I was in the local drugstore buying diapers and bottles a few days before Halloween. As I got to the checkout counter, I started craving a Kit Kat bar, as I often do late in the day after a hard couple of hours of reading my own writing. The candy rack, which is only a little smaller than my Manhattan apartment, was mostly empty and didn’t have Kit Kats. I walked around and discovered there were no Kits Kats in the two newspaper stands in my neighborhood, either. The drugstore a few blocks up the street was selling half-melted Kit Kats, and having no pride in such matters, I bought two and ate one immediately. As it turns out, there is not a shortage in sugar crops this year; America’s largest candy maker, the $4.4 billion Hershey Foods Corporation, was having trouble distributing its candy as Halloween was looming large, a trick that forestalled many treats and may not be greeted warmly by Hershey’s shareholders. The cause? You guessed it: software and, in particular, advanced e-business software.

In 1996, according to the Wall Street Journal, Hershey tossed out its old applications and installed SAP’s enterprise resource planning (ERP) software, Siebel Systems’ customer relationship management (CRM) software, and Manugistics’ supply chain management (SCM) software. IBM Global Services was hired to integrate these programs and tailor them to suit Hershey’s needs. Rather than trying to do the job piecemeal, Hershey, which was running out of time to deal with Y2K bugs in its legacy code, decided to do what’s called a “big bang” installation—everything comes online at once, and you run with it in production. Hershey had apparently planned to bring the system online in April, when candy is not in such high demand, but delays pushed the rollout to July. There are bugs in the spiderweb of ERP, SCM, and CRM applications that have been wreaking havoc with Hershey’s business since that time. The funny thing is Hershey has all this candy in stock in its warehouses—it makes 3,300 different kinds of candy, some of which only differ in packaging for specific markets—and because it can’t trust the data in the system, it doesn’t know who needs it or how to ship it. Both Siebel and SAP are not taking the blame for the problems, Manugistics is quiet about the whole incident, and IBM is saying only that the problem is very complex—meaning that no one knows exactly what is going on.

Hershey is in a sticky situation here, with about 40 percent of its sales coming between October and December. The lesson to learn is to move slowly as you extend your accounting and manufacturing programs with SCM and CRM modules, even if you are not

a big public company like Hershey. Maybe the whole world isn’t watching what might go wrong with your computers, but your customers and competitors certainly are, and let’s face it: That’s all that matters. With ERP and its SCM extensions, you go from doing bookkeeping and simple manufacturing and distribution to controlling complex processes that resemble running a nuclear power plant more than they do computerized accounting. And when customers start adding CRM to the front-end of their ERP applications as they have added SCM to the back-end of them, the situation will be even more complex. In a very real sense, your customers will be able to reach right into your company, right around your employees, to change what raw materials your suppliers are feeding you and what products your distributors are being fed. This is not a cause for concern in itself; this automation is, in fact, the whole point. I find such a hands-off approach to building and distributing products a little unsettling myself, but when it works right, ERP plus SCM plus CRM means that customers will be satisfied in a way that is not only better but also smoother than was possible in the past. Still, you must expect troubles. Just as the transition from accounting to material requirements planning (MRP) to MRP-II to ERP was fraught with difficulties that have taken decades to straighten out, moving on to e-business applications that are based on SCM and CRM extensions to ERP is going to cause some embarrassing snafus. Don’t let it be you that we are laughing at.

CRM Projects Are at Serious Risk of Failure

Analysts at META Group reckon that despite everyone’s best efforts, most Global 2000 companies implementing CRM projects are running a “serious risk of failure.” According to a study by META and its marketing technology research affiliate, IMT Strategies, fewer than 10 percent of the CRM programs installed to date have achieved the enterprisewide integration their proponents were advocating when they convinced their companies to invest millions, or tens of millions, of dollars to install. META says that only 60 percent of the companies surveyed had taken some steps to integrate CRM with existing applications and give users in the company access to it. META also found that 64 percent of the companies that installed CRM did not have any techniques to measure the value of CRM to the business, and only 10 percent have been able to calculate the ROI of CRM projects. The most telling statistic in the study was that, despite all the hoopla around e-business, among the companies polled in the survey (specifically, the 50 largest CRM users in the world, including Sprint, Nortel Networks, Kodak, and PNC Bank), face-to-face, business partner channel, and telemarketing still account for over 95 percent of sales. The problem, apparently, is that companies have installed field sales and marketing CRM tools but don’t have customer collaboration woven into it, which defeats the purpose of CRM. It isn’t hard to be smarter than the Global 2000, so take the time and convince your management to do CRM right the first time, unlike these bozos.

Also Read

The Effects of COVID-19 on the IBM i Ecosystem

Dissecting the HelpSystems IBM i Marketplace Survey

IBM i Receives Package Manager Support