Case Study of Failed Implementation - Shane Company - Project Failure Overview (2008)

Case studies of failed implementation

Shane Company--project failure overview (2008)

SAP & ERP (2010) showed cases where ERP project failed. Shane Company had 23 stores in 14 states in America, and it filed for bankruptcy in January of 2009. At the beginning, Shane blamed their company bankruptcy on SAP as a software project cost overruns and project could not be finished on time. The initial project cost budget was $10 million and duration was 1 year. Unfortunately, it actually took approximately 3 years to finish it. After that, Shane Company announced that it was the so called "low cost" SAP system implementation vendor made the SAP project failure than SAP ERP software.

The case of Shane Company provides some insight into the change management in IT. SAP ERP systems are larger enterprise systems and have been installed in thousands of companies. It should not make its customers lose money due to implementation failure. Not only CFO and CIO, every layer is also important in entire program. In Shane's case, it took the customer's managers to get it really wrong.

From Shane Company SAP ERP project failure, we should learn some lessons (SAP & ERP, 2010):

* The change management is crucial to succeed of the project. A poor SAP ERP management on both project management side and the Shane Company senior management leaded to the failure of the project and made the company ended up with bankruptcy.

* The budget and implementation plan is more important than people thought. As it make entire company and business related to the new system, an improper budget and implementation plan will make more problems during changes. While it is impossible to control or plan for every aspect of the implementation process, but it is possible to anticipate potential problems and put in place effective strategies to increase system success.

* The scope and cost should be properly managed. The cost is normally an important factor when making decision. Mangers need to keep the scope and cost under control.

* In Shane's case, the poor or undefined processes along with poor or untested system functionality make it worse. Management of the implementation process is important to succeed of the project. A project managers need to have strong technical and business knowledge to make the process along with functionality.

Marin County California - project failure overview (2009)

Financial, HR, and Payroll systems are implemented by Deloitte in 2009. This Project led to a lawsuit by its customer Marin County at the end in 2010. This is an important case providing lessons for company when they begin the plan.

Deloitte was prosecuted for fraud. It is fraudulent that they assembled a best team with deep SAP and business knowledge. Actually, it admired that at the beginning it knew that this team did not have the ability or intention to provide the skilled resources necessary and prior ERP implementation experience to deliver a successful SAP implementation. The false representation leaded to the consequence that Deloitte used its customer's SAP project as a trial and error training ground to teach its consultant about SAP, at all the County's expense.

Besides that, these are a number of vital problems in the process of implementation lead to the failure of project in this case:

* The information of pay rates, payroll and wage are incorrect. The implementation of new IT system is aimed to make more work more efficiently and profitably. There should be a verification process or system to make sure each step is under control.

* The training and change management is insufficient. Changes and compromise are always difficult to achieve, and change is often resisted regardless of the advantages that new processes and systems have to offer. The ability to successfully introduce change to individuals and organizational units is critical to successfully implementing a new system. The importance of change management will be expounded in part 4, and part 5 will discuss how to 'govern' this change management process.

* Lawsuit claims that these were an improper relationships and ethical problems between the Deloitte and its customer Marin County employees involved in the project.

Cases review:

An important step of enhancing the management of implementation project is to learn lessons from the cases before. Besides the lessons above, these two cases involve typical consequences of bad project. Any one of these will result in failed implementation, and we should learn lessons from the prior cases and take strategies to avoid these consequences (Ephraim turban & Linda volonino, 2010):

ㄨCost overruns

ㄨFailure to meet deadlines

ㄨSystem performance that fails to meet user expectations

ㄨMissing functionality

Eric Kimberling (2010) concluded the common of recent ERP failures in his article that:

1. ERP failures are typically not related to the ERP system. He said it sound like an oxymoron but it's true. Even choose the tight software, there is still high risk of failure and most of the reasons are not related to technical issues surrounding the software. Instead, it is often related to the business process, project management, and organizational change management issue. So they should take serious on change management.

2. The second thing is gap between the new system and its users. This is what we said that IT is designed for and used by the users, not the IT professors. In these cases, rarely is a troubled implementation about the IT system