Problems with Revlon’s SAP ERP project trigger lawsuit from investors

Patrick Thibodeau, TechTarget

New-York based cosmetics manufacturer Revlon implemented a new SAP ERP system, but poor execution of the project resulted in Revlon’s business being disrupted at its Oxford, N.C manufacturing plant. The business disruption caused by the new software prevented fulfilment of shipments to some large retail customers, resulting in about $64 million in lost sales.

The company claims to have implemented a robust service recovery plan to remedy the situation, but after announcing the problems, Revlon’s stock price dropped 6.4%. This triggered a class action lawsuit from investors seeking damages.

MillerCoors and ERP implementation vendor sue each other over failed ERP project

Patrick Thibodeau, InformationWeek

In a contract initially worth $53 million, MillerCoors hired HCL America for an SAP project to integrate processes across the organization. The expectation was to save $550 million in costs by consolidating the MillerCoors’ and Molson Coors' supply chains.

The implementation project did not go well, with MillerCoors eventually suing HCL for $100 million claiming that the contractor missed project deadlines, delivered buggy code and used junior consultants with inadequate skills. Then HCL filed a counterclaim disputing the brewer’s allegations that they owned responsibility for the troubled ERP project. MillerCoors is accused of being unable to communicate requirements and of shielding its own leadership from blame for failure by making HCL a scapegoat for project problems.

Finish Line's Supply Chain disaster cost $32 million in lost sales and the CEO his job

Dan Gillmore, Supply Chain Digest

Finish Line CEO Glenn Lyon stated in the Q3, 2016 earnings report that performance was severely impacted by a disruption in the supply chain following the implementation of a new warehouse and order management system. Finish Line had trouble filling on-line orders and replenishing stores that cost it $32 million in lost sales, or about 8% of the company's revenue, and this caused an 11% drop in their stock price. CEO Lyon announced his departure simultaneously with the Q3 earnings release.

Finish Line had underestimated the challenge of the project, and especially the level of change management in moving from the old system to the new. There was not nearly enough training for associates and supervisors on the floor to help when ramping up the new system, and too much trust was placed in the software vendor and the implementation consultants.

Oracle sued by university for alleged ERP failure

Chris Kanaracus, Computerworld

Montclair State University is suing Oracle over an allegedly botched ERP software project, saying a series of missteps and delays could ultimately cost the school some $20 million more than originally planned, according to a complaint filed last week in U.S. District Court for the District of New Jersey.

Oracle "failed to deliver key implementation services, caused critical deadlines to be missed, refused to make available computer resources that it had promised, failed to deliver properly tested software, and overall, failed to properly manage the project," the complaint alleges. In the end, Montclair suspended the project, fired Oracle and began looking for a replacement systems integrator, it adds. Due to the problems, the school's costs will increase by greater than $10 million, according to the complaint, which goes on to describe Oracle's alleged failings in detail.

ERP Woes Blamed for Lumber Liquidator's Bad Quarter

Chris Kanaracus, IDG News Service

Lumber Liquidators is attributing a weak third quarter to a complex SAP implementation, saying the project imposed a significant drain on worker productivity. But the problems appear to be largely related to employees having trouble acclimating to the new system, versus malfunctions in the software itself.

The discount flooring chain "implemented the most significant phase" of its SAP project, which included a new point-of-sale system, warehouse management, and inventory modules. While the business continued without interruption during the project, and net sales rose US$6.7 million to $147.2 million, lower productivity led to an estimated $12 million and $14 million in unrealized net sales, according to the company. Net income fell nearly 45 percent to $4.3 million.

Avantor Performance Materials sues IBM over SAP project 'disaster'

Chris Kanaracus, Computerworld

IBM has been slapped with a multimillion-dollar lawsuit by chemical products manufacturer Avantor Performance Materials, which alleges that IBM lied about the suitability of an SAP-based software package it sells in order to win Avantor's business.

Fully aware that, given the competitive pressures of Avantor's industry, and the specialized demands of its customers, Avantor could not tolerate any disruptions in customer service, IBM represented that IBM's 'Express Life Sciences Solution' was uniquely suited to Avantor's business," the lawsuit states. "The Express Solution is a proprietary IBM pre-packaged software solution that runs on an SAP platform." But, after signing, Avantor discovered that Express Life was "woefully unsuited" to its business and the implementation brought its operations to "a near standstill," according to the suit.

Avantor has suffered tens of millions of dollars in monetary damages, as well as taken a hit to its reputation among partners and customers, the suit states. "IBM, meanwhile, has already pocketed over $13 million in fees from Avantor for a systems implementation project it mismanaged and was unable to perform properly," the lawsuit states. "Incredibly, IBM is now seeking to profit from its misconduct by demanding millions of dollars in additional fees to redesign and rebuild the defective System it implemented." The suit was eventually dismissed with each side paying their own costs.

Sobeys replaces software that can’t handle their transaction volume

Lucas Mearian, Computerworld

Canada's second-largest supermarket chain with 1,400 stores abandoned an $89 million SAP retail software implementation. Growing pains experienced turned out to be "systemic problems of a much more serious nature." A 5-day system shutdown caused out-of-stock issues and affected business operations for about 5 weeks.

After 2 years the shutdown was the last straw, and Sobeys decided to phase out SAP Retail saying that the software had insufficient core functionality and could not handle their high transaction volume. This decision cost Sobeys about $50 million after tax.

Sobeys decided to replace the SAP retail applications with new software that can be installed more quickly and that will fully meet all business requirements. Sobeys also replaced their CIO.

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