It has emerged that NCC Group has gone back to Sage after abandoning a problematic implementation of an SAP ERP system that has cost the company £6.9 million.
NCC refuses to comment on details about both the old and new software, citing legal reasons, but Computerworld UK yesterday found previous annual reports that referred to the troubled SAP rollout, and an analyst at Investec bank and asset management group – which used to be the house broker at NCC – revealed Sage as the system that was being upgraded.
“We assume that the project was a necessary one to facilitate higher levels of growth and therefore we do expect a level of growth drag through reverting back to the old systems. On the call, management stated that the old Sage-based products are entirely suitable for the job, but this begs the question of why the expensive migration?” said Investec analyst James Goodman.
He understands that the £6.9 million write-off costs relate to a mix of licence, implementation, contractor pay and internal staff costs.
“Whilst described as non-cash, these are real costs, which have been spent over the preceding three years – we estimate around £2 million in FY12E (estimated full year 2012),” said Goodman.
Furthermore, analyst firm TechMarketView believes the system is Sage’s SalesLogix.
“Even though Sage has apparently won NCC back, for the moment anyway, by accident rather than design, it is an endorsement of sorts. The system did its job and did not disrupt the business. Meanwhile SAP, who has been assiduously courting mid-market businesses and divisions of large enterprises with the message that its solutions are not as costly and complicated as they are thought to be, will be more than a little embarrassed,” said TechMarketView analyst Angela Eager.
“One incident is not indicative of the wider market, but this may give businesses, who are considering software from tier one providers in place of dedicated mid-market solutions, pause for thought. The next question is, where will NCC seek to lay the blame – at SAP’s door or with the so far unnamed SI who was engaged to specify, install and implement the system?” she added.
In a statement, SAP said: “SAP is committed to our customers’ success and we are concerned to learn that NCC has reported that it is having issues with its IT system.
“As such, we are already working with our partner to engage with the customer and understand their concerns and, as always, both NCC and our partner can be assured of our full support,” it added.
