ERP Recovery at a Building-Materials Wholesaler
Horizon Supply is a 180-employee building-materials wholesaler with ¥6.2 billion revenue and three distribution centers. It replaced its 15-year-old ERP with a cloud suite 14 months ago. The budget was ¥180 million; spend to date is ¥240 million and the project is still not closed. Symptoms: 18% of customer master records are duplicates; sales reps keep pricing and stock availability in spreadsheets; 42% of users log in weekly or less; order-entry errors have risen from 1.1% to 4.2%; month-end close takes 11 days versus 6 before; and the CIO says “the business won’t own the data.” The vendor blames customizations requested by finance. The CEO wants a 90-day fix and is considering replacing the vendor. The steering committee meets monthly but has no decision log. A recent customer survey shows on-time delivery fell 7 points. The company has one business analyst and no data owner.
1. Diagnose the root causes of the ERP problems. Separate symptoms from causes and avoid accepting either the vendor’s or the CIO’s framing at face value.
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The symptoms-duplicates, spreadsheet workarounds, low login rates, order errors, slow close, and delivery decline-point to a governance and adoption failure, not a single vendor defect. The likely causes are:
- No business ownership of master data. There is no data owner and only one business analyst, so customer, pricing, and item master data have no accountable process. The 18% duplicate rate is a design and governance outcome.
- Scope creep without decision rights. Finance-requested customizations may be legitimate, but the steering committee has no decision log or change-control discipline. The budget overrun from ¥180m to ¥240m is a symptom of unresolved trade-offs.
- Weak change management. A 42% weekly-or-less login rate means users have not been redesigned into the new process. Spreadsheets are a rational workaround when the system does not support pricing and availability queries.
- Benefits not defined. No one is measuring order accuracy, close cycle time, or on-time delivery as project benefits, so problems surface only through customer complaints.
The vendor may be partly responsible for fit gaps, but replacing the vendor now would not fix missing data ownership, process design, or adoption. The CIO’s statement is accurate as a diagnosis but not a plan.
2. Design a 90-day recovery plan with workstreams, decision rights, and measurable exit criteria.
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Days 1–14: stabilize and govern. Create a recovery steering group chaired by the COO, not the CIO. Issue a decision log and a change freeze except for critical compliance fixes. Appoint a temporary data owner for customer, item, and pricing master data. Publish a single issue list with severity and owners.
Days 15–45: fix master data and critical processes. Deduplicate customer records to below 2%; define golden-record rules; fix pricing and stock-availability queries or provide a controlled interim report. Re-map order entry for the top 20 error causes. Run role-based training for sales and warehouse staff, with managers accountable for attendance.
Days 46–75: adopt and measure. Track weekly active users, order-entry error rate, month-end close days, and on-time delivery. Establish a business process owner for order-to-cash and procure-to-pay. Close remaining customizations only with a business case and a decision-log entry.
Days 76–90: stabilize and decide. Exit criteria: duplicate customer records <2%; order-entry errors <1.5%; weekly active users >85%; month-end close <7 days; on-time delivery recovered to pre-project level; no Severity 1 defects older than 30 days. If these are not met, conduct a fit-gap and contract review before considering replacement.
3. Should Horizon replace the vendor? Give a decision rule and the evidence needed.
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Do not replace the vendor as the first move. Replacement is justified only if the product cannot support a critical process without excessive customization, if the vendor has failed contracted obligations after a formal cure period, or if the total cost of continuing exceeds the cost and risk of migration. The evidence needed is a fit-gap analysis of the top 20 processes, a defect and response-time log, the customization inventory, a data-cleansing estimate, and a comparison of remediation versus replacement costs.
Set explicit exit criteria: more than 30 unresolved critical defects older than 30 days; remediation cost above an additional 20% of project spend; vendor refusal to support a required statutory process; or a demonstrated product gap that affects order-to-cash. Until then, hold the vendor accountable through service credits and a joint recovery plan, but keep ownership of data and adoption inside Horizon.