Table of ContentsIntroductionTask 1: Identifying Failure TypesArticle 1: The FoxMeyer Drug Bankruptcy: Was It an ERP Failure?Article 2: Review of the ERP Process ERP implementation based on a failure case. Task 2: Identify critical failure factors. Article 1: Bankruptcy of the drug FoxMeyer: was it an ERP failure? Article 2: Examination of the ERP implementation process based on a case of failure. ' bankruptcy: was it a failure of the ERP? Article 2: Examination of the ERP implementation process based on a case of failure.ConclusionIntroductionThis assignment is essentially a comparison between two journal articles to understand the procedures that were used in the implementation of new ERP systems in the two different companies discussed in the respective reviews. From the list provided, I chose “The FoxMeyer Drug Bankruptcy: Was It an ERP Failure?” by Judy E. Scott and “Examining the ERP Implementation Process from a Failure Case” by Ada Wong, Harry Scarbrough, and Patrick Chau. The context of the new ERP system requirements in both cases is different. Timelines and geographic locations are also different. By choosing these two, I hope I have brought a touch of diversity. Following the requirements of the assignment, ten other journal articles are also referenced, all discussing how ERPs have failed in various companies in different countries. Surprisingly, most of them highlight human and managerial factors as reasons for IS failure rather than technical factors. For the critical factor analysis, I used both the framework of Tony Feghali and Imad J. Zbib, 2007, as well as that of Schmidt et al. (2001). The APA Sixth Edition format was used to reference these ten articles. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Task 1: Identify Types of Failure Article 1: The FoxMeyer Drug Bankruptcy: Was it an ERP Failure? Interaction failure: These failures are mainly due to lack of user satisfaction. When users cannot use the designed system effectively and does not meet their expectations, they tend to abandon the system. In the case of FoxMeyer, workers feared losing their jobs to automation. The morale problem among the warehouse workers was evident on all sides. The first step of closing three warehouses to automate one warehouse itself threatened them. Workers feared losing control of the warehouse and processes. They started damaging inventory, not fulfilling orders, and making errors when the system had problems handling a huge volume of transactions. They lacked internal skills and competent staff. FoxMeyer relied primarily on external consultants to implement the R/3 system and integrate the ERP. Lack of training on the new systems caused worker resistance to plummet and led to a high attrition rate. There was no knowledge transfer initiative from external consultants, neither from senior management nor from warehouse workers. The external consultants were themselves inexperienced and familiar with the system. The interaction was zero level between the newly implemented system and the warehouse employees. Process Failure: The budgeting and estimating method used by FoxMeyer was not the best. Lack of management control over SAP R/3 implementation and warehouse automation. They tried to create two interfacesdifferent. The design implementation of two different new systems, for the company's most important business systems, ended in massive failure at the same time. Management overestimated R/3's capacity in 1994. The volume of transactions that SAP R/3 could handle was significantly lower than the volume of transactions handled by FoxMeyer's original mainframe system. They have also fallen behind in controlling the risk framework associated with heavy automation and project management. Their budget estimate also doesn't seem any safer ($65 million), because FoxMeyer presented itself as a cost leader, they should have maintained their budget in such a way that they could maintain at least a small margin. The deadline they met was unrealistic, they set 18 months to complete the entire implementation. The results initially set for the new system were later changed to achieve extremely high standards, which was not possible given the stage of implementation and other aspects of the business. SAP project capacity has also increased significantly. Both of these clearly indicate the loose controls maintained by management over the project scope. Adapting relatively new technology, when it is unproven, has also increased risk for the business. By adapting these new measures, they failed to educate users (sellers and workers). Failure to match: This failure is attributed more to the management perspective. “It wasn’t a failure of automation. This was not a failure of commercial software per se. It was a failure of management.” FoxMeyer's senior management was too emotional to get involved in the Delta III project. FoxMeyer CIO Robert Brown felt a high degree of personal responsibility, saying, "We're betting our company on this." » The investment made in this project was far too high for a company like FoxMeyer, especially when they began implementing changes to two vital company systems. Top management's dedication was far too high to be practical while lower management showed zero percent. Changing project direction results in high project costs. The filing also states that there was a warning from Woltz Consulting regarding the project's completion timeline, but management nonetheless insisted on an 18-month timeline. They also expected a savings of $40 million per year. This shows how unrealistic the planning target was. While the vendors, Anderson Consulting and SAP, did not cancel the project assuming that abandoning the project would defame their prestige and result in low sales in the future. Delta III's profits were overestimated by both senior management and suppliers. Article 2: Examination of the ERP implementation process based on a case of failure. Interaction failure: Consultants hired for ERP implementation and mid-level and operational staff could not synchronize well due to language barrier. Even though the project manager was aware, he did not help much and thus lost two months of implementation period. This shows the lack of motivation of the staff. The features needed for the new system were lacking in many ways. They have not tried to address the need to understand their current business processes and the capabilities of the future ERP system. The staff members involved in the business then did not have essential experience as a business analyst and therefore the needs of the business were not being met withprecision. Staff leaving the company due to complexity is how they abandon the system. Process