In a strategic review document released to the Australian Stock Exchange today, the Crane Group said adjustments to the carrying value of the system "will result in a written-down book value of deferred expenditure related to the system at 30 June 2004 of approximately AU$48 million".
The company blamed the enterprise resource planning system difficulties for the underperformance of its Tradelink plumbing supplies stores.
"While Tradelink has a sound market position in an attractive industry, its financial performance, albeit on the back of the disruption caused by the ERP system rollout, is significantly lower than the industry standard and thus unacceptable," it said.
The Crane Group's managing director, Greg Sedgwick, also said the company's information technology department had been rationalised under one chief information officer, while significant savings would be derived from downsizing the department by 30 people following completion of the enterprise resource planning deployment.
Sedgwick told wire services implementation of the system, which kicked off four years ago, was meant to have been completed within two years. Instead, it caused immense difficulties and distracted management from doing their jobs well.
However, to date, all 42 of the company's manufacturing and warehousing sites are live on the system, as well as 207 of 230 trade outlets. The last trade outlet is expected to go live next month.
The Crane Group said operating costs of the information technology system, including depreciation and amortisation, were expected to rise by AU$15 million for the year ended 30 June 2005.
However, the group said despite the problems encountered in rolling out the system -- formerly a JD Edwards product before the vendor's acquisition by PeopleSoft -- "the underlying rationale for the implementation of the new system remains valid".
More than 380 jobs will go across several divisions under the rationalisation, which is expected to cost the company AU$51.4 million after tax.
The then managing director of JD Edwards Australia and New Zealand, Ian Hodge, touted the Crane Group win in November 2002 as an example of how the company was capturing market share by taking from the higher-end at the expense of Oracle and SAP.
just some 2 cents regarding the erp implementation...
i guess a lot of people will point the finger at peoplesoft, but having worked for several large organisations and major vendors i can just imagine how Crane would've approached the implementation of peoplesoft...
firstly a peoplesoft implementation across a large org with customization is a major major project...
i could just imagine Crane setting some unrealistic timeframe in which to have it implemented..
i can just imagine them not listening to any of the vendors hardware, software, architecture recommendations in the hope of saving some bucks to spend on managements holidays... thoughts of telstra running sun's messaging server on hp (think it was hp - not sparc anyway) boxes springs to mind here.. where the hell did that idea come from???
wouldn't even surprise me if some of the managers thought "isn't it as quick to install as msoffice?".. yes that's how dumb some of the managers are out there...
i can even imagine the managers going on about how technical skills for the project won't be important and then they'll wonder why there's implementation and performance issues...
when are companies going to learn how to approach IT projects?
not that peoplesoft would be free of problems either... the patch cycle is ubelievable for that product... damn wouldn't surprise me if half their code was bodged together in india and the sales people promised things that technically just couldn't be delivered.. see that every day...
ah well at least I have my Office Space and The Office dvds to see im not the only one that thinks this way about the corporate slush pit....
"Did you get the memo?"