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

ERP Platforms

In my previous post Does ERP matter? I discussed the business requirements for enterprise resource planning - a management style involving tight command-and-control coupling between different enterprise functions (sales & marketing, distribution, manufacturing, purchasing).

However, this is not the question addressed in Shai Agassi's original post Does ERP matter? His primary concern (as it has been for much of his time at SAP) is the impact of SOA on ERP. He avers (I think rightly) that enterprise software cannot be assembled from JBOWS (just a bunch of web services), largely because of concerns about semantic consistency and compliance.

In the past, major vendors persuaded their customers that the way to achieve semantic consistency and compliance was to purchase the entire application suite from a single supplier. While at SAP, Agassi has championed the creation of a radical SOA-based alternative to this strategy. If you build the rules into the ERP platform (e.g. Netweaver), then your chosen vendor (e.g. SAP) can maintain hegemony and control over a heterogeneous but properly architected collection of enterprise services.

Including of course the multiple inconsistent implementations of SAP software that global mergers sometimes throw up.

So what matters now, according to Agassi, is not the ERP but the ERP platform. If you are going to implement enterprise software, then use a platform that is specifically designed to support enterprise software, rather than a general-purpose software platform.

There are various other terms for this platform, including the bland (Business Process Platform or BPP) and the downright ugly (Applistructure). For recent commentary, see Sam Lowe, Michael "Mitch" Hatscher (via Matej) and Phil Windley (via John Gøtze).

Moving the platform upwards is a powerful architectural strategy, as I've argued before. But these strategies, while enabled and encouraged by SOA, remain challenging both technically and conceptually. It will be interesting to see whether this strategy goes on the back burner once Agassi is out of SAP.

Does ERP matter?

Having announced his departure from SAP (apparently quitting the software industry to work on alternative energy and transport) Shai Agassi continues to blog about enterprise software on the SAP Network as well as his personal website The LongTailPipe. His latest post: Does ERP matter?

People in the software industry often use labels like ERP (enterprise resource planning) and CRM (customer relationship management) to refer to computer systems or application packages, such as those purveyed by SAP and its competitors. So most people will probably read Agassi's post as a discussion of the ongoing relevance and value of these packages.

But these packages are merely a software solution to a particular class of management problem. So we might first ask: does enterprise resource planning matter?

This is not such a stupid question as it might seem. Like MRP and MRPii before it, ERP represents a certain management style. Invoicing is integrated with inventory control and logistics not just because data management likes to have all the data in one place, not just because it makes the transaction processing more efficient and effective, but because this integration enables a set of higher-level management capabilities, including planning and coordination. ERP is therefore not just a transaction processing system, it is a command and control system.

In the early days of MRPii, I can remember considerable resistance to the notions of planning and coordination that MRPii entailed, from factory managers who were accustomed to planning next week's production of widgets quite oblivious of the fact that the warehouse was already full-to-overflowing with widgets.

And it is possible to imagine a fictional enterprise in a totally service-oriented world that doesn't need resource planning - because it doesn't possess any resources. Everything it ever needs is invoked from somewhere else in the network, on a just-in-time basis. You would still need systems to handle logistics and invoicing and all the rest, but you wouldn't need ERP.

Enterprise resource planning represents a kind of management coupling between different management functions - sales and marketing, distribution, manufacturing, purchasing. In the past, there were many enterprises where the coupling between these functions was loose and incompetent. There are many enterprises today where the coupling between these functions is now tight and efficient - and some of the credit for this improvement may go to SAP and its competitors.

Clearly we don't want to go back to a loose and incompetent style of management. But is there a real alternative to enterprise resource planning, one that is loosely coupled (as befits a service-oriented world) but still efficient and effective? I think that's the fundamental question as to whether ERP matters.

But this is not the question Agassi is addressing. I'll come back to his argument in another post.

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See also Ian Thomas Does ERP Suck?