The 6 Most Shocking ERP Failures

July 27, 2015

What does Nike, the US Air Force and the UK NHS all have in common?

USairforce

They have experienced the pain of a failed ERP project.  And when ERP goes wrong, it goes really wrong.  As enterprise resource planning systems usually touch many points within an organisation, a rocky implementation can result in widespread outages, customer order issues and manufacturing and delivery delays.

Here are some of the most monumental ERP failures over recent years:

 

1) Nike’s software sneaker snag

In 2000, Nike invested $400 million in a warehouse order fulfilment system but instead ended up with over $100m in sales losses and a 20% drop in their stock market value due to a glitch in upgrading their ERP software.  This left stores unable to fill orders, creating a PR disaster.

The ERP project failure resulted in Nike delivering too many Air Garnett sneakers than the world wanted and too few Air Jordans, meaning that Nike didn’t capitalise on a great sales opportunity for Nike Air Jordans.

As Nike’s Vice President of Global Operations and Technology, Roland Wolfram, put it, Nike become the ‘poster child’ for failed software implementations.

Find out more: http://www.cio.com/article/2439601/supply-chain-management/nike-rebounds–how–and-why–nike-recovered-from-its-supply-chain-disaster.html

 

2) UK NHS project left feeling under the weather

A national project to implement a new patient record system for the UK NHS was abandoned and reportedly cost the UK taxpayer in the region of £10bn.

This number doesn’t even include the future costs of a new ERP system to replace the failed project, which could run into many millions of pounds more.

After the project was launched in 2002, it struggled on until 2011 when it was officially dismantled.  The provider, CSC, was accused of “poor performance” and a “failure to deliver”.  In 2013, over ten years after the project was started, no NHS trust had a functioning care records system delivered through the original project scope.

Read in detail: http://www.theguardian.com/society/2013/sep/18/nhs-records-system-10bn

 

3) US Air Force flying low with a $1bn failed ERP project

The US Air Force spectacularly spent over $1bn over seven years on an ERP system that was eventually deemed to have no “significant military capability”.

The four causes highlighted which caused the failure of the project were:

  • Governance – there was apparently a “confusing” and “ineffectual” governance structure throughout the project delivery.
  • Tactics, techniques and procedures – the team implementing the solution were eventually found to have underestimated how complicated and enormous the scale of deploying the solution was. In simple terms, they were in over their heads.
  • Difficulty of implementing change – there was significant staff churn throughout the project; 6 different program managers in 8 years, 5 Programme Exec Officers in 6 years and over 10 organisational constructs. No one knew who was in charge.

These factors resulted in a chaotic and confused approach to the implementation which ultimately contributed to its failure.  Find out more detail here: http://spectrum.ieee.org/riskfactor/aerospace/military/the-us-air-force-explains-its-billion-ecss-bonfire

 

4) Hershey Foods gets it teeth into a tough (and costly) project

Investors balked when the CEO of Hershey Foods announced in 2009 that the company was facing issues with its new ERP implementation, preventing it from delivering $100 million dollars’ worth of stock.  Hershey Foods’ stock price consequently fell 8% and investors were concerned that a failed a software implementation could result in the breaking up of a Fortune 500 company.

The software implementation and delivery was mainly delivered by SAP, Siebel and Manugistics.  Both SAP and Siebel affirm that there were no issues with their software, and that the cause of the issue was more likely to be the ‘big bang’ approach employed by Hershey Foods.

This case not only highlights how complex large scale ERP projects can be, but also about how companies must make smart choices about when they choose to go-live with their new ERP systems (i.e. not before a busy sales period as Hershey did).

Read a detailed case study on the Hershey Foods ERP project here: http://www.academia.edu/4630187/ERP_Implementation_Failure_Hershey_Foods_Corporation

 

5) Time ran out for New York City’s CityTime project

New York City’s CityTime project to implement a system of timekeeping and payroll for municipal workers resulted in a criminal investigation into a wide-ranging fraud scheme involving the project implementation.

The outcome of the investigation ended with 8 convictions and the return of half a billion dollars back to the City.

A report on the failed ERP implementation highlighted failures to control the scope and cost of the project and an inability to hold contractors and service providers accountable as critical to the overall failure of the project.

The project was originally budgeted to cost $63 million but the real costs end up being closer to $700 million!

Read further detail about the doomed program: http://www.nyc.gov/html/doi/downloads/pdf/2014/July-2014/pr13citytime_72514.pdf

 

6) HP eating its own dog food in a major ERP fail

In 2004, HP announced that its third quarter profits had dropped by 5% in its Enterprise Server and Storage division, attributed to problems faced in migrating to a centralised SAP ERP system.

