INF70005 Strategic Project Management: HP ERP Implementation Case

This case study critically evaluates the ERP implementation failure at HP, attributing the failure to inadequate planning, improper testing, data integrity issues, forecasting problems, and a poorly constituted project team. The original project aimed to consolidate order management systems to improve efficiency, but faced significant challenges during migration, leading to operational disruptions and financial losses. The analysis identifies key factors such as poor risk management, lack of proper training, and communication breakdowns as major contributors to the failure. Recommendations include developing a comprehensive scope statement, implementing a robust risk management plan, providing thorough training, fostering open communication, and ensuring effective leadership and cost management to mitigate future project failures. The case emphasizes the importance of considering both technical and business aspects in ERP implementations and highlights the need for thorough planning and stakeholder engagement. Desklib provides access to similar case studies and solved assignments for students.

Running head: CRITICAL EVALUATION OF A REAL WORLD PROJECT
Critical evaluation of a real world project: “ERP implementation failure in HP”
Name of the student:
Name of the university:

1CRITICAL EVALUATION OF A REAL WORLD PROJECT
1. Background of the company and the selected project case
Most often it is realized that, success or failure of any project is dependent on certain
criteria. During the project planning and implementation phase if the project associates fail to
identify all success criteria professionally then the project would fail to meet its objectives, goals
and aims. For successful critical evaluation the project that has been nominated is “ERP
implementation failure in HP”. HP is an American multinational corporation (headquarter
located in Palo Alto, United States. The company offers their product and software services to
different sectors like health, education and government also. In the year of 1983, David Packard
and Bill Hewlett had initiated their business of the electronic instrument company as HP in
California. The first equipment that HP developed was resistance capacity audio oscillator. This
equipment was designed and implemented to test different sound equipments.
In the year of 2004, the HP globally reported huge financial loss that was attributed by
certain challenges faced by the migration to a centralized ERP system. In order to implement the
ERP system whatever cost has been estimated was increased five times more. The company gave
this responsibility to an internal investigation team to check the cause for this huge loss. The
causes are not related to the system application product software. However, the ERP project
failed due to the execution of project for migrating to a centralized ERP system at North
America. The goal of the project was to allow all their consumers to place orders with one
delivery date and invoice. However before the implementation of the project the higher authority
of HP ignored all the valuable suggestions give by their employees. They warned the developers
regarding the migration challenges that become apparent once problem were challenging of
orders. The issues of order backlogs occurred as all the data from the older system were failed to

2CRITICAL EVALUATION OF A REAL WORLD PROJECT
get transferred to the new system. The company stopped spending additional money to fulfill
order by way of the flights and all direct orders through the distributors for speeding all the
things up. HP promised their consumers that these operational errors are all under control but
they failed to resolve those. In order to resolve these functional errors they were needed to
collaborate the IT and business group appropriate.
2. Discussion on standard criteria
The goal of the project is to allow their consumers to place order from various systems
and combine the orders into one order with one delivery date and feedback. There are some other
issues identified for this project include data integration, demand forecasting issues, poor
planning and improper system testing, constitution of the project team and inadequate training
between the project team members and inadequate implementation.
The above mentioned factors are very essential for project success though these are not
properly managed and considered by HP during the ERP implementation period. In order to
implement the ERP project the project head and company were required to consider and maintain
the above mentioned criteria but they failed to maintain this, As a result the ERP implementation
project for HP failed. Due to poor project planning and inadequate testing facilities the
employees and consumers were dissatisfied. It results bad reputation that makes loss in revenue
around $400 Million and loss in implementation cost. HP failed to give competition to both IBM
and Dell. The success of ERP implementation is dependent on planning that might have
considered the technical aspects along with business processes. The HP again failed to build into
the incident plan to have a manual backup for keeping orders graceful.

3CRITICAL EVALUATION OF A REAL WORLD PROJECT
2.1 Iron triangle
In order to successfully implement any project the project manager requires considering
triple project constraints in terms of project cost, time and scope management. It is responsibility
of the project manager to complete the project scope within estimated time and budget. The iron
triangle defines an idea regarding how important the triple project constraints are for managing
projects. The financial constraints of the project are also known as project budget. The scope
developed for the project requires meeting the project scope within the assigned timeline. While
implementing the ERP project, HP needed to estimate their cost through several methods such as
historic data, resource costs, bottom up, parametric, vendor bid, quality analysis, reserve etc.
Though, the project scope was designed appropriately by HP but the needful factors that
are to be considered for this implementation were not being followed professionally. According
to PMBOK project management practices, time management is referred to as one of the most
crucial project management knowledge area that needed to be followed by the project manager
and project team members. The project head of HP failed to consider proper cost and time
management plan as a result the project failed to meet the expectation of the consumers and the
employees as well. It has been determined that, commercial success of ERP implementation
project is partly dependent on project planning details. This also needed ot consider business
processes along with the technical perspectives.
3. Critical identification and justification of the criteria
After analyzing the detail ERP implementation project of HP it is defined that, the
products of HP are always excellent in their quality as well as reasonable price range. The
organizational structure of HP is highly decentralized and the business units were completely

