Hugger Mugger's ERP Implementation: A Case Study Essay.

Introduction to ERP Systems

Discuss about the Hugger Mugger ERP Implementation for ERP Systems.

ERP systems are first generation of systems whose goal is to integrate the data across all the business departments of an enterprise like Accounts, Marketing, Sales, Supply Chain, Procurement, production lines etc. They are also configurable based on the business requirement and still if requirements do not met by configurations, customization is the last option provided the company is rigid on not changing its business processes.

Hugger Mugger was founded in 1986 in Salt Lake City, Utah, USA. It was founded by the Sarah Chambers who was learning yoga by local Iyengar teachers. During those practice sessions, Sarah draws an inspiration to produce yoga accessories that will facilitate their training sessions. In the coming weeks, she showed the class about newly made shorts and props suitable for Yoga and the products were an instant hit in the class. She stared taking orders since then. She also consulted about her teachers for other yoga related products. Initially she got complains from the people about the material used for yoga mats. She started using harder mat and this is when Tapas Mat was born and quite popular even today (https://www.huggermugger.com/). 

In 1989, Hugger Mugger moved to a larger place dedicated for the operations and productions as the company started receiving large number of bulk orders from retailers. During that time, it was using point solutions to drive its business. It is using Peachtree Software for account related activities, capturing account payables and receivables, general ledger and also managing the documentation. For the purpose of providing quotations and booking sales order in the system, it was using NetSuite software. It was also using Mail order Manager (M.O.M.) by Dydacomp vendor for managing its inventory as well as supporting order fulfillment and picking. All the solutions were quite popular and suitable for its requirement and Peachtree is also acquired by Sage accounting system. Company was growing at a decent growth rate and as its requirement was increasing, it was buying the software one after another to cater to its immediate needs that resulted in multiple incompatible companies. It did not have a far fledge view of installing ERP systems at the beginning and it is possible that company also don’t have much budget for installing integrated ERP systems resulting in a multiple systems that cannot talk to each other. However, it soon realized that M.O.M. is not doing good job of handling inventory and managing inventory. Besides bug in the products, the functionalities it offer is quite limited. NetSuite also fell short of expectations soon as the organizati5on is seeing high inflow of orders and generation of large operational data. When it became $ 5 million Company, it soon realized that the existing systems were not capable of handling the future business growth of the company and that is when it started looking for the mid-tier ERP vendor. As the company’s revenue is 5 million only, ERP vendors like Microsoft, SAP and Oracle do not make much sense as their license and installing cost is quite high and can be affordable only by the large corporations.

Hugger Mugger's History and Challenges

The realization of the problem of managing 3 incompatible systems is actually the opportunity for the organization to revamp its IT systems and replace all the 3 legacy systems with powerful ERP system that will provide integrated process view and supports the business growth.

Hugger Mugger adopted the mid-tier ERP called Compiere. This ERP is open source ERP that comes with no warranty and support however it support can be taken by its vendor Aptean on a contract basis. It is available freely and company just had to look for the software partners or consulting partners for implementing this product at their premises. It is using Linux operating system and oracle 10g as a database (Compiere.com, 2018). The unique proposition of this ERP is that it is open source and can be implemented at a fraction of cost than other ERP systems. Apart from providing integrated suite of modules like Accounting, Order Management, Inventory Management, Human resource, it also has a modern view of role based dashboard systems and functionality assignment (Bajaj, & Ojha, 2016). This means that system allows to define various roles like material manager, procurement manager, quality manager so that they can view and make changes only in the functions required by them. This provide the authorisation feature as only authorized users can access particular business function. Apart from this, it is highly configurable and also provide the ability to customize without programming. Compiere is the only product in the market that provide the customization feature without programming as claimed by its vendor Aptean (Aptean, 2018). 

