In this episode of "The Ungrowth Show," we explore the tale of how Hershey, the iconic chocolate manufacturer, experienced a major setback during their 1999 ERP and CRM implementation. Intended to modernize operations and streamline processes just before the critical Halloween and Christmas seasons, this ambitious IT project quickly turned into a logistical nightmare. The resulting chaos led to $100 million in lost sales, a 19% decline in quarterly profits, and disappointed customers nationwide.
Avoiding the Big Bang Approach: Embracing the Agile Parallel Approach
One of the critical lessons from Hershey's failed ERP and CRM implementation is the dangers of the "big bang" approach. This strategy, where everything old is turned off and everything new is turned on all at once, is a high-risk move that often leads to chaos, as it did for Hershey. The "big bang" approach leaves little room for error, and when things go wrong, as they did for Hershey, there's no safety net to catch the fallout.
In contrast, the Agile Parallel Approach offers a far more reliable path to success. This method emphasizes a phased rollout, where new systems are gradually introduced alongside existing ones. By breaking the implementation into smaller, manageable segments (often called Sprints), you allow for continuous testing, feedback, and adjustments. This approach not only mitigates risks but also ensures that any issues can be identified and resolved early, preventing them from snowballing into larger problems.
The Agile Parallel Approach also allows for greater flexibility and adaptability. As new business needs arise or unforeseen challenges emerge, the phased rollout can be adjusted in real-time, ensuring that the project stays on track and meets its objectives. This approach is particularly valuable in today's fast-paced business environment, where the ability to pivot and adapt is crucial to maintaining a competitive edge.
Hershey's experience serves as a cautionary tale for those considering the "big bang" approach. By choosing the Agile Parallel Approach instead, businesses can significantly reduce the risks associated with large-scale IT implementations and ensure a smoother, more successful transition to new systems.
A Sticky Situation: Halloween Without Hershey's
As the go-live date neared, Hershey’s systems were plagued with issues. The lack of adequate testing meant that when the systems were activated, they failed to process orders and manage inventory effectively. With Halloween just around the corner, Hershey found itself unable to deliver $100 million worth of products to retailers. Shelves were left empty, and the company’s most lucrative sales period was marred by operational failures.
Lessons from the Chocolate Meltdown
The Hershey case offers several critical lessons for companies undergoing similar IT transformations:
Avoid the Big Bang Approach: Implementing multiple systems at once is risky. A phased rollout with comprehensive testing can help mitigate these risks.
Set Realistic Timelines: Allowing adequate time for testing and troubleshooting is essential to avoid disastrous outcomes.
Ensure Vendor and System Compatibility: Proper planning and testing of all software components together can prevent integration issues that disrupt operations.
Navigating the Challenges of Large-Scale IT Projects
Hershey’s experience underscores the importance of strategic growth consulting in managing complex IT projects. By engaging experts in ERP and CRM implementations, companies can ensure that new systems are integrated smoothly, with thorough testing and effective change management practices. This approach helps prevent the kind of costly disruptions that Hershey faced and promotes sustainable, long-term growth.
Avoiding Ungrowth: The Hershey Lesson
Hershey’s CRM and ERP implementation failure is a textbook example of ungrowth—where poor planning and execution in digital transformation lead to significant setbacks. This story serves as a cautionary tale for businesses, emphasizing the need for meticulous planning, realistic timelines, and strategic vendor management to avoid similar pitfalls.
Conclusion
The tale of Hershey’s 1999 ERP and CRM implementation serves as a stark reminder of the complexities and risks involved in large-scale IT projects. What began as an ambitious effort to modernize operations and streamline supply chains turned into a $100 million nightmare that left the company reeling. The missteps—rushing into a "big bang" implementation, underestimating the importance of thorough testing, and setting unrealistic deadlines—ultimately led to significant financial losses and damaged customer relationships.
However, this story is not just about failure; it’s also about the valuable lessons learned. Hershey’s experience underscores the critical need for careful planning, the adoption of a phased, Agile Parallel Approach, and the importance of vendor management and system compatibility. These are the ingredients for success in any IT implementation, ensuring that technology truly serves to advance business goals rather than hinder them.
For companies embarking on digital transformations, the Hershey debacle offers a powerful case study in what not to do. By prioritizing strategic planning, realistic timelines, and comprehensive testing, businesses can avoid the pitfalls of ungrowth and instead achieve sustainable, long-term success. Hershey’s experience reminds us that while technology can be a powerful tool for growth, its implementation must be handled with care, precision, and a clear vision for the future.
In the end, avoiding the mistakes of the past is key to creating a sweeter future for your business—one where technology empowers rather than disrupts, and where growth is the natural result of careful, strategic planning.