The total cost of the ERP implementation failure including backlogs and lost revenues was cited at $160m – more than five times the cost of implementing the ERP project originally.  One of the original objectives for implementing the solution had in fact been cost savings!

As a result, industry analysts predictably questioned HP’s supposed  expertise around SAP ERP implementations after its own project failure.  Customer orders were trapped in old ERP systems and created huge backlogs in product and ordering systems.
Many analysts suspected the issues lay with the project’s execution rather than fundamental flaws with the software itself, however as HP and SAP are close partners and deliver many joint ERP projects, HP declined from publically blaming SAP.

Read a case study on the project failure: http://astro.temple.edu/~wurban/Case%20Studies/HP’s%20ERP%20Failure.pdf

 

Do you think we missed any?

 

 

 

Image courtesy of Gary [Flickr] (https://www.flickr.com/photos/kwantis/)

 


July 23, 2015

How to choose the right cloud strategy for your business in 2015

Read the original article published on LinkedIn.

Cloud

Deciding on the right approach early on for your business is critical when it comes to cloud, as one mistake now can have organisation-wide consequences if data is lost or if IT teams are restructured to accommodate a new cloud service.

The UK Cloud Industry Forum reported in 2015 that 79% of organisations already consider cloud as part of their IT strategy, so most businesses are not questioning whether cloud is right for them, but in fact what’s next for their cloud strategy.  The Cloud Industry Forum predicts that by the end of 2015, 90% of UK businesses will be using at least one cloud service.

Cloud is permeating throughout the layers of businesses; where it was once used for testing activities or standalone applications, it is now being fully integrated and seen as an integral part of any company’s IT infrastructure.

 

So, what are we calling Public Cloud and Private Cloud?

A cloud is called a “public cloud” when the services are rendered over a network that is open for public use.  Technically there may be little or no difference between public and private cloud architecture at the hardware/software layer, however, security considerations may be substantially different for services (applications, storage, and other resources) that are made available by a service provider for a public audience and when communication is effected over a non-trusted network.

Private cloud is cloud infrastructure operated solely for a single organization, whether managed internally or by a third-party, and hosted either internally or externally. Undertaking a private cloud project requires a significant level and degree of engagement to virtualize the business environment, and requires the organisation to re-evaluate decisions about existing resources.

Between these definitions of Public and Private cloud, there exists a world of cloud scenarios, whether that is privately hosted multi-tenant cloud environments or onsite managed service offerings.

 

Think about data first and foremost

Data

If you use the public cloud, your data and its security will be in the hands of the public cloud providers and although it may be safe and they can be very persuasive around this point, it still demands a leap of faith.  Ensure early on that your public cloud provider can guarantee where data will be held; will it be within the UK, the EU or worldwide?  Some organisations may not be able to compromise on where their data is kept.

The private cloud model puts security and the data location in the hands of the data owners and real world enterprises, clients and legal bodies do demand this level of control.

 

Are your applications cloud ready?

Applications

Before you roll out further cloud services, it is important to spend some time reviewing your applications.  Not all applications are cloud-ready; some have been developed in house, some have been developed many years ago before multi-tenant environments were the norm and some are not able to run on standardised cloud hardware.  Cloud is often an instigator for organisations undertaking an application rationalisation program to understand how their applications are utilised and whether they can be ported to the cloud.

Standalone applications in the cloud look attractive and appear simple to deliver.  However, in the real-world, your business runs on many types of applications.   And some of those are mission critical applications that require specialist infrastructure and management to run effectively.  Can your public cloud provider deliver this level of bespoke service to ensure the smooth running of your most business critical applications?

With private cloud, the real-world enterprise owns the cloud and owns the decision of which language(s) to support. With the right technology, multilingual cloud app support becomes a reality.

Another issue that you may find with larger public cloud players is that support of the applications which maybe key for you is not a major consideration for them as they are only providing the platform.  When a problem does arise, it can be difficult to resolve if the software vendor and public cloud provider only look after their respective areas and do not engage.

 

Does cloud make sense for your business’s locations?

People in DC

Organisations with multiple locations, whether Europe, Asia, US or global need to address many a number of issues, including connectivity, time zones, languages and potentially very sensitive data.  Yet, no public cloud model is currently flexible enough to accommodate the moving myriad of different government’s regulatory red tape around the world, especially as most providers can be US led and focused. Private cloud architectures empower the real-world enterprise to accommodate the compliance requirements for clients.