The selection process was quite straightforward as the company is looking for the ERP suite with rich functionality in its budget and there are not many vendors. SAP R/3 and Oracle are quite expensive products. As the requirements of the company is basic in nature and business processes are also standard based on their business model, they are not performed as-is and To-be Analysis and simply selected the product (Kulkarni, et al., 2015).

As far as implementation strategy is concerned, Hugger Mugger installed the ERP and implemented it in a very short period of time without any consulting partner. Current IT staff were not comfortable with the way ERP works and they treat ERP systems like any other point software and installed it and start using right away without actually realizing the potential of the product as well the readiness of the end users (Ram, Corkindale & Wu, 2015). While most of the companies spent considerable effort in their implementation projects and focuses on documentation, Hugger Mugger totally ignored the documentation. It also conducted training but it was like a very high level overview session that do not help the users to actually understand how they will be using the system for conducting their day to day activities. IT staff did very small amount of testing perhaps they were not having the adequate time for the extensive testing. Real life scenarios and processes and data flow were not properly tested and system was put to production environment without any readiness. This was the integrated suite and data flow from 1 department to another however if the quality of data is not good, it will create issues for everyone in the company. During data migration, data quality was not improved and there was redundant data, corrupt data in the system (Sun, Ni, & Lam, 2015). Implementation was a big disaster as the company realized that the business processes have become more complicated now and the same process now requires much large effort and time.

The Need for ERP Implementation

The main reason of the failure of ERP implementation project at Hugger Mugger was that there is no consulting partner chosen to guide the company about the nature of ERP projects and huge risk of implementing them (Jagoda, & Samaranayake, 207). All the basic things that are required to make the project success like planning, testing, and change management were ignored. Further, most of the IT staff members also left the company leaving it in a very bad shape.

There were no preparatory steps that were taken by Hugger Mugger to facilitate the implementation. It quickly selected the ERP Compiere and started implementing the product. This can happen due to ignorance of IT team about the complexity of ERP projects and they treat it like any other point system east to use and install. Apart from this, Compiere was the open source ERP and not very popular (Stafford, 2005). Most of the case studies about the failure of ERP implementation were largely deals with the SAP and Oracle ERP. When the system went live, it created confusion and chaotic situation all around in the company. Processes were set up by the IT team without consulting the business team. As a result, business process becomes quite complex after the implementation and users find it difficult to work. For instance, order booking was made so complicated that users has to enter the data on 8 screens moving 1 after another and now the process takes 10 minutes to complete which earlier used to takes 2 minutes. It totally ignored the data clean-up activities and the dashboards and various reports generated by the new ERP is not having the corrected data and users are blaming the product however product functions on data (Kramer, et al., 2016). Thus, there is ignorance in staff about the ERP projects and their responsibility. During the same time, most of the IT staff members left the company and Chamberlain joined as a president. He quickly surveyed the situation and realized that it is difficult to work with EPR in such a botched implementation project and decided to continue with the legacy systems and also started revamping the IT systems.

He hired Knowledge Blue which is a consulting company and partner of Compiere and also implemented the same ERP for large number of customers. This company created the structured methodology, project plan, key plans and focuses on the testing, training and change management. It also focusses on including the full time business team at least some of the members for the implementation. Some of the main changes it did is prepared a business flow diagram for all the business processes. It also realizes that several processes includes sharing of data to downstream players like FedEx for customer shipping address details and thus built a custom ERP where the address will automatically be picked by the FedEx team from the Compiere systems. It also reduced the unnecessary fields on various screen to make it clear and user friendly for the company. Finally, the system went live again but this time it used phased approach. Order entry go live first and it has really ease the job for the business users by unleashing the power of EPR if it is properly installed. As per Chamberlain, Company is booking orders in the afternoon and shipping them in next morning which is achieved by real time data sharing between warehouse fulfilment team and order entry. Gradually, all the functions are moved to Compiere and also data was cleaned and as a result, reports and dashboards were largely reflecting accurate and the business users were really pleases and accepted the new system.

