This month, December 2010, American ERP system provider Ross Inc. has been fined $61 million by a customer, Sunshine Mills, a pet food manufacturer that says they failed to give them what they promised.
Trapped – not loyal
It was claimed that the Ross ERP, “Disrupted operations across all of their plants, caused wrong products to be shipped to customers, failed to generate invoices for shipped orders and led to numerous other problems.”
The main function that Ross ERP failed to successfully deliver was automation of the warehouse management system through barcoding. This has been a hot topic in recent years as ERP providers look to expand their expertise into warehouse management systems and barcoding.
Sunshine Mills whom paid the initial license cost of $235,000 and implementation costs can not afford to leave.
Big upfront investment
For most companies the big upfront investment required to get their ERP system up and running leaves their hands tied. The vast majority of ERP customers that we talk say that they are trapped, not loyal. We spoke to more than 3500 companies in the UK during 2010 asking them about their ERP, so it is a fairly large pool.
This feeling of being trapped is only exacerbated when ERP customers are forced to pay for upgrades and customisation to meet their basic business processes.
Unfortunately for future ERP customers, failed ERP projects continue to happen. Last May, SAP settled a lawsuit with Waste Management in the USA for an SAP ERP fail.
For online retailers, the sensible ones are avoiding big ERP implementations, by going with a simple online pay as you go accounting system, a strong CMS (content management system) to run their web site and finally a pay as you go per user warehouse management system. For manufacturers, these options are starting to appear and next year will see them become more widely deployed.