Bloomberg recently reported on a Denver-based jeweler citing SAP ERP cost overruns and delays as contributing factors to its Chapter 11 filing. The problem is all too pervasive across all types of ERP deployments, including accounting software product lines and processes. Accounting solutions in principle too often become accounting software nightmares in practice
Quoting from the story: “SAP, the world’s biggest maker of business-management software, took almost three years to install and implement the system instead of one year, while costs ‘ballooned’ to $36 million from a projected maximum of $10 million, Shane said in papers filed yesterday in U.S. Bankruptcy Court in Denver.
“Shane, based in Centennial, Colorado, became ‘substantially overstocked with inventory, and with the wrong mix of inventory’ when Walldorf, Germany-based SAP finished the system in September 2007, according to the filing. The software ‘adversely affected sales’ through the first nine months of 2008, it said…
“The SAP system didn’t become ‘stable and functional’ until the fall of 2008 and still doesn’t operate as initially planned, Shane said in the court filing. The retailer now employs eight contractors to modify the SAP system and ‘bring it to full functionality,’ it said.”
Obviously, the typical SMB Microsoft Dynamics accounting system software implementation is far less expensive than the millions of dollars cited in this story. But, the Shane deployment highlights key issues that can affect any ERP level accounting software deployment. Among them are:
• Lack of detailed and well-organized pre-accounting services deployment planning. Obviously, the client and ERP supplier weren’t on the same page. It makes me wonder if they skimped on deployment and training expenditures in an effort to keep overall costs down—a surefire recipe for disaster. Inventory overstocking and lack of full functionality add to my belief that there may have been a full court press to get this up and running, without dedication of resources needed to meet objectives.
• Substantial delays. Time is money—three years versus one is disruptive, demoralizing, and obviously financially damaging. Can you imagine having an empowered workforce and positive accounting system software employment environment amid these types of delays?
It doesn’t take an accounting software guru—or any type of math maven for that matter—to see that no matter how sophisticated or robust the ERP system is, success ultimately resides in the details of accounting services deployment.
Now, the jewelry company faces bankruptcy while a corps of eight contractors tries to repair the damage. Begins to sound a lot like “Humpty Dumpty” to me: “…all the king’s horses and all the king’s men couldn’t put Humpty Dumpty back together again.” This is no time to play Humpty Dumpty with accounting system software.
