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The failure of HP's ERP implementation

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  1. Avoidance of the problems
  2. Organisational Problems
  3. Project Management Problems
  4. Possibilities and Threats in the HP implementation project
  5. Possibilities
  6. Threats

In June 2004, Hewlett Packard started the implementation of a new Enterprise Resource Planning Software in its North American Enterprise Servers and Storage (ESS) division. HP, known for its expertise in a lot of product fields and consulting capabilities, especially in the segment of SAP ERP implementations, faced several severe problems during the execution of the project.
After two months, the result of the migration of the new ERP had a decrease in revenues of about 5 percent (total financial impact: $160 million) during the third quarter compared to the same period of the previous year. The initial estimation of the cost by AMR Research has been $30 million.
Two questions were raised concerning this project. On the one hand, whether the problems and aspects which endangered the project could have been avoided and on the other hand, what possibilities and threats can be assessed in the implementation of the project? The following two sections of this case study will answer these questions.
While the question about the potential avoidance of the problems discusses HP's weaknesses from an internal point of view, the second question discusses the opportunities and threats from an external point of view. The answer to these questions can be given by accomplished SWOT-Analysis.

[...] The ERP implementation project requires an accurate communication to ensure the exact and prompt completion of the project. These requirements were fulfilled by the HP team, so that communication training or at least a precise plan about the knowledge and information transfer should have been developed. The requirement definition for the project leader was also not accurate. The project leader has to be objective and must have the ability to plan the project precisely, while being able to handle the difficult corporate culture problems. [...]

[...] The failure of the ERP implementation might easily lead to a bad reputation especially in the field of consulting. If a company offers consulting services in the ERP implementation market and is not able to implement its products in its own company, customers will start thinking about the quality of service offered by the company. It is very bad for the business; HP had enough experience in the ERP field and still was not capable to implement it efficiently. This bad reputation might lead to a loss of customers and a decrease of contracts. [...]

[...] Project Management Problems Next to the corporate culture, which is a precondition for the well execution of the project, project management is probably the most important task during an ERP implementation. experts opined that business evolution of ERP was more about project management rather than software tools.?[6] The most important steps to implement an ERP successfully are: 1. Defining requirements 2. Developing a plan 3. Implementation with technology integration and organize user training[7]. In this context, it is again necessary to identify the problems regarding these aspects and to find solution to the problems. [...]

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