FoxMeyer ERP program
In 1993, FoxMeyer Drugs was the fourth largest distributor of pharmaceuticals in the US, worth US$5 billion. In an attempt to increase efficiency, FoxMeyer purchased an SAP system and a warehouse automation system and hired Andersen Consulting to integrate and implement the two in what was supposed to be a US$35 million project. By 1996, the company was bankrupt; it was eventually sold to a competitor for a mere US$80 million.
The reasons for the failure are familiar. First, FoxMeyer set up an unrealistically aggressive time line -- the entire system was supposed to be implemented in 18 months. Second, the warehouse employees whose jobs were affected -- more accurately, threatened -- by the automated system were not supportive of the project, to say the least. After three existing warehouses were closed, the first warehouse to be automated was plagued by sabotage, with inventory damaged by workers and orders going unfilled.
Finally, the new system turned out to be less capable than the one it replaced: By 1994, the SAP system was processing only 10,000 orders a night, compared with 420,000 orders under the old mainframe. FoxMeyer also alleged that both Andersen and SAP used the automation project as a training tool for junior employees, rather than assigning their best workers to it.
In 1998, two years after filing for bankruptcy, FoxMeyer sued Andersen and SAP for US$500 million each, claiming it had paid twice the estimate to get the system in a quarter of the intended sites. The suits were settled and/or dismissed in 2004.
Lesson learned: No one plans to fail, but even so, make sure your operation can survive the failure of a project.
Apple's Copland operating system
It's easy to forget these days just how desperate Apple Computer was during the 1990s. When Microsoft Windows 95 came out, it arrived with multitasking and dynamic memory allocation, neither of which was available in the existing Mac System 7. Copland was Apple's attempt to develop a new operating system in-house; actually begun in 1994, the new OS was intended to be released as System 8 in 1996.
Copland's development could be the poster child for feature creep. As the new OS came to dominate resource allocation within Apple, project managers began protecting their fiefdoms by pushing for their products to be incorporated into System 8. Apple did manage to get one developers' release out in late 1996, but it was wildly unstable and did little to increase anyone's confidence in the company.
Before another developer release could come out, Apple made the decision to cancel Copland and look outside for its new operating system; the outcome, of course, was the purchase of NeXT, which supplied the technology that became OS X.
Copland did not die in vain. Some of the technology seen in demos eventually turned up in OS X. And even before that, some Copland features wound up in System 8 and 9, including a multithreaded Finder that provided something like true preemptive multitasking.
Lesson learned: Project creep is a killer. Keep your project's goals focused.