Private cloud solutions enable the real-world enterprise to position its own cloud to support its international business objectives as private clouds providers can be more flexible in tailoring and managing individual solutions.

 

What is your growth trajectory?

Server Room

Public cloud architectures can deliver shared-resource efficiencies, utility computing and flexible scalability. Those benefits are seductive, but at times illusory. With the right technology, private clouds deliver on those promises; yet provide better security, better control and greater flexibility than public cloud alternatives.

For businesses that are expecting to grow their use of cloud services, their IT teams should critically assess the costs of growth with each of their potential cloud providers.

Most businesses do not like hidden costs; especially the Financial Director. There are numerous examples of how hidden costs can occur when working with a public cloud provider. The difficult pricing models mean that even the most financially astute individuals can have issues and be caught out with ‘hidden’ costs.  This is due to how pricing models are set out – letting organisations access public cloud services at low costs.  However each additional component or service usually incurs a charge, resulting in sometimes unexpectedly high costs at the end of the month.

Costs to be aware of include bandwidth, licencing, storage and processing all are variable and can be extreme in nature if the solutions are used ineffectively.

 

So what should we think about in future?

Working

With cloud adoption rates at 80% for large businesses and 75% for SMB organisations, successful integration of multiple cloud services will be one of the most important considerations for IT leaders.  Managing multiple public cloud providers is not an optimum position for IT teams, so it will be central to the success of any business to choose a trusted partner for their cloud services, who can aggregate multiple cloud solutions whilst offering an array of cloud ‘types’, from Public, to Private to managed hosting.

 

 

 

Images provided courtesy of theaucitron (https://www.flickr.com/photos/theaucitron), Texas A&M University (https://www.flickr.com/photos/tamuc), Torkild Retvedt (https://www.flickr.com/photos/torkildr) r2hox (https://www.flickr.com/photos/rh2ox), Intel Free Press (https://www.flickr.com/photos/intelfreepress), and Nic McPhee (https://www.flickr.com/photos/nicmcphee).


Data Insights through Social Selling

July 14, 2015

IBM recently reported that 76% of B2B companies now have an account on social media as “getting closer to the customer” is becoming a top priority for CEOs, who are presumably looking for ways to be more competitive and connected with their customers.  Read our full report on Information and the Customer Experience for more detailed info.

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There are a number of companies and software products on the market today focused on helping companies sell better by deriving insights from social media, commonly called social selling software.

From tracking what people are saying about your business on social media platforms, to analysing trends based on what certain demographics are sharing, right through to gaining contact specific data about a prospect you are due to meet; many companies are now leveraging social media as a data-producing tool that can support their go-to-market strategies.

This information is then helping businesses to define target demographics – and most importantly, better understand what those target demographics think, want and buy.

Better awareness of what the customer is sharing publicly about your brand also allows you to act quickly in the event of an issue.  Bains and Co. reported that a 5% increase in customer retention rates can increase an organisation’s profitability by as much as 75% so businesses are now looking for ways to increase customer loyalty and avoid losing clients rather than focusing solely on customer acquisition.  Businesses are therefore recognising that data is central to the process of understanding how they can improve the entire client experience.

Once data is being collected and processed repeatedly, companies are then in a better position to perform trend analyses based on historic information.  Did one marketing campaign resonate better with the target demographic?  Did a certain type of complaint on social media get more shares than another type of complaint?  What are the most common issues being linked to our company on social media that we need to focus on first?

These are all questions that data can help to answer, which in turn helps to improve the wider customer experience.  As your company’s data analysis practice matures, you can start to review trends and patterns that lead up to certain outcomes, before the incident occurs.

The next step is to then automate actions based on data coming into your business, such as automating responses to common support questions to reduce response times.

For more information on how data can help you to improve your customer experience program, download the full whitepaper from C24.

 

Image courtesy of Jason Howle.


88% of companies anticipate increased revenue as a result of implementing a big data solution

July 8, 2015

Recent research conducted by CA Technologies makes for interesting reading if you are an organisation considering implementing a business analytics or big data solution this year.infopic

A whopping 84% of large organisations polled by CA Technologies have already, or plan to, implement a big data project within the next year.  And spend on big data projects is set to increase from 18% of the IT budget, to 25% in the next three years.

This means that big data will soon be making up on average ¼ of all IT spend, showing that spend is moving away from solely infrastructure hardware and over to software and tools that traditionally sat on the periphery of IT budgets.

