Lidl’s €500 million ‘Elvis’ Project Fail: A Textbook Example Of How Not To Approach A Massive Transformation Program
09/05/2018 | Denver, CO
“Don’t wait until you’re in a crisis to come up with a crisis plan.”
– Phil McGraw
Failure. We cringe at the word, shy away from the thought of it, and hate to experience it. But failure is exactly what describes Lidl’s mammoth SAP transformation program – six years in the making, and half a billion dollars in the hole. Lidl, a multinational German grocery store chain, moved forward with adopting an SAP software for inventory management. However, the leadership team at Lidl was not prepared to embrace the necessary process changes, and stakeholder alignment, needed for efficient integration, meant the operation was aborted before take-off. Ouch.
- Lidl’s €500 Million Flop: The company has been pretty hush-hush regarding the insider details of the failed system, but we know that they spent around €500 million in the past six years during their partnership with SAP building the eLWIS (cleverly pronounced “Elvis” in German) inventory management system. Lidl is rapidly expanding, even opening stores outside of native Europe in the U.S. The new software was designed to upgrade their manual processes with data. However, just months after CIO Alexander Sonnenmoser resigned, the company decided to return to their original inventory management system before completely integrating eLWIS.
- What the Team Missed: The basis of Lidl’s crisis is simple: with SAP, they built an innovative, award-winning system that required so much focus, it failed to integrate into the existing corporate process landscape. The big issue? Standard SAP software operates on retail prices, while Lidl’s operates on purchase prices. Unwilling to change, management paid to have SAP’s software adapted to their own rigid processes. Lidl also failed at navigating their PR landscape, which has thrived on gossip, due to a lack of a public statements.
- Why They Should Have Used ThinkTank: ThinkTank’s consensus-driven productivity and automation tools are designed to prevent these costly mishaps from occurring, particularly in projects that are focused on enterprise software deployment. We sympathize with Lidl’s management, who viewed software as easier to adapt than process structures. However, hundreds of millions of Euros would have been potentially saved, had the management team effectively engaged their stakeholders early on and discovered how unachievable their goals were. Software implementations should never take more than three to five years anyway. It’s a software industry ‘dirty little secret’ that most versions of big enterprise software are already obsolete before implemented.
- The Big Takeaway: No matter how great the team, technology, and products are, without smart management and consensus based engagement, success is not guaranteed. Lidl and other category dominating organizations should not be stopped or stymied by such errors on their paths to efficiency and true innovation. One should always learn from the mistakes made before us. (Case in point: Deutsche Post DHL’s failed 345m SAP project in 2015.) Teaming up with stakeholder engagement and consensus-based change experts is an integral step to success, and we at ThinkTank are just the ones for the job.
About ThinkTank: We’re a company that’s maniacally focused on aligning leaders with teams and teams with great leaders. The top 5 reasons for the success (or failure) of your organization’s ability to execute or adopt a new way of working are all related to your people.