Vodafone erp implementation failure

Vodafone Group PLC is the largest mobile service provider by revenue in the world, with 400 million customers across Europe, the Middle East, Africa, Asia Pacific, and the United States. In 2013, it had revenues of $64.6 billion and more than 86,000 employees working in over 30 countries. Since its founding nearly 30 years ago, the business has experienced phenomenal growth, largely by establishing local operating companies that provides products and services to their local markets.

As a result, the company was very decentralized, lacking common practices, centralized operations, and data sharing among its various operating companies. Most of Vodafone’s mobile subsidiaries operated as independent companies with their own business processes. Vodafone was a network of individual businesses, but it wanted to function more like a single global firm to better deal with competitive pressures. Management called for a major business transformation to make this happen.

In 2006, Vodafone’s board of directors approved the “Evolution Vodafone” Business Transformation Program” (EVO) designed to refashion Vodafone into a truly global company, with a centralized shared services organization and common worldwide business processes in finances, human resources, and supply chain management for all of the operating companies. (Shared services refers to the consolidation of business operations that are used by multiple parts of the same organization in order to reduce costs and redundancy.) A common SAP ERP system would provide the technology platform for these changes by supporting information- sharing and common business processes that would simplify and speed up work throughout the company. Additional software tools from Informatica, Opentext, Readsoft, Sabrix, Redwood, HP, and Remedy that could integrate with SAP were added to the mix.

Vodafone’s system turned out to be one of the biggest SAP ERP implementations in the world. How did Vodafone pull it off? First of all, Vodafone’s management realized the company lacked the expertise and resources to manage such a complex project entirely on its own. It enlisted

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the consulting firms Accenture and IBM to provide skills and services that this ambitious project required and which were not available inside the company.

The company spent a year identifying and designing its new business processes and establishing the scope of this project. The management team wanted to limit risks to non- customer-facing processes that were nevertheless important sources of value for the firm. Customer-facing front-end processes were excluded from the first phase of the rollout to keep the transformation more manageable.

Procurement was targeted as the first set of processes to be transformed using the new ERP system. Vodafone had been allowing each of its local companies to manage its own procurement, which prevented it from leveraging the massive purchasing power the company could obtain by managing relationships with material and service suppliers from a single entity. By generating savings from centralized procurement, the transformation project would be able to quickly show a return on investment and win further support. Vodafone did not establish a centralized procurement department but instead created a centralized procurement company based in Luxembourg that uses the SAP ERP platform. Most of the company’s spending goes through this central organization. Suppliers benefit because the system helps them plan their sales to Vodafone and they only need to work with a single purchaser instead of many. This new way of doing business included a new purchase-to-pay process in which invoices are approved automatically for payment by matching them with purchase orders and receipts.

Once the new procurement process and organization were running, Vodafone started creating a centralized shared services organization based on the SAP ERP system. It selected Budapest, Hungary as the pilot location for this new arrangement. Vodafone Hungary is a mid- sized company with 2,000 employees with a small IT platform based on Oracle software. This made Vodafone Hungary more receptive to changing its information system and business processes than Vodafone organizations in larger countries, and Hungary had already been using Oracle systems. There, Vodafone built an entire shared services organization from scratch while simultaneously implementing the SAP ERP system. Vodafone then set up two more shared services organizations in India running on SAP.