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SAP ERP Project Failures Lessons Learned and Mini Case Studies 2

December 20th, 2010 by
SAP ERP Project Failures

SAP ERP Project Failures

The following SAP ERP project failures cover the importance of testing, change management, training, senior management involvement, scope management, and quality of the consultants provided by ERP implementation vendors.

With the exception of the inept, incompetent, or otherwise unqualified “con”sultants provided by some system integrators it is important to note that these failure overviews illustrate many of the points made by Steve Phillips in the post on Software Consulting Firms and Clients Myths and Half Truths .

There Mr. Phillips lays out pretty significant areas where the business must chart and then control their own project destiny.

For a table of the primary areas of responsibility for end customers to ensure project success please see SAP Success Factors for Vender Selection – Responsibility Matrix 2 .  The table developed there is derived from the academic literature and my own experience.  I have added my opinion on how the responsibility for those success factors is divided between the customer and the SAP implementation partner or vendor.

Continuing on the series of SAP ERP project failure overviews, here are three more.

SAP ERP Implementation Failure Overviews – part 2

Levi Strauss & Company – SAP Failure? (2008)

  • After go-live shipping was prevented for one week and there were legacy system integration issues.  Levi was an interesting case study because many industry experts believe the SAP implementation was used as an excuse for broader economic issues affecting Levi.
    • One week of delayed deliveries was insufficient to explain the overall drop in financial performance (approximately 98% decrease in revenue could not be sufficiently tied back to the SAP implementation).
  • Levi Strauss has since worked through and resolved the implementation issues and SAP is running smoothly.

Lessons Learned: Ensure that all legacy system interfaces are carefully tested before going live. Don’t use SAP or enterprise application implementations as an excuse for poor economic or poor overall market conditions.

Waste Management Incorporated – SAP ERP Failure Overview (2008)

  • Waste Management claimed in its lawsuit that they “wanted an ERP package that could meet its business requirements without large amounts of custom development…” They also claimed “SAP used a ‘fake’ product demonstration” and “SAP’s technical team had ‘recommended that SAP deliver to Waste Management a later version of the software than the version SAP in fact delivered’.” They also claimed SAP knew the software was “unstable and lacking key functionality…” [FN1]
  • SAP claimed that its application could meet the company’s needs without modification.
  • SAP claimed in its legal counterclaims that “Waste Management didn’t ‘timely and accurately define its business requirements’ nor provide ‘sufficient, knowledgeable, decision-empowered users and managers’ to work on the project.” [FN1]

Lessons Learned: First and foremost any organization or company who implements SAP, ERP, or other enterprise software applications must ensure they are in control of their own project. This would generally fall under numerous critical success factors: business process engineering / change management, scope management, senior management support, formal project plan and schedule, consultant experience, implementation strategy, and amount of custom coding.  Delivering a project with standard system functionality, and on time / on budget requires strong leadership from both the customer and the integrator.  For additional insight and a somewhat different perspective please see the post where SAP and Waste Management Finally Settle .

Los Angeles Unified School District – SAP ERP-HR Failure Overview (2007)

  • Fake Consultants / Trainees / unqualified consulting resources on the project
    • “[I]t appears Deloitte (the implementation partner) brought unqualified resources (i.e., personnel) to the project.” [FN2, pg. 28].
    • I personally encountered one of these fakes as a project manager for another company looking for a workflow resource.  Their ABAP and SAP skills were horrible but they got a great reference from LAUSD.
  • Lack of cooperation with the Teacher’s Union and no user buy in.
    • This is a project planning and change management issue; the company and the integrator bear this responsibility.
  • Has since worked through and resolved the implementation issues and SAP is running smoothly.

Lessons Learned: SAP implementation vendors and partners may allow margin desires to override quality to the point of presenting significant project risks.  It is critical to evaluate every consultant any integrator brings onto your project.  There are just too many fakes in the marketplace that do not have proper background checks.

======================

[FN1]  SAP, Waste Management settle lawsuit.  Business Week. May 3, 2010.
http://www.businessweek.com/idg/2010-05-03/sap-waste-management-settle-lawsuit.html (retrieved 5/11/2010)

[FN2]  Bhagwani, A. (2009). Critical Success Factors In Implementing SAP ERP Software, University of Kansas Graduate School. http://www.r3now.com/literature/2009-Bhagwani-SAP-Project-Success.pdf




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SAP System Vendor Project Success Criteria & Factors 5

November 29th, 2010 by

High Performance SAP ProjectThis is the final post in the series on SAP project shared success criteria.  Doing this entire topic justice has been more of a challenge than I had originally anticipated and at some point I will put it all together in a PDF e-book. 

This series leaves you with a lot to digest but over the years these items generally make up the foundations for a very successful project that is able to transform your business.  This series has been challenging but interesting and I am glad it is complete. 