failure: The resources needed to fully implement the new system proved insufficient. The allocated budget was less than that required for full ERP adoption. The deadline was initially set at six months by senior management, the project manager and the consultants. It was clearly insufficient. In addition to the lack of budget and time, complexity has increased with the nature of new technologies. The consultants were not knowledgeable enough about the technology to configure the system, which led to many bugs in the system, which ultimately contributed to the project being abandoned. The project had to struggle with fewer human resources to cope with an increased load. Staff were unable to cope with the complexity and pressure. Some staff members have resigned due to high stress and workload. The company therefore had to hire new consultants and train them on this new ERP system. This again led to more time and budget than expected. Failure to match: Senior and middle management focused more on the benefits of the new ERP system and ignored considering the drawbacks or setbacks that the company may face due to this new system. system. All levels of management maintained unrealistic expectations and did not consider potential risks or the need for business process re-engineering to accommodate the new ERP system. Even before the system was completely ready, management went live with the assumption that they would be able to resolve the issues incrementally, which turned out to be a poor decision. If these are the slip-ups committed by management, the salespeople have also followed them. Vendors did not perform enough testing on the system before delivering it to the company. Task 2: Identify critical failure factors. Article 1: The bankruptcy of the drug FoxMeyer: was it a failure of the ERP? Introduction of new technologies (technology factor) The technologies used in Delta III were new technology at that time. Depending on the case, suppliers did not have enough time to carry out extensive testing before introducing them to the market. FoxMeyer, unfortunately, was in the throes of serving as a prototype platform when they decided to implement two different new systems simultaneously, for the company's most important business systems. It would have been better if they had at least waited for the technologies to prove themselves in the market. Or, they could have tried implementing one technology after another to see how well the first one works for them. Poor change management (PM related factor) FoxMeyer mainframe production was 420,000 customer orders per night. The new system could only process 10,000 orders per night. Before putting the system into practice, they did not consider the actual needs versus the capacity of the system. During the initial implementation phase itself, they tried to incorporate high volume production without changing the business environment. Additionally, with the enormous costs associated with the new system, their cost leadership focus has changed dramatically. They did not try to manage change effectively. Insufficient staffing (PM related factor) Lack of internal skills was another key reason for project failure. FoxMeyer depended on external consultants for the implementation and operation of the ERP. They did not train staff ininternally nor hired professionals with knowledge of systems similar to those of the company. Without adequate staff, the lack of commitment from external consultants was evident. This too, the external consultants were inexperienced, but FoxMeyer had to pay high consultant fees for inexperienced advice. If they had experienced or trained staff for both systems, the process of integrating the new system and the old system would have been easier and more useful. Poor quality of IS planning (i.e. poor estimation, monitoring, planning) (management factor) The expectations of the senior management level on Delta III were unrealistic in every way, whether it s It's about time approximation, production budget or profit planning. Even after noticing that the loss was happening at different stages, they believed that after some time they would break even and then start making profits. They could have at least thought twice. Consulting firm Woltz had given numerous warnings about their tight deadline, but FoxMeyer chose to stick with the 18-month plan and had to surrender to the unrealistic timetable.Article 2: Review of the implementation process of ERP in case of failure.Lack of team skills (Organizational factors)Communication plays a vital role in any project/business. In fact, this should be the first step in building a new project. This allows you to build a team, exchange ideas and understand things from different perspectives. Here, the consultants and staff failed on this very point. The level of communication between the number of consultants and project team members was very low during the initial implementation phase. The consultants were hired from India and spoke English fluently but with a strong Indian accent that staff could not understand. Due to this, they could not understand the concepts, features and usage of the ERP system for daily operations. Without understanding the basics of new technologies, staff could have experienced immense pressure and vulnerability. The project manager who was aware of this situation did not take much action, resulting in a loss of two months out of the six-month turnaround time. This once again shows the team's lack of skills on the manager's side. Inadequacy of the technical environment (Technical Factor) The quality of service provided by the consultants was poor. They had minimal expertise in Hong Kong market requirements and the new ERP system. They failed to conduct proper market research to understand that the business requirements are different from India. Instead of identifying the gap between the current business system and the potential features of the ERP system, they implemented the exact version of the Indian branch. The need for business process engineering was not considered at all. The hired consultants also lacked business analyst experience. They could not communicate their ideas on ERP concepts to operational staff due to their strong linguistic accent. The suppliers of the new system did not carry out enough testing before releasing the system to the market. This also made the technical environment very unsuitable for the implementation of a new IS. Unrealistic expectations from management (cultural factor) Management, being so optimistic, snubbed the disadvantages and undesirable impacts that the ERP system can bring on the company. They ignored the need for business process reengineering to master.