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The Development of Enterprise Resource Planning Systems
• Unless a large project such as an ERP installation is promoted from the top
down, it is doomed to fail; top executives must be behind a project 100
percent if it is going to be successful. 41
• A recent academic study attempting to identify the critical success factors of
ERP implementations showed that a good project manager was critical and
central to success of a project. In addition, training was crucial—along with a
project champion, that is, someone who might not be in the CEO role but
who brings enthusiasm and leadership to a project.
• ERP implementation brings a tremendous amount of change for users of the
system. Managers need to effectively manage that change in order to ensure a
smooth implementation.

Many ERP implementation experts emphasize the importance of proper education
and training for both employees and managers. Most people will naturally resist changing
the way they do their jobs. Many analysts have noted that active top management
support is crucial for successful acceptance and implementation of such company-wide
changes.
Some companies willingly part with funds for software and new hardware, but they do
not properly budget for employee training. ERP software is complex and can be
intimidating at first. This fact alone supports the case for adequate training. Gartner
Research recommends allocating 17 percent of a project’s budget to training. Those
companies spending less than 13 percent on training are three times more likely to have
problems with their ERP implementations. The cost includes training employees on how to
use the software to do their job, employees’ nonproductive downtime during training,
and—very importantly—educating employees about how the data they control affect the
entire business operation.
Nestlé learned many lessons from its implementation of an ERP system. Its six-year,
$210 million project was initially headed for failure because Nestlé didn’t include on the
implementation team any employees from the operating groups affected. Employees left
the company, morale was down, and help desk calls were up. After three years, the ERP
implementation was temporarily stopped. Nestlé USA’s vice president and CIO at that
time, Jeri Dunn, learned that major software implementation projects are not really about
the software, rather they are about change management. “When you move to SAP, you are
changing the way people work…. You are challenging their principles, their beliefs, and
the way they have done things for many, many years,” said Dunn. After addressing the
initial problems, Nestlé ultimately reaped benefits from its ERP installation.
For many companies, it takes years before they can take full advantage of the wide
variety of capabilities of their ERP systems. Most ERP installations do generate returns,
and news coverage now focuses on how companies gain value from their existing systems
or are upgrading and adding functionality to their existing ERP systems. Del Monte Foods
needed to meet Walmart’s and Target’s requirements for package tracking using radio
frequency identification devices (RFIDs), so approximately a year after its ERP system
installation, the company tied its RFID applications into its existing SAP platform and is
working to make its supply chain more efficient.

The Continuing Evolution of ERP
Understanding the social and business implications of new technologies is not easy.
Howard H. Aiken, the pioneering computer engineer behind the first large-scale digital

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