INF70005 | Project Management | Hershey ERP Implementation Project

Introduction

The success and the failure of a project depend on a number of criteria and therefore it is essential to identify the process by which the project’s success and the failure of the project can be identified. A project can be success from the perspective of project management but may not be a success on basis of the end product that is developed (for example, the Millennium Dome project in London). Alternatively, a project can be a success on basis of the end product developed but may not be successful from the perspective of project management (for example, the Sydney Opera House Project) (Flyvbjerg and Budzier 2013). The aim of the report is to analyze the ERP implementation project by Hershey and to analyze the reason behind the project being a leading example of project failure (Lemon et al. 2002). This project has been a failure from both the perspective of the project management and from the perspective of product that is developed. The following sections of the report discuss the project and the company background and the standard criteria that are being chosen to analyze the success criteria for the project.

1. Project and Company background

Hershey was founded in the year 1894 by Milton S. Although chocolate was a luxury product, S Milton made it affordable for everyone. Hershey Company produces chocolates and other snacks and it is one of the largest manufacturers of the world. Apart from chocolates it also manufactures cookies and other baked products. With an exponential growth of the business of Hershey, in the year 1996, it embarked on the implementation of ERP with an aim of upgrading its patchwork and the legacy IT systems. There were a number of reasons why the project failed. The Hershey’s ERP project is a leading example of an improper project management. The output of the project was even more disastrous that resulted in considerable decrease in the price of the shares of the company. A project can fail because of a number of reasons. However, this was the case of a improper planning and inefficient management of the project. In majority of the software projects, testing is an important phase that unveils the bugs in the project. The following section discusses the criteria of success or project failure.

2. Standard Criteria of Project Success or Project Failure

Project management can be described as a collection of tools, techniques and diverse resource that drives a project towards success. Project management helps in accomplishment of the unique and the complex tasks. It is necessary to define the criteria of project success from the view point of both project management and the end product that is developed (Obeidat and North 2014). One of the success criteria of the project when it is in the delivery stage is to implement the project according to the plan. Although 50 years back, the cost, time and quality of the project was enough to determine the success of a project. However, the different authors have opined that although the cost, time and quality can be considered or used as a success criterion, it cannot be consider exclusive in determination of success. The perception of project success changes with person. The success criteria of the project should be predetermines and should be agreed with the stakeholders. Generally the project manager is empowered with the flexibility of dealing with the unforeseen circumstances that might arise in a project (Mir and Pinnington 2013). Therefore, one of the success criteria of the project is to fulfill the demands of the stakeholders or to implement the project in a way defined by the stakeholders of the project (Burke 2013). This criteria of project success is however subjective and may not be considered a success criteria of complex projects as in such project it almost becomes impossible to achieve stakeholders satisfaction. Another success criterion of the project is accessing the level of collaboration in the team. The lack of collaboration within the team often considered as a reason of failure of the project. Therefore, accessing the project by the level of collaboration is considered to be the success criteria of the project (Duncan 2004). Apart from this, there are a number of other success factor themes which are, Time management, identifying and agreeing on the objectives, satisfaction of the stakeholders, completion of the project within a set budget, focus and competencies of project manager, strategic benefits of the project and support from the top management (Larson et al. 2014). Any one theme cannot drive a project towards success. A combination of the identified themes can drive the project towards success (Cleland and Ireland 2004). Time, budget and scope of the project are considered three most important criteria of project success. Along with the time, budget and scope, support from the stakeholders and stakeholders’ satisfaction is considered to be an important criterion of the project. The ERP implementation project of Hershey will be evaluated on basis of these identified criteria of project success.

3. Justification of the chosen criteria

A number of success criteria has been identified that will help in analyzing whether the ERP implementation is an example of success and failure of the project. The choice of these criteria is justified as the scope, time and budget is considered the most significant aspects of project implementation. Along with that, it is essential to consider the customers’ satisfaction in evaluating the success of the project (Atkinson 1999). If the project’s scope is unclear, it is difficult to achieve the success of the project. Similarly a project will not be considered as a success if the project is not completed within the scheduled budget or within a scheduled time. The time, budget and the schedule of the project are the accessing criteria of project success from the perspective of project management. However, it is essential to evaluate whether the project that has been implemented has been a success from the view point of the customers or from the view point of the stakeholders involved with the project (Davis 2013). These identified success criteria will be used to analyze the project of ERP implementation by Hershey.

4. Critical Analysis of ERP implementation by Hershey

Hershey is one of the leading chocolate manufacturers across the world. With the increase in the size of the business, Hershey needed an efficient and reliable logistic system to carter the large no of seasonal requirements (Marchewka 2014). At that time the company was running on legacy system and with the impending problems with the system, it chose to replace the legacy system and implement a completely new system. It was not a problem to implement an ERP system; however, there were certain issues with the implementation approach of this system.

The implementation time needed for the project was at least 48 months. However, the project was tried to be implemented in a very constricted time (Harrison and Lock 2017). Enterprise resource planning system is complex software which could not be implemented in a constricted timeframe (Thomsett 2002). Hershey wanted to develop the system within 30 months in order to roll the Christmas orders through the new system.

In order to implement the system in a constricted time, the project management team sacrificed the system testing for the sake of completing the project within a scheduled time. Time is  the significant success criteria of a project; however, implementation of the project in an unrealistic timeframe never results in project success. Testing phase of the projects are safety nets that should not be compromised in any project. The implementation team of Hershey cut the critical system phases mainly to roll out the system before Halloween and Christmas. Therefore it can be said that with an improper time approach, the project management team of Hershey had an improper scheduling as well that resulted in the failure of the project.

