Hershey's Enterprise 21 ERP Implementation Failure
This paper analyzes the failure of Hershey's Enterprise 21 project, an SAP-based ERP implementation launched in the late 1990s to modernize the company's operations and resolve Y2K concerns. The paper outlines the project's goals — including hardware standardization, improved data sharing, and competitive advantage — before identifying the key internal and external risks that contributed to its collapse. Central among these risks was a compressed timeline of 39 months instead of the planned 48, insufficient employee training, and inadequate risk assessment. The paper contrasts Hershey's approach with Leapfrog's successful ERP rollout, drawing lessons about expert consultation, realistic scheduling, and change management.
- Introduction to Hershey and Enterprise 21: Hershey's background and origins of Enterprise 21
- Goals of the Enterprise 21 Project: Y2K concerns, hardware upgrades, and competitive goals
- Unrecognized Timeline and Deadline Risks: Compressed 39-month deadline and its consequences
- External Risks: Customer Trust and Shelf Space: Lost shelf space and damaged supplier relationships
- Internal Risks: Revenue Loss and Training Gaps: $112 million investment and inadequate employee training
- Lessons from Leapfrog's Implementation: Leapfrog's successful ERP rollout as a counterexample
- Conclusion: Expert consultation and realistic timelines as solutions
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What makes this paper effective
- The paper clearly identifies both internal and external risk categories, giving the analysis a structured, two-pronged framework that is easy to follow.
- It uses a concrete financial figure ($112 million) to anchor the stakes of the project and reinforce why proper risk assessment was critical.
- The Leapfrog comparison provides an effective real-world counterexample, illustrating what a successful implementation looked like in contrast to Hershey's missteps.
Key academic technique demonstrated
The paper employs comparative analysis — placing Hershey's failed implementation alongside Leapfrog's successful one — to argue its central claim about timeline management and expert consultation. This technique strengthens the argument by grounding prescriptive recommendations in observable practice rather than abstract theory.
Structure breakdown
The paper opens with company background and project context, then transitions to the project's stated goals. It methodically addresses unrecognized timeline compression, followed by external stakeholder risks, then internal financial and training risks. The comparative Leapfrog section serves as a prescriptive counterexample before a brief conclusion synthesizes the key takeaways. The structure follows a problem-cause-comparison-solution arc suitable for a business case analysis.
Introduction to Hershey and Enterprise 21
Hershey is one of the most well-known producers of chocolate and candy in the world. The company's origins trace back to Hershey, Pennsylvania, where it was founded in 1894. A little more than a century later, in 1998, it recorded $4.4 billion in sales across approximately 3,300 candy products in various sizes and shapes. Seasonal sales are significant for the company's profits, with Halloween and Christmas alone accounting for roughly 40% of annual candy sales — making these periods crucial to Hershey's bottom line. Other important seasonal windows include Valentine's Day and Easter.
One of the main challenges Hershey faced as it entered the 21st century was the modernization of its information technology operations. Because of the nature of its products and sales cycles, the company had not historically invested large amounts of funding in this area. At the turn of the century, it therefore launched a project known as Enterprise 21, which was intended to provide the company with a better business solution and greater competitive advantage.
Goals of the Enterprise 21 Project
The overriding catalyst for Enterprise 21 was the need to address Year 2000 (Y2K) problems. At the heart of the new implementation was the judgment that it would be less costly and troublesome to replace existing systems than to fix the problems embedded within them. The immediate goals of the project were to upgrade and standardize hardware, transitioning from a mainframe-based network to a client-server environment. The ultimate goal was to increase the company's competitive edge by improving the efficiency of its data-sharing capabilities.
In short, it was believed that Enterprise 21 would result in better execution of Hershey's business strategy — specifically its focus on its core mass-market candy business. The centerpiece of the plan was a switch to a new SAP system designed to improve not only operational efficiency but also competitive positioning.
Unrecognized Timeline and Deadline Risks
One of the most significant risks that went unrecognized was the full impact of the compressed deadline. Instead of the originally planned 48 months, the company had only 39 months to complete the project. This eliminated nine months of training and implementation time that proved impossible to recover. This critical constraint does not appear to have been adequately accounted for by project managers when approving the revised schedule.
Conclusion
Hershey could have saved a large amount of money, along with its reputation, by implementing the advice of experts and maintaining a more reasonable timeline. The Enterprise 21 case illustrates that even well-resourced companies can suffer serious operational and reputational harm when risk assessment is inadequate and implementation schedules are driven by urgency rather than feasibility.
References
Levin, R. (2008, September 24). Leapfrog makes a flying leap onto the SOA pad. CIO.
The Hershey story. (2010). The Hershey Company.
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