Lidl cancels SAP introduction after spending 500M Euro and seven years
Last night, while relaxing on the couch, my attention was caught by an article on Lidl who canceled SAP Introduction after spending 500M Euro and seven years (see for example Italian and German comments; curiously I couldn't find any coverage in English). Interestingly, a cost similar to the one incurred by Deutche Post - DHL for failed SAP Implementation in 2015 (English, German).
The Lidl project was an ambitious transformation project, expectations were correspondingly high (reducing effort for master data maintenance, real time key figures and forecast analysis, etc). All this is now nothing...
While a failure is never good news, I think that there are at least two lessons learned.
The first lesson? An ERP implementation cannot last seven years. The pace of change has accelerated in many industries, retail and disrtibution is not immune. ERP Systems have to cope with the pace of change. Customizations should be avoided as far as possible, leveraging built-in best practices that are now part of modern ERP Cloud Systems.
Flexibility to adapt to a changing environment is mandatory for companies, and this requires agility. Implementations should require months (perhaps 12-18 months in complex businesses) not many years.
When the unfortunate project LIDL started – SaaS ERP was not available as an option (or it was in it infancy). Now SaaS ERP is a reality. Only a true SaaS model would guarantee the required agility and flexibility, dramatically reducing the implementation time.
This brings me to the second thought. Now Lidl apparently wants to revive his old system. The executive committee said that In the cost-benefit-balance everything speaks for the resurrection of the old legacy system called Wavi. This sounds very odd to me. I would not base a digital transformation program on an on-premise, legacy solution conceived a long time ago. New technologies such as artificial intelligence, robotic process automation, conversational interfaces, block-chain are disrupting the application landscape and will guarantee a competitive advantage to the early adopters. SaaS and PaaS models are the only option to exploit the potential of innovation and avoid the risk of obsolescence.
Back to Lidl. Still on time to revisit strategy?
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