IN JUNE 2000, Nestlé SA signed a much publicized $200million contract with SAP—and threw in an additional$80million for consulting and maintenance—to install an ERP system for its global enterprise. The Switzerland-based consumer goods giant intends to use the SAP system to help centralize a conglomerate that owns 200 operating companies and subsidiaries in 80 countries.]
Not surprisingly, a move of this magnitude sparked skepticism. Anne Alexandre, an analyst who covers Nestlé for HSBC Securities in London (the company is traded only in Europe), downgraded her recommendation on Nestlé stock a year after the project was announced. While she says that the ERP system will likely have long-term benefits, she is wary of what the project will do to the company along the way. "It touches the corporate culture, which is decentralized, and tries to centralize it," she says. "That's risky. It's always a risk when you touch the corporate
culture."
It is a risk that Jeri Dunn, vice president and CIO of Nestlé USA, the $8.1 billion U.S. subsidiary, knows all too well. In1997, the Glendale, Calif.-based company embarked on an SAP project code-named Best (business excellence through systems technology). By the time it reaches the finish line ,Best will have gobbled up six years and more than $200million (the same amount its global parent intends to spend).Dunn now says she sees the light at the end of the tunnel .The last rollouts will take place in the first quarter of 2003.But the implementation has been fraught with dead ends and costly mistakes. It is a cautionary tale, full of lessons not only for its Swiss parent but for any Fortune 1000 company intent on an enterprise wide software implementation.
"I took eight or nine autonomous divisions and said we are ...