Despite this, respondents cited a number of major obstacles when it comes to deploying a successful big data solution for their organisations (in order of severity):

  • Insufficient existing infrastructure
  • Organisational complexity
  • Security and compliance concerns
  • Lack of budget and resources
  • Lack of visibility into information and processes

For organisations that have overcame those obstacles, the benefits realised or anticipated for planned projects were:

  • Improved competitive positioning
  • Increased revenue
  • Faster time-to-market
  • More targeted marketing and selling campaigns

In fact, 90% of respondents said they were either experiencing or anticipated experiencing more targeted marketing and selling campaigns, demonstrating that big data is going to play a critical role in the defining of sales strategies, target customers and analysing client demographics.

Whilst the implementation of big data projects is increasing, so too is the amount of data being handled by organisations – creating further complexity.

The report from CA estimated that the amount of data coming into organisations has increased by 16% in the last 2 years and those companies that have already implemented a big data solution estimate that their BI tools are analysing over 2pb of data currently.

The key drivers for businesses looking to implement a business analytics program, tend to come back again to the sales and marketing side of operations:

  • 60% said they were investigating big data in order to improve customer experience.
  • 54% thought it would help with acquiring new customers.
  • 41% said it would be crucial for keeping up with competition.

C24 recently published a report about how big data can impact on customer experience and satisfaction levels which covers how organisations can segment customer data to uncover business insights.

Read the full report from CA technologies here for further info.

 

 

Image courtesy of Purple Slog 


Customer Experience – The Many Ways Customers Create Data

July 6, 2015

When looking at how to improve your customers’ experience with your brand and improve the levels of customer service across each area of your business, you don’t need to spend thousands of pounds on hiring a customer experience consultant to tell you where you are going wrong.

In the first instance, the data you need to start making positive changes to the customer experience is usually right in front of you.

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In our whitepaper, “Information and the Customer Experience”, we looked at the many ways data is integral to improving customer experience levels.  Here are just a number of areas where a customer creates data based purely on their interactions with your organisation:

Via…

  • Web; visiting your site for more product/company information, finding contact data, requesting support or ordering services.
  • Email; whether that is between internal support teams, or between your customer and internal teams.
  • Phone; for sales information, ordering, support, account management – how many times the customer called, at what time, and what issue prompted the call. At a macro level, what are the busiest times for calls, what does each call cost and how quickly calls are completed?
  • Social Media; what are customers saying about your company and product, are they engaging with you on social media through likes, follows and tweets? What are they using social media for? Are these engagement channels replacing traditional phone calls for certain interactions?
  • In Person; what information is the customer sharing with your teams during meetings or at events, how often are they meeting with you, what outcomes do those meetings have, do face to face meetings result in higher sales or success rates than phone or web driven conversations?
  • Marketing; how is your brand perceived by your customers, what marketing campaigns do they come into contact with, what resonates the most, what drives tangible behaviour, what prompts action, what doesn’t result in a sale?
  • Support; how do customers first contact you when they require product or service support; via forums, web chat, email or phone?
  • Internal Business Departments; your different business departments will invariably be collecting data on each customer – across finance, legal, sales, logistics, manufacturing, support etc.

 

If you were to collate data from all of these different areas, you could derive valuable insights into the experience your customer has each time they engage with your business.  It may be unrealistic to track each customer at such a granular level, but reminding yourself to constantly think about what data you can derive from each business function that could impact on customer satisfaction is an important activity; especially in an age where it is so easy and quick for customers to share experiences with other potential consumers over social media.

Outside of your own company’s interactions with a client, we highlighted in our report that consumers are producing more data than ever due to the mobility and internet of things technology trends:

 

Mobility

  • Social media can be accessed on the go through mobile devices; increasing available information about customers’ perceptions and experiences in real-time.
  • Mobility means that data about locations and travel can be shared for a greater understanding of your customer’s habits and/or demographics.
  • Information collected within apps is increasing as software providers become increasingly aware of the value of data they are collecting from their customers.

 

Internet of Things

  • Many appliances and devices in the home and office are increasingly able to collect, process and share information with users or report it back to the company delivering the original product or service. This means that data collection and sharing is becoming ubiquitous and constantly updated all around us.

 

Additionally, the software tools you use to interact with clients (VOIP telephone systems, support ticketing apps and web chat facilities, for example) are becoming increasingly data-driven; one of their core product features is now the ability to track, process and deliver data for better insights, so businesses will naturally start to collect data about their client interactions and use it to build their wider customer experience programs.

For more information, download the full whitepaper at C24’s site.

 

 

Image courtesy of NYC Media Lab.


