SAP Watch

Mar 24 2008   10:09AM GMT

DTE’s $120 million SAP overrun

JackDanahy Jack Danahy Profile: JackDanahy

A recent article in Crain’s Detroit Business disclosed that DTE Energy Co. of Michigan posted a $120 million overrun in the cost of its SAP project. DTE, which had budgeted $263 million towards its SAP project in 2003, finished the migration in 2007 at a total cost of $383 million.

While only insiders know exactly why the project finished with such a large cost overrun, it’s possible that DTE could have paid more attention to preparation and training, which studies have revealed to be the most important factors in a successful ERP implementation. For example, DTE apparently elected to upgrade to a newer version of SAP in 2005. Leap-frogging its own original implementation plan suggests that DTE didn’t think hard enough about the project at its inception. Floating intentions can doom otherwise efficient projects.

That said, one shouldn’t minimize the difficulty that DTE faced during its SAP project. David Meador, the company’s CFO, explained on a conference call last month that, “We had systems that we’re replacing that were over 30 years old. In total, we replaced over 160 systems, and it caused some disruption in our operations.”

DTE’s overrun should be a warning to companies facing an SAP migration or upgrade that anything less than optimal training and preparation can result in a tough implementation experience. Educate yourself further by reading this tip on 10 things to watch out for during an SAP implementation and this explanation of the respective roles of SAP service and third-party consulting before and after an upgrade. Also feel free to browse our SAP upgrades and integration topic center for other tips and tricks. The more you know, the less chance you’ll have of becoming the next SAP overrun story.

Demir Barlas, Site Editor

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  • Parashar Jani
    Once you have made your mind after a serious discussion on SAP implementation you should not make major changes in implementation strategy. The other option for DTE was to wait atleast for a year after completing their implementation project. Whatever may be the reason it was the company who had to accept the loss.
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