Overview
The purpose of this assessment item is to identify causes of ERP implementation failure at Waste Management Company and provide possible solutions which can be used for future implementations.
Background to the Case Study
Be aware that the case outline below is brief. This has been done on purpose to challenge you to research and investigate the case as thoroughly as possible in order to mount and justify your argument. You should find the web useful in this regard. However, you are also required to investigate and use other sources including academic literature.
The Case
A Houston-based Waste Management Company (WMC) signed a purchase agreement for a new revenue management system (ERP) in October 2005 with a well-known ERP vendor SAP AG. In 2006, WMC filed a case against the ERP vendor SAP for a complete failure of a $100 million ERP software implementation. It also alleged that SAP executives participated in a fraudulent sales scheme by describing the Waste and Recycling version of its ERP application as “tested, working solution” and this product would be delivered within 18 months from the purchase date. However, SAP fired back, claiming that Waste Management violated its contractual agreement with SAP by “failing to timely and accurately define its business requirements” and not providing “sufficient, knowledgeable, decision-empowered users and managers” to work on the project.
WMC claimed it suffered significant damages, including more than US$100 million it spent on the project, as well as more than $350 million for benefits it would have gained if the software had worked as intended. In the end, SAP made a one-time cash payment to Waste Management under the confidential settlement's terms.
In general ERP vendors provide basic software that can be modified to suit existing business processes “OR” modify their own business processes to suit the proposed system. Claims made by WMC indicate that they were expecting SAP to deliver already developed product without realising that it was a prototype. As we are not clear about the facts, it can be assumed that SAP was planning to develop a customised solution to meet WMC’s needs, but failed to deliver a customised solution within 18 months, due to lack of support and information about current business practices at WMC.
Your Task
You have been asked to prepare a report identifying the causes of failure and recommendations to adopt a new ERP system.
You need to thoroughly research, mount and justify proposed solutions for successful implementation of an ERP system. Your report should include discussion and arguments with suitable evidence about the following:
a) Major causes of ERP implementation failure
b) Use of prototype in ERP selection process, benefits and challenges with converting prototype into a working system.
c) Detail the importance of Introducing an ERP that requires changing business processes to match the system functionality, or
d) Customise the software to match the business processes.
In justifying your argument you need to take into consideration the problems experienced by Waste Management Company. Successful arguments can be made both ways.
Your task is simply this: to present a persuasive and argumentative piece of writing in report form. The report should be directed at senior managers with a limited understanding of technology and ERP systems. The report should contain information pertaining to the risks and benefits of your selected option, from which you are expected to draw and justify your own conclusion.
Hints
Your report should follow the following structure:
Executive Summary
This is a concise summary of the purpose of the report. It includes brief recommendations / conclusions.
Introduction
This section describes purpose and structure of the report: it sets out how the report is to be presented and what will be discussed. You need to clearly state which option you will be arguing for.
Discussion
This section should begin with a brief outline the two options and what the key impacts of each would be. You should then present a detailed analysis of the risks and benefits of your preferred option. Suitable examples and information from academic and trade literature should be used to illustrate and support your discussion. The aim of the discussion is to prove the case for your argument: it is important that the argument and supporting literature is relevant. Remember, as you build your discussion, you need to build the argument for your preferred option.
There are a number of points that you may want to consider in order to fully explore the risks and benefits of your preferred option, including (but not limited to):
•Technical Benefits
•Organisational Benefits
•Cost Benefits
•Operational Benefits
•Future Benefits
•Implementation Challenges
•Technical Challenges
•Change Challenges
•Operational Challenges
•Future Challenges
Those students focusing on achieving very high marks may wish to explore some of the socio-technical impacts of the case. These may include issues relating to power, politics, control, culture and change.
This section may be broken into subsections.
Conclusion and Recommendation
This section should briefly summarise the facts established in the discussion.
It should arrive at a logical end-point. You need to clearly present and justify your recommendation(s). You should not introduce any new material in this section.
References
List all references used in alphabetical order (Harvard format).
Other Hints:
•The following are some useful search terms that may assist you in finding relevant literature:
Business Processes Reengineering, BPR, Enterprise System, ERP, Organisation Information System, System Implementation, Acquisition, Change, Customise.
•The following link provides some good general information on how to get started on a persuasive piece of writing.
•This can’t exceed 2500 words excluding introduction and references. There is no minimum or maximum word count for this assessment, however it is suggested you keep your report this is not a function of length. In other words, a longer report is not necessarily a better report.
• ASK QUESTIONS! Use the course forums to pose questions and seek clarification.