Failed Strategic Information Systems

By
Grace Ceniza

A report submitted in partial fulfillment of the requirements
For CIS370-05
In
Computer Information Systems

School of Business and Public Administration
California State University, Dominguez Hills
Spring 2012

Table of Contents I. Hershey Food Corporation o Background 3 o Implementing ERP 3 o Expected benefits 3-4 o What went wrong? 4 II. Denver Airport Baggage System o Background 4-5 o Expected benefits 5 o What went wrong? 5 III. United Kingdom Passport Agency o Background 6 o What went wrong? 6 IV. FBI’s Trilogy Terminated o Background 7 o What went wrong? 7-8 V. Reference 10

Hershey Food Corporation
Background
Milton Hershey founded Hershey Food Corporation in 1894. Hershey was famous for a lot of innovations and was credited for several chocolate variants like chocolate syrup, chocolate chips, Krackle Bar, ice cream toppings, hot fudge and a lot more. By 1895, Hershey Corporation was manufacturing more than 114 different varieties of chocolates. Their most popular products are Hershey’s kisses, Kit Kat, Reese’s Peanut butter cups and more. Their sales went up from US$334 million in 1969 to $4.94 billion in 2006. Most of their sales that was 40% of their profit came from sales on Valentines Day, Easter, Halloween, “back-to-school,” and Christmas.
Implementing ERP ERP stands for Enterprise Resource Planning. It is a business management system that integrates all aspects of the business, including planning, manufacturing, sales, and marketing. Hershey wanted to implement this system since their products were really cheap and they were aiming to achieve sales of $5 billion. They feel like they needed to sell huge quantities of products. The corporation also wanted efficient logistics and supply chain systems and since there was an ongoing Y2K problem, they decided to replace the existing legacy systems. Also, there was a huge demand from the retailers that Hershey should share their data about product deliveries so that they could maintain favorable inventory levels and reduce costs. As a result, they came with Enterprise 21.
Expected benefits As a part of Enterprise project, Hershey installed bar coding systems on its products and through bar coding, they aimed to reduce costs, track the inflow and outflow of the materials and improve overall management of logistics. They also wanted fine-tune deliveries to suppliers, upgrade business processes, reduce order cycle times; boost inventory accuracy, and an overall improvement on the execution of business strategy.
What went wrong? The new system failed for a number of reasons. First of all, the company had squeezed deadlines. The project was originally supposed to take 4 years but the company forced the implementation to go live in just 30 months. After going live, they started experiencing problems entering the orders into the new system, resulting in shipping delays and incomplete orders. Also, the timing was wrong. The new system was very complex, according to analysts, and Hershey’s mistake was to implement ERP during its busiest time of the season, which was around Halloween. Also, there was lack of experience among the employees. Management did not do enough groundwork; their employees were not well trained on how the system works and were overloaded, as they had to learn the intricacies of the new system. As a result, the company lost their credibility in the market, lost precious shelf space, and customers began switching to products of competitors like Nestle and Mars. They spent $112 million on this project but their profit fell by $151 million compared to the previous year.
Denver Airport Automated Baggage System
Background
The city of Denver built a huge new airport in 1995 that was 13, 568 hectares and was called the Denver International Airport. It had 3 parallel North-South runways, 2 parallel East-West runways, and room for a total of 12 major runways. It was somehow considered as a model of the airport of the future. Its baggage system was something unique; it was called the “Integrated Automated Baggage Handling System.”
Expected benefits The baggage system was designed to deliver each bag, including transfers, individually from check-in or the unloading of the aircraft to the outward-bound aircraft or baggage reclaim. It was originally designed to deliver bags a lot faster than other major airports. It would supposedly allow baggage to be transported anywhere in the terminal within just 10 minutes.
What went wrong? There were a lot of obvious mechanical problems that have caused the failure of the automated baggage system at Denver. The baggage carts have jammed in the tracks, misaligned the bags, and lost bags. To fix the problem, contractors installed additional equipment, which increased costs, reduced performance and lower cost-effectiveness of the system. Deeper problems also aroused, like failing to deliver bags consistently within the times and at the capacity originally promised. This problem was the effect of the extreme complexity of its design and the variability of the loads. The individual elements of the baggage system have been used successfully but they have not worked together in such a large system. The complexity of the system was the main cause of the problem. It was hard to achieve reliable delivery times due to the “line-balancing” problem. It was supposed to provide good service to all lines and avoid connections that do not function. As a result, in 2005, United Airline stopped its use of the system, and was shut down. It cost $186 million to construct the system.

