Post on 01-Nov-2014
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BIG MIS FAILURES
PRESENTED TO: A.H.TOOR
PRESENTED BY: FAISAL JAVAID
REG #: 2113102
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS
BIG MIS FAILURES Page 1 of 4
MIS
Short for management information system or management information services, and
pronounced as separate letters, MIS refers broadly to a computer-based system that provides
managers with the tools for organizing, evaluating and efficiently running their departments. In
order to provide past, present and prediction information, an MIS can include software that helps
in decision making, data resources such as databases, the hardware resources of a
system, decision support systems, people management and project management applications, and
any computerized processes that enable the department to run efficiently.
Within companies and large organizations, the department responsible for computer
systems is sometimes called the MIS department. Other names for MIS include IS (Information
Services) and IT (Information Technology).
REASONS OF MIS FAILURES
Information technology (IT) project management is a crucial issue for organizations
today. The failure rate of IT projects is astounding. A 1995 study in the USA found that 31 per
cent of software projects will be canceled before completion, and more than half the projects will
cost an average of 189 per cent of their original estimates.
In April 1997, a survey questionnaire focusing on IT project management issues was sent
to Canada's leading 1,450 public and private sector organizations. KPMG's 1997 Survey of
Unsuccessful Information Technology Projects revealed that the three most common reasons for
project failure are:
1. POOR PROJECT PLANNING: Specifically, inadequate risk management and a weak project plan.
Risk management becomes more important as the organization gets bigger, so larger
organizations need to pay more attention to this area.
2. A WEAK BUSINESS CASE: The need for the system should be justified in ways that relate
directly to the organization's business needs.
3. LACK OF TOP MANAGEMENT INVOLVEMENT AND SUPPORT: This often dooms the project to failure
before it starts. Securing buy-in from the top, often by a strong business case backed up
with a realistic project plan, is an essential step.
Some of the other main findings were:
Projects fail more often because of schedule overruns than budget overruns.
Many projects fail because they use new or unproven technology.
Poor estimates or weak definitions of requirements at the project planning stage also
contribute to project failure.
Projects can run into trouble due to the vendors' inability to meet commitments.
Of the failed projects, 60 per cent were planned to take less than one year to complete.
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS
BIG MIS FAILURES Page 2 of 4
BIG MIS FAILURES
With the rapid change in the economic world due to new and innovative advances,
organizations switched to computerized system (MIS) from manual system. But such conversion
was not profitable for all organization. Some faced minim while others had to suffer huge losses
by implementing MIs in their organizations. Various factors were involved in their demise. Here
are few MIS failures involving big giants.
ORGANIZATION: Budget Rent A Car Corp., Hilton Hotels, Marriott International Inc. PROJECT: “Confirm” reservation system for hotel and system for hotel and rental car bookings. WHAT HAPPENED: After four years and $125 million in development, the project crumbled
in 1992 when it became clear that Confirm would miss its deadline by as much as two
years. AMR sued its three partners for breach of contract, citing mismanagement and
fickle goals. Marriott countersued, accusing AMR of botching the project and covering it
up. Both suits were later settled for undisclosed terms. Confirm died and AMR took a
$109 million write-off.
ORGANIZATION: Snap-On Inc. PROJECT: Conversion to a new order-entry system from The Baan Co. WHAT HAPPENED: Despite three years of design and implementation, a new order-entry
system installed in December 1997 costs the tools company $50 million in lost sales for
the first half of 1998. Orders are delayed, inventory is miscounted. Snap-On’s operating
costs soar 40%, mainly to cover costs of extra freight and temporary workers.
Franchisees, frustrated because they can’t operate the new software, turn to Snap-On
competitors. Company profits for the period sink 22% compared to 1997.
ORGANIZATION: Fox Meyer Corp. PROJECT: SAP ERP system
WHAT HAPPENED: A bungled enterprise resource planning (ERP) installation in 1996
helped drive FoxMeyer into bankruptcy, the drug distributor claims in lawsuits against
SAP AG, SAP America Inc. and Andersen Consulting. FoxMeyer seeks a combined $1
billion in damages, but defendants deny doing anything wrong.
ORGANIZATION: W.W. Grainger Inc. PROJECT: SAP ERP system
WHAT HAPPENED: Grainger spent at least $9 million on SAP software and services in 1998,
but the ERP system over counted warehouse inventory and had routine crashes. During
the worst six months, Grainger lost $19 million in sales and $23 million in profits.
