COMPANY: FoxMeyer Drug Company

FAILED IT PROJECT: Delta Information System Project

SCOPE: To Computerize Oder Handling and Distribution Processes For Efficiency

BUGDET: $65 million

SCHEDULE: 3 years

ABSTREACT

FoxMeyer Drug Co. in 1993 decided that in order to increase efficiency in it order handling and
distribution process as well as becoming a market leader in the pharmaceutical wholesale market it will
computerize its processes.

It turned to SAP AG, a leading German company in information systems for their R/3 software which
was designed for manufacturing companies and was actually very successful in that market. R/3 had
many useful and well needed functions and features.

The project failed.

Reasons For Failure

1. SAP AG’s R/3 software was not capable of handling the size of transactions that FoxMeye Drug
Co. deals with per day.
This is something proper requirement gathering would have uncovered. They also underbid the
project to cut down cost.

2. In 1993 a company that was responsible for 15% of FoxMeyers Drug Co. business went
bankrupt. FoxMeye in their quest to fill the gab in lost business signed a 5year contract
with another company called University HealthSystem Consortium to do business they
believed will make them $4 billion or more over the 5 years. Also, with the new IT
solution project in mind, they expected to make even more money by cutting down on
operational cost. Due to this, FoxMeyer Drug Co. had to roll out the financial module of
the SAP R/3 software 3 months earlier than planned. This was to add to the already over
stretch timeline and deadline developers were facing due to the sheer magnitude of such
an ambitious project. This also meant that developer had to skip testing of some parts of
the software which ended up causing major cost losses even before the project was
completed.

Conclusion
With careful and proper planning and realistic scheduling of the project coupled with proper
testing of customized modules, FoxMeyer Drug Co. would have avoided the cost incurred and
delays they had to deal with.