Tuesday, January 29, 2008

Did IBM's ERP implementation drive American LaFrance bankrupt?

American LaFrance has filed for Chapter 11 after not being able to properly migrate from their ex-parent company's ERP system to a new one that was being implemented by IBM. They said that the new system caused production disruptions and left the company with a $100m debt. The company is now taking action "based upon services provided by IBM in connection with the problem-riddled transition to the ERP system."

Hmmm... since the transition was done last year, I wonder whether IBM really is to blame? Did they not have a QA environment?

1 comment:

jleeper said...

ERP systems are complex systems that not only have to run as coded, but have to mesh with other non-IT processes, in this case manufacturing processes.

It probably not that the software didn't run, or had a lot of out and out errors. More likey IBM shoehorned in a system that didn't mesh with the way American LaFrance did business.

I don't doubt at all that ALF turned on the system several months ago, did stuff like manufacturing planning, which probably worked to some extent. But it took several months for problems to snowball, with IBM unable to get things running smoothly. This sort of problem isn't all that uncommon for new ERP systems. The hope is that you can tune the system as it is in production.

Note that ALF isn't blaiming the software supplyer, they are people who implemented the software. That's a non-trivial process that's alot more than than just setting up the servers and installing the software.

Not blaiming the ERP software supplier (which I've heard rumors is an Oracle product, whice one I don't know) leads me to believe that the software itself worked, what didn't work was IBM's implementation of it.

And as far as a QA environment, the only one that could really work to guarantee a problem like this would be one that included a running manufacturing facility. A simple environment that just runs the software without interaction with the other business systems won't draw out problems in the setup of the software, if that implementation is done sloppily or by inexperenced implementers. (Actully I've set up ERP systems like that. Convert one factory/warehose, then go on to the next.) ALF only had one or two plants as I understand it, so that sernario would provide much protection.