Grainger patiently worked with SAP on fixes.
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS
BIG MIS FAILURES Page 3 of 4
ORGANIZATION: Greyhound Lines Inc. PROJECT: “Trips” reservation and bus-dispatch system
WHAT HAPPENED: Greyhound spent at least $6 million in the early 1990s building Trips.
But Trips failed miserably when installed in 1993, crashing when Greyhound offered sale
prices on bus fares. To avoid using the system, agents wrote tickets by hand while
customers waited in line and missed busses. Ridership plunged 12% in one month. Just
weeks after rolling Trips out, Greyhound disabled it in some regions while trying to trace
problems. The debacle spurred a $61.4 million loss for the first half of 1994. The CEO
and CFO resigned. Trips operate today but Greyhound never regained its status as a
transport powerhouse.
ORGANIZATIONS: Hershey Foods Corp. PROJECT: IBM-led installation and integration of SAP, Manugistics Group Inc. and Siebel Systems Inc. software
WHAT HAPPENED: To meet Halloween and Christmas candy rush, Hershey compressed the
rollout of a new $112 million ERP system by several months. But inaccurate inventory
data and other problems caused shipment delays and incomplete orders. Hershey sales
fell 12% in the quarter after the system went live — down $150.5 million compared with
the year before. Software and business-process fixes stretched into early next year.
ORGANIZATIONS: Norflok Southern Corp. PROJECT: Systems integration with merger target Consolidated Rail Corp. WHAT HAPPENED: Norfolk Southern lost more than $113 million in business during its
1998/1999 railroad merger with Conrail. Custom logistics software wasn’t tested
properly and a dispatcher mistakenly fed bogus test data into the system. Norfolk
Southern suffered more than a year of train backups, untrackable freight and crew-
scheduling mishaps. Norfolk Southern spent an extra $80 million on worker overtime pay
and fix-up costs until the system was stabilized.
ORGANIZATIONS: Oxford Health Plan Inc. PROJECT: New billing and claims-processing system based on Unix International and Oracle Corp. databases
WHAT HAPPENED: 1996 migration to a new set of applications for health maintenance
organizations operations resulted in hordes of doctors and patients angry about payment
delays and errors. The system also underestimated medical costs and overestimated
income. As a result, high-flying Oxford posted its first-ever quarterly loss in November
1997: $78 million. All told, Oxford overestimated revenues by $173.5 million in 1997
and $218.2 million in 1998. New York State fines the company $3 million for violating
insurance laws. Oxford replaced large parts of the home-grown system with off-the-shelf
modules.
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS
BIG MIS FAILURES Page 4 of 4
ORGANIZATIONS: Tri Valley Growers
PROJECT: Oracle Corp. ERP and application integration
WHAT HAPPENED: A giant agricultural co-operative, Tri Valley bought at least $6 million
worth of ERP software and services from Oracle in 1996. None of the software worked as
promised; some of it couldn’t even be installed on Tri Valley’s DEC Alpha hardware, the
co-op claimed in a $20 million lawsuit filed. Tri Valley stopped using the Oracle
software and stopped paying the vendor. Oracle countersued for breach of contract. Tri
Valley filed for bankruptcy protection. Oracle denies all claims.
ORGANIZATIONS: Universal Oil Products LLC
PROJECT: Software for estimating project costs and figuring engineering specifications, to be built and installed by Andersen Consulting
WHAT HAPPENED: After a 1991 ERP deal with Andersen resulted in unusable systems for
UOP, the industrial engineering firm cried “fraud, negligence and neglect” in a $100
million lawsuit in 1995. Andersen later sued UOP for libel, accusing it of leaking
incriminating e-mail by its consultants in an “attempt to publicly harass and humiliate
Andersen.” UOP hired another consultancy to implement the system.
CONCLUSION
MIS are effective tools in business. But it must be kept in mind that it is a system which
is made and used by humans. Due to human errors in either its preparation or implementation the
system collapses or provides wrong data which tends to put blame on the system. With proper
and patience managing of the system it can be immensely beneficial for the organization.
REFERENCES
http://www.standishgroup.com
http://www.computerworld.com/computerworld/records/images/pdf/44NfailChart.pdf