Context
In the late 1990s the confectionery company Hershey was replacing its old systems with three new ones: SAP R/3 for accounting and resource planning, Manugistics for the supply chain and Siebel for customer relationships. According to published figures, the project cost $112 million.
Symptom
The recommended implementation time was about four years. The company cut it to 30 months to finish before the year 2000. The launch fell in July 1999, when the main orders for Halloween and Christmas start to arrive.
Cause
The schedule was subordinated to an outside date, and the readiness of the system came second. Testing and training were cut, and thousands of employees started working in the new systems without enough preparation. Launching three systems at once in the peak season left no time to fix mistakes.
The fork
Move the launch to a quiet period and risk missing the date, or launch on time with less testing.
Decision
The company launched the systems in July 1999 as planned.
Execution
Orders stopped going through the system. The goods sat in the warehouses, but the company could not ship them: the data on orders, inventory and deliveries did not match.
Outcome
Hershey was unable to fill about $100 million in orders. Quarterly profit fell by 19 percent, and the shares dropped 8 percent in a day. The problems hit the season that accounts for most of the year's sales.
What it means for you
A platform is implemented into a process that keeps running. That is why the launch date depends on the business season and on whether people are ready, not only on the project plan.
- When is your business busiest, and does the launch of a new system fall into that period?
- Which employees tested the new system on their real tasks before launch?
- What will you do if the system does not work on the first day?
We would start with a launch plan that includes a fallback: which signs make us stop the rollout, and how we work while the error is being fixed.
Key dates
| Year | Event |
|---|---|
| 1997 | System replacement project starts; the schedule is cut to 30 months |
| 1999, July | SAP R/3, Manugistics and Siebel launched at the same time |
| 1999, fall | $100 million in unfilled orders; quarterly profit down 19 percent |
