|
Recovering From A Three-Alarm ERP Fire
|
| Written by Mel Duvall |
American LaFrance, a storied manufacturer of fire trucks and other emergency vehicles, is attempting to bring its operations back into full production after emerging from bankruptcy protection two weeks ago, on May 23.
The court approval of its reorganization ends a sorry chapter in its proud history, one which dates back to 1832 when it produced its first hand-pumped fire wagon.
In court papers, the Summerville, S.C. company says it fell victim to a botched enterprise resource planning (ERP) implementation – one that brought its operations to a standstill. Timing was also to blame, the company says, with American LaFrance (ALF), also struggling through a move into a new headquarters and a depressed market for emergency vehicles.
Details behind the troubled ERP implementation have not yet fully emerged. The company has so far refused to talk about the project with CIOZone or other media outlets.
But the lesson to be learned from ALF’s experience is clear.
ERP systems have been around for more than two decades and consulting firms like Accenture, EDS, and IBM have been involved in thousands of installations at large and mid-sized corporations. Yet, the ALF bankruptcy demonstrates that implementing an ERP system is still far from a routine operation.
Done right, and a company can expect to achieve significant operational and financial improvements, says Andrew McAfee, an associate professor with Harvard Business School who has studied the impacts of ERP systems on corporate performance. Done wrong, and it has the potential to turn an otherwise healthy company into one struggling for survival.
In many cases bad management or oversight of a project – by the supplier or the customer – can be as much or more to blame as the underlying technology, says McAfee.
“They are clearly very large, technical projects,” says McAfee. “But even more so, these are very complex, very threatening organizational change efforts. And that’s where most of these go off the rails.”
ALF is far from alone in having to deal with the aftermath of a troubled ERP implementation. In March, Waste Management sued German ERP software provider SAP. Waste Management says it spent more than $100 million on the SAP system and that it turned out to be a “complete failure.” See CIOZone article: Waste Management Sues SAP. Waste Management is seeking to recoup its expenses and receive punitive damages. An SAP spokeswoman says it is company policy to not comment on pending litigation.
Those examples can be added to a long list that includes Hershey Foods, Boeing, Dow Chemical, Dell Computer, Nike, Whirlpool, and FoxMeyer, all of whom have suffered to varying degrees as a result of difficulties in implementing large-scale ERP projects.
The bottom line is although ERP systems are now considered a relatively mature technology, they cannot be taken lightly. The potential impacts of a poorly planned and executed implementation are still just as dangerous as they were two decades ago.
Over the next few days, CIOZone will take a closer look at what went wrong at ALF and its road to recovery.
|
| [ Back ] |
