Exploring Two Perspectives: A Balanced Approach. I am trying to look at this in two ways:

1. How could LIDL have approached this internally?
2. How could the consultants have approached it?

Based on the information from the sources, Lidl could have done several things differently to avoid the SAP implementation failure:

• Being more open to business process reengineering. The most significant issue appears to have been Lidl’s unwillingness to change its inventory management system from purchase prices to the retail prices used by the standard SAP for Retail software. Instead of extensively customising the software, Lidl could have considered adapting its internal processes to align with SAP’s best practices. This would have reduced the ‘requirements gap’.
• Limiting excessive software customisation. Lidl’s decision to heavily customise the SAP software to fit its existing processes led to increased complexity, higher costs, and a prolonged timeline. The sources suggest that customisation should be avoided as much as possible, leveraging the built-in best practices of modern ERP systems. Over-customisation can break other parts of the software, introduce implementation risks, and complicate ongoing maintenance.
• Conducting a more thorough evaluation of the SAP solution. Lidl should have more carefully assessed whether SAP was the right fit for their specific needs and whether they were willing to adapt to the software’s principles. Key characteristics like inventory management should have been scrutinised during product demonstrations and the Proof of Concept phase. Signing a contract for a solution that lacked a fundamental function without addressing it properly at the outset was a critical error.
• Stopping the project earlier. Despite the escalating costs and lack of progress, Lidl continued the project for seven years. The management should have intervened sooner when it became clear that the strategic goals could not be achieved with reasonable effort. Establishing clear budget and timeline expectations and being willing to terminate the project when these are significantly exceeded, without a clear path to success, is crucial.
• Ensuring strong executive sponsorship and alignment. The executive turnover at Lidl during the project’s seven-year duration likely contributed to a lack of consistent direction, resources, and momentum. A competent director who owns the project from start to finish and ensures the executive team remains aligned with project priorities is essential for success.
• Prioritising organisational change management. Lidl appears to have underestimated the work required to prepare its workforce for the new system and processes. A robust change management strategy is necessary to manage resistance and ensure employees can effectively use the new software. The human element of such a large-scale transformation is critical.
• Establishing better governance and oversight, potentially reducing over-reliance on system integrators. While system integrators play a role, Lidl needed sufficient internal oversight to ensure the project remained aligned with its strategic objectives and to challenge unnecessarily complex or prolonged timelines.

In essence, Lidl’s failure can be seen as an attempt to force SAP to conform entirely to their existing way of working, rather than embracing the potential benefits of adopting the standard practices embedded within the SAP software. As Jean-Claude Flury of a SAP user group suggested, companies need to adapt their own processes when implementing standard software.

Drawing on the lessons, an external consultant should handle a similar situation with a strong focus on proactive guidance and risk mitigation. Here’s how:

• Early and Thorough Needs Assessment and Gap Analysis: Before any implementation begins, a consultant should conduct a comprehensive analysis of the client’s existing business processes and compare them rigorously against the standard functionalities of the proposed ERP system. Crucially, the consultant must clearly highlight any ‘requirements gaps’, particularly fundamental ones like the inventory valuation method used by Lidl. This should involve detailed workshops and demonstrations to ensure the client fully understands the differences.
• Strong Emphasis on Business Process Reengineering (BPR): The consultant has a responsibility to advise the client on the benefits and potential necessity of adapting their business processes to align with the ERP system’s best practices. Instead of immediately acceding to extensive customisation requests, the consultant should advocate for process changes that leverage the standard software, explaining the long-term risks and costs associated with heavy customisation. They should articulate that an ERP implementation is often a business transformation, not just a software installation.
• Clear Communication of Customisation Risks: If customisation is deemed necessary, the consultant must clearly articulate the potential negative consequences, including increased complexity, higher costs, longer timelines, difficulties with future upgrades, and the potential to break other parts of the software. A robust governance process for customisation requests, including rigorous validation and rationalisation, should be implemented and enforced by the consultant.
• Phased Implementation and Pilot Programs with Rigorous Evaluation: The consultant should recommend a phased rollout, starting with pilot programs in smaller parts of the organisation, as Lidl initially did in Austria, Ireland, and the US. However, the crucial difference is that the consultant must ensure that the results of these pilot phases are thoroughly evaluated, particularly regarding the fit of the core functionalities like inventory management, and that any significant mismatches are addressed before a wider rollout. The failure to identify the ‘requirements chasm’ early on was a major misstep for Lidl.
• Proactive Risk Management and Escalation: The consultant should establish clear metrics and milestones for the project and continuously monitor progress against them. Any significant deviations, particularly in terms of budget, timeline, or fundamental mismatches between the system and business needs, must be proactively raised to the client’s management with clear recommendations for corrective action, including the possibility of scaling back or even halting the project if necessary. The consultant should not shy away from delivering difficult news.
• Importance of Executive Alignment and Sponsorship: The consultant should actively engage with senior leadership to ensure their ongoing understanding, buy-in, and commitment to the project. They should highlight the risks associated with executive turnover and advocate for a consistent and empowered project sponsor who is accountable for the project’s success or failure. The consultant can facilitate communication between IT and business stakeholders to maintain alignment.
• Emphasis on Organisational Change Management: A significant part of the consultant’s role is to guide the client through the necessary organisational changes. This includes developing and implementing a comprehensive change management plan to prepare employees for new processes and the new system, address resistance to change, and ensure user adoption. The consultant should stress that the ‘people side’ of ERP implementation is just as critical as the technical aspects.
• Clear Definition of Roles and Responsibilities: The consultant should ensure that the roles and responsibilities of all parties involved – the client, the consultant, and any system integrators – are clearly defined from the outset. While providing expertise, the consultant should also guide the client in maintaining internal oversight of the project to avoid over-reliance on external parties and ensure alignment with strategic objectives.

By taking these steps, an external consultant can significantly increase the likelihood of a successful ERP implementation and help the client avoid the pitfalls that led to Lidl’s €500 million SAP debacle. The consultant’s role is not just to implement software, but to provide strategic guidance and support throughout the entire transformation journey.