Selection Criteria for ERP System

Compiere had a unique feature of providing customization without programming. As per the Hugger Mugger’s management, if any changes are needed in the product, one can do it themselves however in case of SAP and Oracle, you have to go to the vendor and pay every time for changes.

The adoption of the enterprise system was very difficult initially because the company went live without spending much efforts after buying the product. They just installed the system and started using it which complicated the standard business processes leading to huge dissatisfaction among the business users. However, till now, company had not made any major investments. The product is an open source that comes for free and it did not hire any consulting partner also.

But after the implementation, the negative results were quite evident. Most of the employees from existing IT team have left the company after goofing up the implementation process and that is when Chamberlain joined as a president. He analyzed the situation and also hired consulting company Knowledge Blue that was having good experience in implementing the same product for large number of customers. New company has defined the proper methodologies, business flows and focuses on the other things to make the ERP implementation as a success and yes, it was a success after it went live again.

Company had quickly realised and also appreciated the flexibility of the Compiere’s open source software. One of the metric used by the company to evaluate the effectiveness of this project is the turnaround time between order booking and order shipping. It realized the noticeable differences in the improvement. With the help of Compiere systems, company is shipping all the orders received before the afternoon on the same day and orders after afternoon on next day morning. This was a significant improvement that improved on time delivery of the orders.

Conclusion

Hugger Mugger was founded in 1986 in US. It manufactures yoga related accessories. Initially, company was growing slowly and purchased point systems whenever there is a need. It results in 3 different legacy incompatible systems. Also, Company begun to see higher growth and also realized that its legacy system will not support the future growth and thus switched to open source Compiere ERP that replaced all the legacy systems. The implementation was a botched implementation first time due to lack of any consulting partner however company soon rectified its mistake and hired a consulting company that have experience in implementing the Compiere product for several companies. This time the implementation was successful. Apart from this, it was well accepted by the end users and company metrics started improving dramatically in stabilization phase itself.

References

Aptean. (2018). Aptean ERP Solutions - Compiere ERP. [online] Available at: https://www.aptean.com/products/compiere-erp [Accessed 23 May 2018].

Bajaj, S., & Ojha, S. (2016, March). Comparative analysis of open source ERP softwares for small and medium enterprises. In Computing for Sustainable Global Development (INDIACom), 2016 3rd International Conference on (pp. 1047-1050). IEEE.

Compiere.com. (2018). Compiere Open Source ERP - A Modern, Low-cost ERP Software Solution. [online] Available at: https://www.compiere.com/ [Accessed 23 May 2018].

https://www.huggermugger.com/

Jagoda, K., & Samaranayake, P. (2017). An integrated framework for ERP system implementation. International Journal of Accounting & Information Management, 25(1), 91-109.

Kramer, F., Rehn, T., Schneider, M., & Turowski, K. (2016). ERP-adoption within SME—challenging the existing body of knowledge with a recent case. In Multidimensional Views on Enterprise Information Systems (pp. 41-54). Springer, Cham.

Kulkarni, A., Hegde, N., Sharma, M., Kulkarni, A. A., Hegde, N., & Sharma, M. (2015). Educational ERP systems in the market–a comparative study. International Journal of Innovative Research Science in Technology, 1.

Ram, J., Corkindale, D., & Wu, M. L. (2015). Examining the role of organizational readiness in ERP project delivery. Journal of Computer Information Systems, 55(2), 29-39.

Stafford, J. (2005). Hugger-Mugger fixes goofed open source ERP implementation. [online] SearchDataCenter. Available at: https://searchdatacenter.techtarget.com/news/1103531/Hugger-Mugger-fixes-goofed-open-source-ERP-implementation [Accessed 23 May 2018].

Sun, H., Ni, W., & Lam, R. (2015). A step-by-step performance assessment and improvement method for ERP implementation: Action case studies in Chinese companies. Computers in Industry, 68, 40-52.