The EPR system was roll out in 1999 without undergoing the testing phase. However, certain unforeseen issues prevented the orders from flowing into the system (Nicholas and Steyn 2017). The system was released and went live on July 1999; however certain unforeseen issues prevented the flowing of orders in the new system. The ERP system proved to be ineffective in processing a $100 million worth of kiss and jolly Rancher orders. This was indeed a significant example of project failure.

Hershey failed to outline the scope of the project as well. It underestimated the time that would have required implementing a complex project of ERP. It was unreasonable and illogical for Hershey to expect that the untrained employees would be able to make a correct use of the ERP system (Schwalbe 2015). Had the project been implemented in the time of slower business periods and not in the peak time of the business, the company would have not suffered such a huge risk along with the reputation risk.

It was too late for the Hershey to identify the problems with the system. This is because the initial roll out appeared to be quite smooth but the problems started penetrating with the order fulfillment and processing. However, at the time the problem could be detected, it was practically impossible to deal with the fault system as it was the busiest business period of Hershey. According to success criteria of the project that has been identified, time and schedule of the project are two important criteria of the project’s success. The project management team of Hershey failed to implement the project according to the success criteria of the project. The need for management of the project in an accurate manner was high in this case since the time allocated for the project was quite constricted.

Another major success criterion of the project is the budget. The ERP implementation project of Hershey did not go over budget; however, the cost of fixing the bugs in the system after the project failure was huge. Another reason behind the failure of the Hershey project is that it chose a big bang approach of project implementation. This project implementation approach was not suitable for implementation of such a complex project like ERP (Fonseca et al. 2016). Therefore it can be commented that the ERP implementation project of Hershey was a failure from the perspective of three main success criteria of the project which are time cost and budget.

Another success criterion of the project that has been identified in the previous sections is the satisfaction of the stakeholders. It is seen that followed by the failure of the project, the company suffered a huge loss. The company’s stock decreased drastically as the faulty ERP system could not supply the ordered products on time. This was a situation of huge reputational risk for the company. Since none of the bulk orders could be submitted on time, the company lost their credibility in the market. The retailers associated with the company complained about the persisting problems of irregular supplies from Hershey. Followed by the failure of the ERP project, Hershey lost the precious shelf space in the market as there was a huge competition on the market. The failure of supplying the bulk Christmas order lead to a huge reputational risk as not only the short term sales but also the long term sales were affected by the ERP implementation failure. Hershey was not able to send the consignments on time due the problems associated with the processing and manufacturing of the orders. On the other hand, there was a piled up inventory items in Hershey. This resulted in the decrease of the stock price of the company indicating that the project’s stakeholders were not satisfied with the project. Thus on basis of the selected success criteria of the project, the project is considered to be a leading example of the project failure.

Conclusion

The report discusses case of ERP implementation project of Hershey. The project was implemented on constricted schedule that was one of the significant reasons of failure of the project. The background of Hershey and their ERP implementation project was discussed in the report. The case is an example of improper project management and improper decision making. There are a number of criteria that determines the success and the failure of the project. The critical factors of project success are discussed in the report and it is evaluated that time, cost and schedule of the project are the major success criteria of the project. Along with the time, cost and schedule of the project, the satisfaction of the stakeholders is another important success criterion of the project. The project was analyzed on basis of the identified success criteria of the project and the project was found to be a case of failure. Another reason behind the failure of the project was choosing an inappropriate method for implementing the project.

Recommendations

The recommendations for ensuring that the implemented project is a success are as follows-

1. It is needed to identify the scope of the project before implementation.

2. It is needed to choose a proper implementation approach for execution of the project successfully. The ERP implementation project of Hershey failed mainly because a Big Bang Approach was chosen for implementation of the project.

3. It is necessary to set a realistic project schedule for the implementation of the project in order to ensure successful execution of the project.

4. It is essential to plan the project in an effective manner so that the project can be implemented in scheduled manner.

The above recommendations are made in order to ensure that the project is implemented in a successful manner.

References 

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Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.

Cleland, DI and Ireland, LR 2004, Project manager's portable handbook, 2 nd edition, McGraw-Hill, New York. Coronado, RB and Antony, J 2002, ‘Critical success factors for the successful implementation of six sigma projects in organisations’, The TQM Magazine, vol. 14 no. 2, pp.92 – 99.

Davis, K 2013, Different Stakeholder Groups And Their Perceptions Of Project Success, International Journal of Project Management, accepted 5 th June currently in press, JPMA-01512, pp. 1-13.

Duncan, WR 2004, ‘Defining and Measuring Project Success’, Project Management Partners, viewed 16 March 2017, https://eprints.usq.edu.au/346/1/DependentVariableArticleV8.pdf

Flyvbjerg, B. and Budzier, A., 2013. Why your IT project might be riskier than you think. arXiv preprint arXiv:1304.0265.

Fonseca, L., Ramos, A., Rosa, Á.L., Braga, A.C. and Sampaio, P., 2016. Stakeholders satisfaction and sustainable success. International Journal of Industrial and Systems Engineering, 24(2), pp.144-157.

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Marchewka, J.T., 2014. Information technology project management. John Wiley & Sons.

Mir, FA and Pinnington, AH 2013, Exploring the Value of Project Management: Linking Project Management Performance and Project Success, International Journal of Project Management, accepted 14th May currently in press, JPMA-01545, pp. 1-16.

Nicholas, J.M. and Steyn, H., 2017. Project management for engineering, business and technology. Routledge.

Obeidat, M. and North, M., 2014. A Comparative Review of Information Technology Project Management in Private and Public Sector Organization. [email protected] Kennesaw State University.

Schwalbe, K., 2015. Information technology project management. Cengage Learning.

Thomsett, R 2002, Radical project management, Prentice Hall, Upper Saddle River, NJ.