The SAP project for 0.5 billion euros failed at one of the largest retailers of the world

In August, 2018 the Lidl company which is among the world's largest retailers announced the termination of the project on software implementation of SAP. The supermarket chain spent for it half a billion euro, however this amount appeared insufficiently in order that a system earned properly.

Lidl began implementation of the instrument of corporate management of trade of SAP for Retail using SAP HANA DBMS   in 2011 in hope to replace the outdated management system for trade inventories of Wawi which at that time reached limits of improvement and development of innovations.

The SAP project for 0.5 billion euros failed at one of the largest retailers of the world

In this system constantly there were interruptions of processes, there were problems with integration, creation of functions and excessive storage of basic data. The set of interfaces and modules and also the decentralized server structure led to the fact that work and system maintenance became very difficult.

The new solution under the name Elwis which creation in Lidl was called "the largest transformation in the history of the company" had to reduce housekeeping overheads of data and also organize information analysis and forecasting in real time.

In May, 2015 Lidl started the IT system created based on technologies by SAP for management of merchandising in the Austrian shops. About 10 thousand supermarkets and more than 140 logistic centers were going to connect to it. However the company decided to refuse Elwis.

According to the BR edition, a system initially was implemented mainly in rather small divisions of Lidl in Austria, Northern Ireland and the USA, but with big turnover it is not suitable for the countries.

According to the ComputerWeekly edition, the head of Lidl Jesper Hoyer sent to employees the letter in which noted that strategic objectives which were set within the project were not executed. For their implementation the retailer will need additional expenses which the company did not expect.

Problems began when it became clear that in the standard version of SAP for Retail retail prices, and a management system for stocks of goods of Lidl — purchase prices are used. Being afraid to lose competitive advantages, the retailer did not begin to change pricing and instead began to adapt a SAP software. This change directed to arranging software to Lidl was nonunique therefore expenses grew in the project, and system performance as a result of numerous completions decreased.

With respect thereto Lidl completely stopped the SAP project and decided to return to an old system, previously significantly having upgraded it. One of the informed sources told the German newspaper Handelsblatt what Lidl "practically starts from scratch".

At the same time in the company specified that will continue to work with SAP over other projects. SAP confirmed a stop of the joint project.

Termination of work over this project does not affect our cooperation in other areas in any way — reported in the company.

According to the former analyst of Gartner Derek Prior, the projects similar to in what Lidl participated fail because the companies wait for the advantages of implementation inappropriate to the analysis of a business situation.

They have no correct level of business interaction. They have no suitable people for assessment of results of business. They shelve a business model and any more never return to it — the expert reported.

The SAP project in Lidl was not the first failure. According to a research of consulting company Resulting IT, only 36% of the companies which implemented software of SAP indicate that results of project implementation correspond to the initial plan. Nearly a half (48%) of projects does not lead to accomplishment of the delivered business objectives, and 52% of the polled companies stated that they spent more budget for the project, put on start. In more detail about the reasons of a failure of the SAP projects it is written here.^[1]

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