Case Study: Gifi’s ERP Migration Failure and Lessons for Digital Adoption

Gifi’s failed ERP migration shows a hard truth: digital transformation fails without user adoption. A €100M+ lesson on why ERP success depends as much on people as on technology.

Gifi’s failed ERP migration in 2023 illustrates how neglecting user adoption can turn a modernization project into a financial disaster. It serves as a crucial lesson on the importance of digital adoption platforms.

Table of Contents:

1. Context and Key Challenges
2. Project Execution and Identified Issues
3. Consequences and Impact of the Failure
4. Analysis of Root Causes
5. How MeltingSpot Could Have Prevented This Disaster
6. Recommendations to Avoid Repeating Gifi’s Failure
7. Conclusion: Towards a New Approach to Digital Transformation

Context and Key Challenges

Company Overview

Gifi is a French discount home décor retailer founded in 1981 that has established itself as a major player in the sector, with €1.3 billion in annual revenue, 600 stores, and 6,800 employees. This family-run company, led by Philippe Ginestet, held a strong position in the affordable décor market, with a proven business model and steady growth.

The Millennium Program: An Ambitious Transformation Initiative

In 2016, Gifi launched the Millennium program, a large-scale digital transformation project aimed at modernizing its entire information system. The goals were ambitious: to support expansion to 1,000 stores and 10,000 employees by 2027, while optimizing 200 business processes with a dedicated team of 150 people.

The technical architecture chosen was built around an SAP ECC 6 ERP as the backbone, supplemented by specialized solutions: Aptos for merchandise lifecycle management, Optimix for pricing and logistics, and Reflex for inventory management. This “best-of-breed” approach promised flexibility and performance but required complex integration among multiple systems.

Project Execution and Identified Issues

Flawed Governance

Analysis of the project reveals several issues in how it was managed. The Digital Transformation Director, Robert Eskenazy — who joined in 2019 from the retailer But — left the company in early February 2024, just months after the disastrous go-live. This turnover at the helm of the project reflects instability in the leadership of this critical transformation.

Experts noted the absence of an experienced project director capable of coordinating all stakeholders effectively. This gap led to multiple strategic course changes and persistent difficulty in stabilizing all the solutions that had been deployed.

Insufficient User Training

One of the most critical issues identified was the preparation of the operational teams. Contrary to best practices for this type of project, Gifi’s employees did not receive adequate training and support to adopt the new processes and interfaces.

This lack of support is part of a broader problem: 54% of employees say their employer expects them to self-train on new tools, while 70% feel uncomfortable admitting they are struggling with technology. This creates an environment ripe for failure, especially during a major transformation like the one Gifi undertook.

Unfavorable Timing

The June 2023 go-live took place amid an already strained economic context for the company. Gifi was dealing with the lingering effects of COVID-19, widespread inflation, the war in Ukraine, and heightened competition from rivals like Action, Shein, Temu, and Noz. This combination of external factors inevitably exacerbated the impact of any operational hiccup.

Experts stress the crucial importance of timing in ERP projects and recommend avoiding periods of peak business activity. However, June traditionally sees a surge in purchasing ahead of the summer season, which multiplied the risks associated with the system transition.

Consequences and Impact of the Failure

Immediate Operational Disruptions

As soon as the new system went live, the consequences were dramatic and visible. Store shelves went empty, products were shipped to incorrect destinations, inventory levels fell completely out of sync, and emergency manual procedures had to be implemented to compensate for the failing system.

These breakdowns revealed a complete loss of visibility into orders and supply chains, paralyzing the retailer’s operations. Teams were forced to improvise workarounds, creating a substantial extra workload and worsening working conditions.

Major Financial Impact

The financial impact was on par with the operational meltdown. The company’s revenue fell by 9% — on a base of €1.3 billion, that’s roughly €117 million in lost sales.

This financial hemorrhage quickly turned a previously profitable business (€65 million net profit in 2022) into one in distress. Gifi was forced to seek intervention from the French Interministerial Committee for Industrial Restructuring (CIRI) to restructure its debt, part of which was guaranteed by the French state.

Search for a Buyer

In light of the severity of the crisis, CEO Philippe Ginestet enlisted the investment bank Lazard to find a potential buyer — a sign that the fallout extended well beyond the project’s technical scope. This decision marked the culmination of a downward spiral in which a modernization project turned into an existential threat for the company.

Analysis of Root Causes

Tech-Centric Approach at the Expense of People

Gifi’s failure reveals an approach that was too tech-centric, neglecting the human element. As SAP consultant Joëlle Bouguem Sihoute points out, an ERP project isn’t just about the IT department — it’s a company-wide initiative.

