Friday, July 27, 2018

Standardizing Processes Worldwide

September 2015
Lidl is looking to press ahead with standardizing processes worldwide and chose SAP ERP Retail powered by SAP HANA to do the job (PressBox 2, September 2015)

November 2016
Lidl rolls out SAP for Retail powered by SAP HANA with KPS (Retail Times, 9 November 2016)

July 2018
Lidl stops million-dollar SAP project for inventory management (CIO, in German, 18 July 2018)

Lidl cancels SAP introduction after spending 500M Euro and seven years (An Oracle Executive, via Linked-In, 20 July 2018) 
Lidl software disaster another example of Germany’s digital failure (Handelsblatt Global, 30 July 2018)

I don't have any inside information about this project, but I have seen other large programmes fail on because of the challenges of process standardization. When you are spending so much money on the technology, people across the organization may start to think of this as primarily a technology project. Sometimes it is as if the knowledge of how to run the business is no longer grounded in the organization and its culture but (by some form of transference) is located in the software. To be clear, I don't know if this is what happened in this case.

Also to be clear, some organizations have been very successful at process standardization. This is probably more to do with management style and organizational culture than technology choices alone.

Writing in Handelsblatt Global, Florian Kolf and Christof Kerkmann suggest that Lidl's core mentality was "but this is how we always do it". Alexander Posselt refers to Schicksalsgemeinschaften, which can be roughly translated as collective wilful blindness. Kolf and Kerkmann also make a point related to the notion of shearing layers.
Altering existing software is like changing a prefab house, IT experts say — you can put the kitchen cupboards in a different place, but when you start moving the walls, there’s no stability.
But at least with a prefab house, it is reasonably clear what counts as Cupboard and what counts as Wall. Whereas with COTS software, people may have widely different perceptions about which elements are flexible and which elements need to be stable. So the IT experts may imagine it's cheaper to change the business process than the software, while the business imagines it's easier and quicker to change the software than the business process.

What will Lidl do now? Apparently it plans to fall back on its old ERP system, at least in the short term. It's hard to imagine that Lidl is going to be in a hurry to burn that amount of cash on another solution straightaway. (Sorry Oracle!) But the frustrations with the old system are surely going to get greater over time, and Lidl can't afford to spend another seven years tinkering around the edges. So what's the answer? Organic planning perhaps?


Thanks to @EnterprisingA for drawing this story to my attention.

Slideshare: Organic Planning (September 2008), Next Generation Enterprise Architecture (September 2011)

Related Posts: SOA and Holism (January 2009), Differentiation and Integration (May 2010), EA Effectiveness and Process Standardization (August 2012), Agile and Wilful Blindness (April 2015).


Updated 31 August 2018

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