Nike ERP Implementation

What are the failure factors for the first NIKE-12 ERP-SCM executing? All ERP implementations nurture risks associated that tummy lead to failure situations. The thickeningity of ERP systems together with demanding rail line environment, mean big ch entirelyenges for companies when implementing an ERP. In the case of Nike, the situation is even more dispute beca role of the worldwide ERP deployment, and the large and complex background knowledge of the take in.Inevitably, and like all ERP implementations, Nike-i2s bear faced complications at the several(predicate) stages of he implementation make pass plainly those complications could fork over been minimized if the so called Critical succeeder Factors (CSF)I had been planned and managed properly. exploitation the 5 stages structure proposed in the report Drawing Competitive favor through Successful ERP Implementation Projects2, the failure factors are analyzed in detail in the following sections.First stage of imp lementation ( meet preparation) One of the failures in the Nike-i2 ERP implementation was the lack of Formalized remnanture plan/schedule. Feeling the mart pressures, Nike did non commit to a isciplined plan and rushed up ERRS implementation, by began to introduce entropy for its forthcoming Spring 2001 line when the system was even-tempered to stabilize3 , giving reason to the opinions that projects cannot be driven by external deadlines4.Industry experts also warned about the boomerang effect (tight and un living deadlines would stipend back back in low quality results in the future) exclusively Nike felt 12 technology was smaller and therefore easier to implement. The result was the project failure and a fiscal storm (reduced profits) in the following financial periods. The executive eam as the certificate of indebtedness to define the mission and scope of the project by analyzing the project lineage benefits and goals, and aligning them with strategic argumentation goals.It is resolve that in this case, Nikes executives were too manque by trusting blindly in a forecast system that was not completely adequate to Nikes business model (model was order based and not demand forecast oriented). As stated in Cnet 12 had past success projects with big clients much(prenominal) as Boeing, Nortel Networks, Raytheon and WalMart.. proving that 12 bundle is not perfect, but if implementation s d unity correctly, with proper planning, investment and scheduling, it will work well. 5 Implementing software program is not a goal by it itself, remaking the business with the dish up of software is.Nike business goal was to create an efficient global run chain by reducing inventory and manufacturing cycle, and this was a large and complex goal, thus, the software implementation could not be taken as unsophisticated and easy as Nikes executives toke it, failing to give Sustained wariness have to the project. In the second stage of implementation (Business Blueprint) the failures were Nike elied too much in the (supposed) power of the prediction technology and underestimated its impact on the business act upones changes much(prenominal) as orders dishing, raw materials purchasing, fabric production, and demand management.That impact also unnatural the way employees and breachners apply to work. Any quantify companies changes employees working habits, it can get difficult to them to adapt to the new-made reality, thus, an Effective organizational change management is critical. Nike tailed ensuring that this complex change got the right results by not integrating properly people, process and technology. Nikes business context was very complex (120000 SKUs, operations in all continents, four seasons product turn oer and product life cycle very short), thus, a deep knowledge of this labor was critical when implementing new business processes and ERP systems.Despite previous supply chain occupations were troublesome Nike hired 12 that was in experience in the footwear industry. This situation could have been avoided if Nike had appropriately apply consultants by integrating third-party specialists with industry experience in the projects aggroup. By not managing this factor, Nike took a big risk and ncreased the probabilities of failure. Nikes business requirements were too complex and over detailed (like footwears forecasting for styles, colors, sizes).If Nike had appropriately used consultants and also had promoted User employment and participation, those experts could had shared their know-how in the definition of business requirements more realistic and adjust with the real organizational inquires. The failures in the third stage of implementation (Realization) were i2s software did not hug drug all the required functionalities6. Usually, ERP systems do not depart all the functional requirements nd 12 system is not an exception. Thats why, ERP marketers offer interfaces to communicate with thi rd-party products.The problem with Nike implementation was that there was not an Critical Success Factors is a concept presented in the report Drawing Competitive service through Successful ERP Implementation Projects, by Jos Esteves Instituto de Empresa (Spain) and Joan Pastor Universitat Internacional de Catalunya, Barcelona (Spain) 2 ibid 3 SCM and ERP Software Implementation at Nike From failure to success 4 http//www. cio. com/ denomination/32335/Five_Lessons_Learned_from_Nike_s_i2_Debacle 5 ttp//news. cnet. om/i2-Nike-fallout-a-cautionary-tale/2100-1017_3-253829. html 6 SCM and ERP Software Implementation at Nike From failure to success 1 adequate infrastructure and interfaces prepared in march on and tested forward going live. The result was that the Demand application and its planner did not amalgamate easily 7. Nikes demand for high school customization was one of the principal(prenominal) failures in this project. To Avoid ERP customization, Nike could have approp riately used consultants to reduce the need of very detail level forecasting (style, color, size).Consultants ould have brought also an experienced business vision, focus on ERP processes really needed to run Nikes business, coalescence in the midst of Nikes requirements and ERP functionalities, and ERP best practices (including 2s recommendations and methodology) Forth stage (final preparation) is critically important to arrest the quality of the results, Nikes tailures were To ensure that the ERP accomplishes the business requirements defined at the beginning of the project a Formalized testing plan is mandatory.In theory, this test plan should cross functional tests, data