UK Passport Agency
Background
In October 1998, the United Kingdom Passport Agency introduced a passport processing system in two of its offices- Liverpool and Newport. The new system was supposed to replace an old computer system and introduce a more reliable passport. Siemens Business Services was the one who developed and provided the new computer system, while Security Printing and System Ltd is responsible for printing and dispatching of a new passport with a digital image of the passport holder. The agency planned to implement the new processing system to all its offices and just wanted to get through the busy season.
What went wrong? The agency failed to assess the time that their staff needed to learn about how the new system works. They didn’t have enough contingency planning when the implementation of the new passport system would not go according to plan. They already had difficulties at the first two sites, which were Liverpool and Newport. There wasn’t an effective communication with the public. As a result, they were facing a lot of difficulties on meeting the demand for passports. During their busiest time, maximum processing times were between 25 to 50 days instead of just 10 working days, which was their target. By June 1999, there were around 565,000 applications that were not processed. The cost of additional measures taken by the agency to fix the problem was around 12.6 million pounds. The agency has waived other compensation due from Siemens, which was estimated to be worth 275,000 pounds. The whole fiasco cost around 13 million pounds.

FBI’s Trilogy Terminated
Background
The FBI Information Technology Upgrade project was introduced in September 2000. It was a 3-year project, costing $379.8 million that was approved by Congress. It was under the direction of Director Louis Freeh, with no Chief Information Officer, documentation of its current systems, or a plan for renovating them. The project was then divided into 3 parts and renamed Trilogy. It was designed to upgrade the agency’s 56 field offices and 22,000 agents and support staff with new desktops and severs, web-enabling a number of the most important investigative database systems, and on top of all, a Virtual Case File system that would automate the old paper-based Automated Case Support system. The new system was to design to help FBI agents share data about cases in progress efficiently, especially terrorist investigations. It was also expected that the system would help agents anywhere in the United States to easily search documents and allow them to connect possible leads from different sources. Also, the Virtual Case File would include a case management system, an evidence management system, and a records management system. They wanted to disregard the need to scan documents into computer files. The trilogy was designed to upgrade the FBI’s hardware and software, communication networks, and the five most important investigative applications.
What went wrong? VCF was developed with a simple concept, which was to upgrade the modern case management system of the FBI. However, the FBI faced a lot of issues in areas relating to the VCF program. They did not have a complete set of defined VCF requirements when the original contract was signed in June 2001. The contract was based on hours worked, cost plus an award fee. They realized that those types of contracts were difficult to manage. Although the requirements were strengthened in November 2002, the contract remained a cost-plus-award-fee contract. Their employees also lacked skills such as qualified software engineering, program management, and contract management. They also experienced a high turnover in Trilogy program managers and Chief Information Officers. Lastly, they also underestimated the intricacies and complexities of using the new legacy system, of addressing their security needs, and establishing an enterprise architecture. As a result, the requirements and design documentation were incomplete, imprecise, requirements and design tracings have gaps, and the software cannot be maintained without difficulty, which was not usable. In April 2005, the FBI officially terminated the Virtual Case File project with a cost estimated to be about $170 million.

Reference

http://www.nao.org.uk/news/9899/9899812.aspx

http://members.home.nl/c.schalkx/Cases%20ARP/ERP%20Implementation%20Failure%20Hershey%20Foods%20Corporation.pdf

http://ardent.mit.edu/airports/ASP_papers/Bag%20System%20at%20Denver.PDF

http://www.justice.gov/oig/reports/FBI/a0507/intro.html

http://www.fbi.gov/news/testimony/fbis-virtual-case-file-system