SAP is blamed for problems at European hi-fi manufacturer

Enterprise software giant SAP has been left to face the music after European hi-fi manufacturer Bang & Olufsen blamed an installation of the German vendor’s software for a ‘loss of financial overview’ and a breakdown in its supply chain.

In its 1998/1999 financial results released last week, Danish-based Bang & Olufsen claimed the year-long installation of SAP’s flagship R/3 product damaged the effectiveness of its supply chain and pushed up ‘consumption’ costs by DKK25m (£2.2m). The product is widely used by blue-chip companies in the UK and across the world.

Bang & Olufsen has said problems installing the software, at a cost of around £2.7m, caused deliveries to shut down for eight days and disrupted its cashflow.

The unexpected additional costs also forced Bang & Olufsen to make a special announcement to the Copenhagen stock exchange.

The Bang & Olufsen broadside against SAP highlights a growing trend for companies to blame software installations and suppliers for disappointing financial results.

In July UK pub and hotel group, Greenalls, issued a profit warning and blamed an exceptional £8m provision on an installation of software, supplied by System Software Associates at its wholesaling division, Tavern. The spotlight on software projects could also put companies on a collision course with the Big Five consultancies, who are dominant players in IT consultancy.

Nick Griffin, managing partner of Deloitte & Touche management solutions, said most ERP installations ran smoothly despite the complexity of the software involved.

‘People are realising that ERP solutions go to the heart of the business,’ he added.

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