Inventory Software Migration Failure Sparks National Drug Shortage Crisis
For over two weeks, pharmacies across Israel have struggled with severe drug shortages, leaving patients without critical medications, including chemotherapy, hypertension, and psychiatric treatments.
The crisis stems from a failed migration to a new ordering system by Novolog, Israel’s exclusive pharmaceutical distributor, which has effectively paralyzed drug supply chains nationwide.
Despite announcing a return to full operations on January 6, pharmacies report that supply issues persist, forcing desperate patients to travel long distances in search of essential treatments. Industry experts warn that the situation underscores a larger issue: the high failure rate of enterprise software migrations and the enormous financial and operational toll they impose.
The Widespread Failure of Software Migrations
Software transitions, particularly those involving ERP systems like SAP or Priority, are notoriously complex and prone to failure.
Research shows that:
- Up to 75% of ERP migrations fail to meet their objectives.
- 55% of companies experience operational disruptions following an ERP transition.
- Direct costs (consulting, rework, training) often exceed triple the expected budget.
- Indirect costs, including supply chain breakdowns and revenue loss, can escalate into millions of dollars—as seen in Novolog’s case.
- The primary reason behind these failures is the mismatch between software complexity and company resources. While global ERP providers like SAP and Oracle offer robust solutions, their rigid frameworks often fail to adapt to the unique workflows of mid-sized companies. This creates a gap between expectations and execution, leading to operational chaos rather than efficiency.
Expert Insights: Why These Projects Fail
According to Pini Usha, CEO of Buffers.ai providing optimization ERP plug-ins, Novolog’s crisis is a textbook example of a company implementing a solution too complex for its infrastructure and processes. “For over a decade, I’ve seen these projects collapse under their own weight. Companies expect a new system to solve all their problems overnight, but they underestimate the complexity of implementation,” explains Usha. “The issue isn’t just the software—it’s how it integrates with the company’s existing processes and resources.” He highlights three key reasons why ERP migrations often fail:
* Unrealistic expectations – Many companies assume that implementing a big-name software solution will immediately improve efficiency, ignoring the complexity of adoption.
* Rigid enterprise software – Large providers like SAP and Oracle build solutions for global industries but often require major process changes that businesses cannot handle.
* Lack of adaptability to company needs – Big ERP solutions don’t easily conform to a company’s unique workflows, leading to inefficiencies rather than improvements.
A Smarter Approach: AI-Driven Inventory Optimization
To bridge the gap between advanced inventory systems and real-world business needs, Buffers.ai provides AI-powered inventory optimization and ERP plug-ins that seamlessly integrate with SAP and Priority. This approach allows businesses to enhance efficiency without overhauling their entire system, reducing the risk of failures like the one Novolog is experiencing.
Global brands like Toshiba, H&M, and Victoria’s Secret have successfully implemented Buffers.ai’s solutions to streamline supply chain operations while avoiding costly software migration pitfalls. “The mistake Novolog made—and many others before them—is assuming that a one-size-fits-all solution will work,” Usha concludes. “Companies need to find the right balance between customization and scalability to ensure smooth transitions without disrupting operations.”
Lessons for the Industry
Novolog’s failure serves as a cautionary tale for businesses undergoing software migrations. Large-scale implementations require careful planning, extensive testing, and a realistic assessment of organizational readiness. Without these, businesses risk operational collapse, financial loss, and reputational damage—a fate Novolog is now grappling with. As companies continue to modernize their systems, the key takeaway is clear: technology must serve the business, not the other way around.
Background (Hebrew): https://www.ynet.co.il/health/article/syeugqc001e
