ERP SOFTWARE INDUSTRY BUZZ
Shane Co Blames Failed SAP Implementation in Bankruptcy
On January 13, 2009 Shane Company, one of the largest jewelry retailers in the United States, filed for Chapter 11 bankruptcy citing the combination of a slowing economy and a failed SAP project that ballooned from $10 million to $36 million. The jewelry retailer told a U.S. bankruptcy judge that the company's decline was triggered in large part due to excessive delays and cost overruns associated with a run away SAP implementation project. According to court papers filed by Shane, the SAP ERP system took approximately three years to implement instead of the proposed one year and costs 'ballooned' to $36 million from a projected maximum of $10 million. Further, Shane claims that the company became "substantially overstocked with inventory, and with the wrong mix of inventory" and that the SAP ERP software "adversely affected sales" through the prior nine months leading to the company's bankruptcy. The complaint cited that the SAP system did not become "stable and functional" until the fall of 2008 and the ERP application still does not operate as initially planned. Shane continues to employ eight contractors to modify the SAP system in order to "bring it to full functionality." SAP spokesperson Saswato Das commented by telephone that SAP was "assessing the situation" and could not provide additional comment.
Trackback: http://www.erp.asia/shane.asp
Tags: SAP
Posted: ERP Implementation Failures
By: Editor
Date: January 13, 2009
Comments: email comments to buzz<at>erp.asia
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Reader Comments
By Ian Stephens, January 14, 2009
Failed ERP implementations are nothing new, however, it does seem as though the volume and magnitude of failures is increasing. While SAP may be very difficult to implement, it sounds like the company may have underestimated the challenge. Let the buyer beware.By Annie Yang, January 16, 2009
Frankly it sounds like this company was completely over-sold by somebody. For them to be told the maximum investment would be $10M and then the bill goes up nearly 400% sounds like a failed sales process that then turned into a failed implementation process.By anonyms, January 18, 2009
I think software sales people and ERP implementers are becoming more aggressive in their sales cycles and with their sales tactics. I've been following the Waste Management failed ERP implementation and the allegations and stories that appear to be supported by multiple accounts seem to tell a story of misrepresented sales claims backed up with misrepresented implementation estimates.
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