In a few more weeks I will be coming back around to try to wrap up my series on SAP reimplementation for little more cost than a technical upgrade.  That one turned out to be more challenging than I had originally expected.  Until then, here is the final installment in this series on project success criteria.

No. SAP or ERP Critical Success Factor Company Integrator
5 Experienced SAP consultants   A
7 SAP implementation strategy z A
8 SAP project management A z
9 SAP tools, templates, and resources   A
10 SAP scope development z A
11 SAP scope management A z
12 Strong SAP project and business communication (inward and outward) A z
13 SAP change management A z
15 Sufficient SAP training (user and project team training) A A
16 SAP system vendor and customer trust   A
17 SAP system design decisions z A
18 Amount of custom ABAP or other SAP coding z A
19 Appropriate SAP software configuration (system settings) z A
20 SAP system change control process   A
21 SAP data analysis and conversion A z
22 SAP test planning A z
23 SAP test development z A

Legend

A = Primary Responsibility for the success factor
z = Shared but secondary responsibility for success

21.  SAP Data Analysis and Conversion

One of the major activities of an SAP project is the data analysis and conversion. On many projects there are too many new data requirements or data changes needed after the system goes live.  One way to avoid so many of the data correction in a live production system is to ensure that you have sufficient integration and cutover testing.  We will look at testing in a moment.

The primary responsibility for data conversion is generally on the customer.  Customer primary responsibilities include:

  • Identifying legacy and other data sources
  • Cleaning or scrubbing the data
  • Ensuring the converted data meets business processing requirements
  • Defining sufficient test plans to validate data is properly converted
  • Provide sufficiently skilled employees to work the data
  • Make as many data corrections as possible in legacy systems before conversion
  • Ensure there are sufficient hardware resources available for meaningful data conversion tests

I’ve developed a short list of the common data conversion risks as adapted from the SAP ASAP 7.0 Data Migration and Risk Assessment Template.  That template, provided by SAP, contains a sample issue and risk log, and includes some suggestions on how to manage the following common data conversion risks:

SAP Data Conversion Project Management Risks

  • Improper estimates of data migration effort and activities
  • Client side skills gaps on data migration
  • Deferring data corrections until after go-live
  • Knowledge of and access to data sources
  • Insufficient or incorrect change control processes
  • Insufficient participation from key functional project team members (client and consulting)
  • Improper management of dependencies between functional areas or modules. 

SAP Data Technical Conversion Risks

  • Lack of agreement on system of record, data definitions, standards, transformations, conversion methods, etc.
  • Data migration tool(s) not well defined or settled
  • Hardware sizing and data volume are inconsistent
  • Requiring historical data conversion (rather than using legacy systems for historical purposes)
  • Multiple legacy sources of data for single master record loads in SAP.
  • Data gaps – no corresponding data record for SAP conversion
  • Different data structures between legacy systems and SAP.  For example SAP may have structured hierarchies and the source data may not.
  • Poor data quality – errors, duplicates, inconsistent use of fields

Preparing conversion programs, or more specifically, using SAP’s variety of conversion tools and resources is a vendor responsibility.  Together with that the vendor, who has set up the system with the master data requirements is also responsible for providing data load templates as well.  Further the vendor’s functional consultants must participate in the data conversion design and development activities because they are the ones that set up the system and know the master data requirements better than anyone.  The only exception to this is if you decide to bring in consultants who do knowledge transfer to your implementation team and your own internal team does all of the system setup.

For an overview of the various data transformation methods in an SAP project please see the following post:

Planning For a Smooth SAP Go-Live: Part 2
http://www.r3now.com/planning-for-a-smooth-go-live-part-2

SAP Blueprint Master Data Requirements

As a final note, a system integrator should be able to provide a first pass at basic master data requirements by the end of the Blueprint phase.  In fact your SAP Blueprint should contain a technical blueprint section with significant amounts of detail. 

  • It should include each master data type (Material Master, Vendor, Customer, Routing, Sales or Production BOM, Work Center, Chart of Accounts, Profit Centers, Cost Centers, etc., etc., etc.)
  • And it should include each master data SUB type, using just the Customer Master as an example it should contain the requirements of sub-data types, for example you may need Ship-To Customers, Sold-To Customers, Bill-To Customers, Payers, Agents, Freight Forwarders, Carriers, one-time customers, web shop or online customers, etc.  This type of breakdown and segmentation should be done for every data type so that you know what data conversions are necessary.  And this level of detail MUST be contained in a sufficient blueprint.
  • At the end of the blueprint, to ensure that you have all of the master data requirements covered as well, your system integrator SAP blueprint document should contain the specific details of every transaction data type.  That transactional data requirement will be a key part of the data conversion.  For example using the Material Master and inventory movements SAP provides the blueprint document should contain the specific types of inventory movement transactions you perform.  Simple goods receipts, goods issues to production, goods receipt from consignment stocks, issues to consignment stocks, scrapping, shipping / distribution goods issues, receipt into restricted / quality hold, move into unrestricted from quality hold, transfer from plant to plant, transfer from storage location to storage location, etc., etc., etc.