This narrow view explains why end users were not adequately prepared for the change. The company seems to have underestimated the magnitude of the shifts in work habits required to fully benefit from the new system.

Insufficient Real-World Testing

ERP deployment best practices call for thorough testing phases, including simulations in real-life conditions with business users. Jean-Sylvanus Olympio — drawing on his experience completing an ERP project over three years at a €7 billion company — stresses that such rigorous testing is absolutely essential.

At Gifi, accounts describe a rollout that was “forced through,” suggesting a rush that compromised implementation quality. This haste deprived the company of the opportunity to identify and fix issues before go-live.

Underestimated Architectural Complexity

The choice of a best-of-breed architecture, while justified by specific needs, created considerable integration complexity. Coordinating SAP ECC 6, Aptos, Optimix, Reflex and the other solutions required significant technical expertise and particularly strong project governance.

This complexity, combined with the governance failures already identified, created fertile ground for the cascading malfunctions observed at go-live.

How MeltingSpot Could Have Prevented This Disaster

The Critical Importance of Contextual Training

Gifi’s failure perfectly illustrates the value of a solution like MeltingSpot in securing ERP migrations at large enterprises. While statistics show that 70% of digital transformation projects fail primarily due to insufficient end-user adoption, MeltingSpot provides exactly the support that was lacking at Gifi.

The platform delivers personalized, in-context training integrated directly into daily workflows. This approach would have allowed Gifi’s 6,800 employees to receive real-time guidance as they got up to speed with SAP ECC 6 and its complementary solutions.

Proactive Detection of Usage Difficulties

MeltingSpot’s AI learning companion can automatically detect knowledge gaps and user difficulties before they turn into operational errors. In Gifi’s case, this capability would have quickly flagged the data entry and usage issues that led to the inventory and order disarray.

This proactive approach stands in contrast to Gifi’s experience, where problems were only identified after they had already caused considerable damage to the business.

Drastic Reduction in Human Errors

Data entry and handling errors played a decisive role in the scale of the Gifi catastrophe. MeltingSpot guides users step by step through new processes, significantly reducing the risk of errors and speeding up the mastery of new features.

This contextual guidance would have been especially valuable for staff across Gifi’s 600 stores, who were generally less familiar with complex systems and had less time to train on the new tools.

Real-Time Adoption Tracking and Management

One of the blind spots in Gifi’s project was the lack of visibility into how users were actually adopting the new system. MeltingSpot offers dashboards to monitor adoption rates in real time, identify problematic features, and adjust the support strategy accordingly.

This monitoring capability would have enabled Gifi’s project teams to anticipate difficulties and make corrections before the situation became critical.

Recommendations to Avoid Repeating Gifi’s Failure

Integrate Digital Adoption from the Start

The Gifi experience shows that user adoption support can no longer be treated as a peripheral activity in ERP projects. It needs to be built in from the very start of the project, with dedicated tools like MeltingSpot to ensure a smooth and effective adoption process.

IT departments and digital transformation teams should view digital adoption platforms as essential components of their architecture, on par with the technical solutions they deploy.

Establish Strong Project Governance

The instability observed in the Millennium project’s leadership underlines the importance of solid, stable governance. Major transformation projects require specialized expertise and continuity of leadership that only dedicated, experienced teams can provide.

Favor a Gradual, Well-Tested Approach

Unlike the “big bang” strategy Gifi used, experts recommend progressive rollouts that validate each step before moving on to the next. This approach — combined with tools like MeltingSpot to support users — minimizes risk and ensures a smoother transition.

Invest Heavily in Training and Support

The cost of a digital adoption platform is negligible compared to the potential losses from a failed ERP migration. With more than €100 million lost, Gifi clearly had more than enough means to finance the necessary training and support that could have ensured a successful transformation.

Conclusion: Towards a New Approach to Digital Transformation

The Gifi case marks a turning point in recognizing the critical role of Digital Adoption Platforms in securing major technology investments. This case study shows that the success of a digital transformation does not depend solely on the technical quality of the solutions deployed, but above all on their adoption by end users.

For companies embarking on similar projects, the message is clear: neglecting the human aspect of digital adoption can turn a promising investment into an operational and financial catastrophe. Solutions like MeltingSpot provide a way to secure these critical transformations by ensuring every employee has the necessary skills and support to fully leverage new tools.

Gifi’s failure was not inevitable — it serves as a much-needed reminder that in the era of digital transformation, investing in technology without investing in people is to risk losing everything.

If you’d like to learn more about our software adoption solution, check out meltingspot.io.