4CRITICAL EVALUATION OF A REAL WORLD PROJECT
independent. The unit products developed by HP were also marketed and manufactured complete
independently. In the early age of 1990 as the electronic industry started flourishing the era of
production in the industry also commenced. HP has redesigned their business strategies to
explore low priced electronic market. In the year of 2000, HP planned a phase out its numerous
legacy systems and replaces them with a SAP R/3 (standard ERP solution). The reengineering
process of HP initiated with shorter lead and delivery timing, cost savings and global distribution
system. In the year of 1993, HP planned to began a project with implementation of different units
such as product planning, material management, financial accounting and controlling.
4. Critical analysis of the case based on chosen criteria
HP has adopted a business process based approach that is comprises of information
technology and business objectives. For some time period the company also appreciated their
aim for implementation of a single order management system. In order to gain a better business
effectiveness and efficiency HP has planned to implement SAP based ERP solution or SAP
based fusion order management system for managing their business operation and
functionalities. In order to do so HP also reduced the numbers of their order management
systems. A soon as the system was upgraded from one version to another, different migration
challenges were identified. The new system involved around more than 70 supply chain systems
together. HP identified that integrated SAP ERP solution will offer unique functionalities with
reduced issues of time and cost management. With progressing time, HP started facing various
operational challenges that includes both the technical and business perspectives. The company
also faced major disruption for three weeks due to the IT level problems and catered business

5CRITICAL EVALUATION OF A REAL WORLD PROJECT
applications. The assigned internal investigation team of HP identified all the reasons of ERP
migration failure and these are as follows:
Constitution of the project team: It has been found that the assigned project team
members are much interdependent on each other as a result various difficulties in case of
program management were occurred. The project groups also faced massive communication
errors. It is identified that, communication between the order taking group and the back end
logistic group were not professionally maintained by the ERP project implementation team of
HP.
Issues with data integrity: This risk was surfaced between the new SAP system and the
logistic system those were implemented. Production training and inaccurate data management
were identified as the main cause for the issues data integrity.
Issues with forecasting problems: The divisions cannot predict accurate requirements
for al l the customized server products. Over order management has become a major problem
for the company with the ERP solution.
Poor planning and improper testing: The project activities were not planned accurately
by the project manager and the project team members. Only for the standardized orders the
system was tested. The contingency plan developed for the ERP implementation project was
inadequate.
Improper identification of technical, functional and non functional specifications: In
depth assessment of ISS divisions were not done professionally as results the project team does
not follow all the project testing specifications.

6CRITICAL EVALUATION OF A REAL WORLD PROJECT
5. Presentation of accurate conclusion
It is concluded that, in order to improve the business efficiency and competitive
advantages the project manager and the project team members of HP has planned to implement
an ERP solution. However, the training, testing and customization approach for the project were
not professionally followed. As a result the project failed to meet the expectation of the
consumers and employees as well. It was assumed that ERP solution would gives a better
response to various requirements of local market and maximum availability of combined stock
levels. Though, it was not implemented as the project implementation was failed.
6. Provision of suggestions or recommendations in the event
It has been determined that different risks are there which impacted the HP ERP system
implementation project. In order to re run the ERP implementation project the project manager
should identify proper functional, technical and non functional requirements. The negative
impacts are required to be mitigated by the project developers to overcome the functional and
operational system application risks. Some suggestions or recommendations are given in the
below section to overcome the application and implementation errors:
Development of proper scope statement: Before initiating any project the project
manager should develop a project scope statement. The scope statement needs to be shared to all
the project team members. It will allow the project team members to realize the project aim and
objectives. It can be said that, professional scope statement will help the project team members
so that it can meet the aim and objectives.

7CRITICAL EVALUATION OF A REAL WORLD PROJECT
Risk management plan: Before initiating the HP ERP implementation project the
project manager should have identified the potential risks, possibilities of its occurrences and
impact as well at the very initial phase.
Training and development program: In order to overcome the operational and
functional challenges, the company project developers are needed to arrange professional
training and development plan. It can be said that proper training and development program will
improve the skills and knowledge of the project team members. It will help them to meet the
consumer’s expectation and employees requirements.
Proper communication: In addition to this the other suggestion that is applicable for this
project is implementation of open communication. The project team members are needed to
follow open communication while interacting to each other. Open communication offers an
independent platform to the project team members where they can share their ideas and point of
views to each other.
Leadership and motivation: The project head should possess leadership and
motivational quality so that they can keep the other employees engaged to their assigned job
roles and all other responsibilities.
Proper cost and time management: It is mandatory for the project managers to assign
project time and budget at the very initial phase. In order to develop the time plan an accurate
schedule is needed to be prepared by the project manager. The finance manager should conduct a
feasibility study at the project initiation phase to ensure that whether re run of the ERP
implementation project will be beneficial or not. If possible change request factors are properly

8CRITICAL EVALUATION OF A REAL WORLD PROJECT
identified at the initial phase, then respective change management are also needed to be
implemented by the HP project development authority.

9CRITICAL EVALUATION OF A REAL WORLD PROJECT
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