 If your SAP system integrator Blueprint does NOT have this level of detail then it is not sufficient to set up the system and perform the necessary master data conversion.  Further, if it lacks this level of detail you may want to fire your system integrator and demand a refund of at least part of what they bill.

By having this level of detail at the end of SAP blueprinting (process details, master data details, interface requirements, forms, reports, etc.) you can immediately move into setting up the system. If you lack this level of detail you may find yourself forever in design mode (revisiting normal blueprint requirements) and blowing both the budget and the timeline.

I suggest you add this summary of the type of detail you want by the end of the blueprint phase to your contract.

22.  SAP Test Planning

You will have to determine who needs to perform what testing, when, and where.  Together with that you will also want to use this as an opportunity to get both “power users” and non power users involved in the testing.  This becomes the early part of knowledge transfer as well as user acceptance testing.  Inevitably the additional resources from outside of the project team will discover gaps or items that might need to be addressed. 

The Test Planning responsibility is primarily on you as the SAP customer.  Your primary goal here is to ensure that every process you put in scope is represented in some type of testing script. For example, in your order to cash process you might want test scenarios that include credit processing with and without product returns; third party drop shipping to the customer direct from the vendor; pro-forma invoice processing and then follow-up commercial invoice processing; interfaces to and from various external systems; online order entry processing with and without manual intervention; backorder processing and sourcing from other facilities, etc.  At a high level you will be responsible for ensuring that you cover all of the key processes that need to be tested.

SAP Test Strategy and Testing Approach

  • SAP Test Management
    • Test planning, scheduling, and logistics / coordination
      • Identify users to perform testing
      • Identify who will coordinate testing activities
      • Location and equipment logistics for testing
      • Method for communicating test schedule to participants
      • Test data – common master “data sets” to use for testing.  This is different than the converted data testing.
  • Types of SAP Testing and Methods for Testing (whether manual or automated)
    • Unit testing (single transaction)
    • Business Process testing (unit test strings within the same functional module like SD, MM, PP, FI, CO, etc.)
    • Integration testing (Business Process testing including the integration points with other functional modules)
    • Interface testing
    • Data conversion testing (test the data load programs)
    • Converted data testing (test the converted data at performing various functions)
    • User Acceptance Testing
    • Regression Test
    • Batch Job testing (test batch programs, timing, and sequence)
    • Security Test
    • Performance / volume testing
    • Any positive and negative testing requirements for security or transactions
    • Ad hoc testing of unplanned variations and variants
  • Testing Toolset (various spreadsheets, or automation tools for building and managing the testing process).
  • SAP Test Reporting and Analysis
    • Test Metrics
    • Defect Management

Change Control Process (for an overview and details of the SAP change control process see SAP System Integrator Shared Success Criteria Evaluation 4 which focuses critical success factor on #20 on this list of “System Change Control Process”). 

As for a test script, I have included an example one which is a modified version of the standard options SAP provides as part of the older ASAP methodology.

EXAMPLE SAP TEST SCRIPT with Ad Hoc or Variant Section information.

23.  SAP Test Development

As for test development this is clearly a vendor primary responsibility.  Unless you use SAP’s integrated Solution Manager resources for testing this is probably one of the areas where you will have to rely heavily on your SAP partner. The reason this is primarily a vendor responsibility is that as an SAP customer “you don’t know what you don’t know.” 

Unless you have adopted an approach where you require the implementation vendor to act as pure consultants, where your own project team does all of the system setup, you will not know the detailed testing requirements.  As a result a vendor must be able to walk you through the transaction strings and dependencies.  They must be able to take the entire process-related solution they blueprinted from master data creation through cash processing and any interfaces or manual steps in between. 

Because of time, budget, and limitless possibilities there is only so much testing in a project.  These limitations create a requirement that only a “limited universe” of testing can be accomplished and SAP system integrators will usually require someone to sign off on those limited tests. 

There are a few things to beware of here:

1) When the tests have been “gamed” to support only a successful outcome and not to actually test the solution.

2) When a system integrator pushes back on testing variations that they may not have documented in the “formal” test scripts.

3)  Any vendors who engage in hard push back against additional ad hoc, variant, or converted data testing.  Unfortunately I have seen a couple of the major SAP system integrators KNOWINGLY push trash on their customers.

For a thorough testing program you should always ensure your tests include any of the custom development objects as well as manual processing steps.  For example, a thorough test process must include testing of any outputs (forms), interfaces, enhancements, and reports.  Data conversions should also be tested but may be done separately.  However, one strong word of caution here, once converted data is available, even if you do not do formal testing, be absolutely certain to do as much process testing as possible with the converted data.  Testing with converted data will reveal a number of potential problems that can be corrected or resolved before you go live.




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