engineering its beating heart: its business processes. (4)” Again these point out to that perception and measurement factor. Another reason the document goes over is “Not involving key stakeholders (6)”. Ziff...

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...e cut back to the department caused an operations halt and lead to a 19 percent drop in profit and an 8 percent drop in stock. Gross stated, “Despite a recommended implementation time of 48 months, Hershey’s demanded a 30-month turnaround so that it could roll out the systems before Y2K. (Gross)” Since the schedule was so tight, Hershey’s team had to take dastardly shortcuts at critical times of the implementation (Gross). The system went live and because of the poor implementation orders was prevented (Gross). Gross state this cost Hershey $100 million worth of orders when the supplies was in stock. Gross goes over how Hershey failed to do testing at certain phases, due to their desire to implement the system fast. Hershey also tried to implement the season during its busiest time, resulting in more loses from their cutbacks and poor handling of the implementation.

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