78% of British businesses rely on spreadsheets for key financial decisions

July 2, 2015

A report from F1F9 in conjunction with YouGov has revealed that UK businesses are facing ‘looming financial disasters’ through the misuse of spreadsheets within their organisations.C24 Data governance

Due to the fact that spreadsheets are prone to human error, and in complex spreadsheets with thousands of formulas, errors can be very difficult to identify, the report highlights that billions of pounds are being put at risk daily due to spreadsheet inaccuracies.

Spreadsheets are predominantly used within businesses, according to the research, for the following reasons:

  • Account preparation
  • Pricing decisions
  • Investment decisions
  • Budgeting and forecasting

All of these financial processes are central to a business, hence why errors in spreadsheets can result in large losses or disastrous consequences for businesses.

Delft University analysed over 15,000 spreadsheets following Enron’s demise and found that 24% of all spreadsheet formulas contained errors.  755 spreadsheets had more than 100 errors in each spreadsheet.  This is a staggering figure, and shows the compounding effect that one error can have when the incorrect formula is utilised repeatedly.

Within UK businesses, 16% of companies have admitted to finding inaccurate information within their spreadsheets more than 10 times during 2014.  Who knows how many millions of pounds or margin percentages this could have affected for UK businesses?

The report, which was also featured in the Telegraph, cites a lack of standardisation as to how spreadsheets are used within a business, and the severe lack in training on spreadsheets as the main culprits.

Many businesses assume that all staff are competent in using Excel spreadsheets however competencies range drastically, and as spreadsheets are prone to being changed, saved and then sent out, it is very hard to instigate rigorous control over versions.

At C24, we regularly speak to customers who are struggling to manage hundreds of different spreadsheets that their businesses run on.  These spreadsheets exist in many different versions, and are saved by different users, with little knowledge over who changed what part of who is responsible for which spreadsheet.  This leads to inertia and confusion, and before long causes an results in an error that impacts the entire organisation.

We speak to our customers about instilling better data governance practices, through more controlled access to reporting; making it easy to view reports but putting in place standard processes to change and manipulate data to avoid errors.

Without a critical review of all of the different spreadsheets being used within your organisation, it is only a matter of time before data is lost, deleted or incorrect.  The report from F1F9 says that nearly one in five large businesses have suffered financial loss as a result of spreadsheet errors, and our increasing ability to share files quickly and easily will result in more widespread and less tangible user access across each organisation.  Without standard processes and best practices in place, this reliance on spreadsheets can quickly spiral out of control.

 

Image courtesy of R. Nial Bradshaw.


Specialist applications hosting provider, C24, delivers hosting for many of the top ERP platforms

June 16, 2015

Nucleus Research publishes its Leader Quadrant for ERP vendors, and C24 delivers hosting for many of the top right providers deemed as “Leaders” and “Experts” in their field.

C24 is a specialist applications hosting provider, based in the West Midlands.  They provide hosting for business critical applications from their two enterprise-grade data centres in the Midlands.  C24 specialises in ERP hosting, due to the complexities involved in designing, implementing and delivering hosted ERP solutions.

Nucleus Research highlighted a handful of vendors to be in the top right of their Value Matrix Quadrant for ERP, showing the brightest and best of the ERP vendor world.

C24 is specialised in hosting many of these vendors for clients across the globe, including, Microsoft Dynamics AX, Oracle JD Edwards, Oracle ERP and Epicor.  C24 delivers this hosting in partnership with specialist ERP consultancies who are expert in delivering the software layer.

The report from Nucleus Research showed that C24 is at the forefront of the ERP hosting industry, working with Leaders and Experts in the ERP arena to deliver secure, business-critical ERP hosting to clients of all sizes.

Head of Sales and Marketing at C24, David Ricketts, commented, “It is great to see so many of the vendors we work closely with to deliver specialised ERP hosting solutions are recognised as Leaders and Experts in their field.  This goes to show that C24’s strategy of working with a small number of focused ERP specialist partners to deliver bespoke ERP hosting is the right approach and recognised by the industry”.

 

About C24

C24 Ltd is a specialist managed service and hosting provider, with a focus on big data and business analytics.  We tailor our solutions primarily to sectors deploying complex ERP systems where we have particular experience and expertise.  C24 designs, manages and delivers critical business applications to over 100 countries for our global customer base.

Our focus on Enterprise Resource Planning (ERP) solutions means we partner with some of the world’s leading ERP vendors, across Microsoft Dynamics AX and JD Edwards, to deliver bespoke hosting solutions within our enterprise Midlands based datacentres.

 


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