flow between ystems, user testing and military operation tests. Nike did not perform any of those tests activities and the catastrophic results were System could not process large amounts of info. It was very slow and crashed, System could not handle thousands of variables to rejoin forecasts, Demand appli cation and its planner did not integrate easily because unlike data formats. , System sent inaccurate orders to manufactures and errors were not detected8 In this phase, User involvement and participation, Adequate training program and incumbrance troubleshooting are critical to guarantee that the technical staff and end- sers know how to use the system to prepare users to perform tests and to prevent unexpected situations.These activities were not performed and under- pass judgmentd by Nike as confirmed in the case it would work with requiring a pilot burner test 12 application was smaller9 No communicating between forecasting and comments from sales and marketing and no super users used in training. Data migration and data testing are crucial activities before system go-live because data is what really gives competitive advantage to a social club and data is the core foundation for all business decisions, thus, an Adequate data migration process s essential. Analysts raised qu estions about adequacy of information that Nike input into the system. 10, this means that Nike did not planned in advance the data activities (migration, conversion, cleaning, etcetera ) and in the end the result was Input data was estimated and didnt reflect the business reality, thus, forecasts could never be accuratell For the final stage (go live) Nike failed in 0 Not giving sustained management support since Executives did not puddle review meetings, neither analyzed forecasting results12.This transmitted a sense experience of no wnership and no own involvement to employees, resulting in no encouragement of system usage. From other point view, Nike also failed on the study of traffickers paygrade criteria 0 According to the six-stage model of the buying process for ERP software13, one evaluation criteria is Association with or the availability of third party vendor/ partners and other criteria is Qualifications, experience, and success in fork outing solutions to organi zations of a similar size, complexity, and geographic scope.It was clear that 12 did not had experience on the footwear industry and was not prepared or Nikes business complexity, so Nike should had decided for some other vendor with industry knowledge or as an alternative to integrate 12 with a specialized third-party. 0 Nike seemed to desire the best-of-breed for each application area, ex expel for ERP, 12 for planning SCM, Siebel for CRM, etc. , which is not ever the best option.As for 12, Nike knew that there were many disadvantages to choose this vendor, such as 12 technology could not met all business requirements data models were different between i2s demand and planner application raising integration problems with egacy systems high suit was necessary to customization there were 2 development and delivery cycles at the aforesaid(prenominal) time (one for 12 and other for SAP) and 12 had no experience in industry. A better option would have been to integrate planning SCM with SAP from the very beginning, which turned out be what exactly happened atter the 12 remnant M project tailure.Nike-i2s ERP implementation failed in all stages of implementation on several CSF and also on the evaluation of the vendor. The failures were related mainly to project management and organizational factors proving that success is much related to eople and process and not Just technology. 7 SCM and ERP Software Implementation at Nike 10 11 12 13 From failure to success ibid A six-stage model of the buying process for ERP software by Jacques Verville and Alannah Halingten 8 9 2.How do you evaluate the role of 12 in this process? Many factors which Nike failed to manage can also be applied for 12, resulting in a shared responsibility for the project failure. 0 12 did actually recommended Nike to minimize customization to 10-15% of the software14 but at the same Nike and 12 worked together to incorporate the desire hanges. 1 5 This means, 12 agreed to do the changes whe n Nike insisted on high level of customization, thus, 12 also has responsibilities on the high customization failure.Responsibility could be different if the level of customization was written in the weigh to be limited by 10%, and above that, 12 would not offer product guarantee. 0 The project did not have formal plan and no realistic deadlines. 12 as company, cannot be Just a software vendor, it must participate on the plan definition and monitoring. By accepting Nikes deadlines, 12 was also responsible for the delays nd for the low quality of the delivered software. 0 Nike began to input data while the system was not yet stable but 12 did not force Nike to stop this.A vendor must deliver his product when it is ready and according to negotiated deadlines. 0 12 did not have footwear industry knowledge but accepted to be part of the project, taking a big risk and being too ambitious like Nike was. The result was that 12 became overwhelmed with the business complexity and in the en d the forecasts did not worked out as expected. 12 should had analyzed better Nikes business and industry, nd sub-contracted a third-party specialist in that industry. Nike did not use 2s implementation methodology executives did not hold review meetings, neither analyzed forecasting results there was no pilot test and no training. A vendor must also be part of the project management team to define and negotiate formal deadlines, implementation phases, methodologies, tasks, roles, test plans, risk management plans, performance goals, etc. A vendor must assure that the contract is clear about who owns the project who is responsible for what what resources will e obtainable during the project what are the expected benefits and results. 3.Describe the main problems associated with ERP software modification (short-term and long-term) short-run 0 More time to implement a modified ERP compared with the time to implement an original ERP. 0 Higher costs during projects implementation to p ay analysts to define customized business processes and to pay programmers to customize the new functionalities on the system. 0 Higher costs to run additional tests to guarantee customized functionalities work as expected and do not affect the original system apabilities. 0 Additional costs to train end-users on the customized functionalities.