MFI claims its problem-hit SAP implementation will still save the company£35 million a year in supply chain costs sometime in the future.
Problems with the£50 million project, which has doubled in cost over the past 12 months, could now cost£30 million to put right.
The problems prompted a profits warning, takeover speculation and the subsequent resignations of MFI chief finance officer Martin Clifford-King and supply chain manager Gordon MacDonald. MFI IT director Simon Dean remains with the company.
A spokesperson said MFI 'aimed to have things resolved by the winter trading period, or (to have) contingencies in place', and said the£35 million-a-year saving 'still holds good for the long term'.
MFI refused to explain the maths behind the£35 million sum. However, it is not without precedent. Last year, Surrey County Council expected to save£50 million in 10 years with SAP and IBM. In 2002, Thomas Cook claimed savings of£140 million after a SAP implementation that cost a fraction of the MFI scheme.
Ovum principal analyst David Bradshaw said such savings claims are not unrealistic, but calculating benefits and costs is not easy. 'It's very difficult to come up with an unambiguous figure,' he said.
Berwin Leighton Paisner IT lawyers said it is unlikely that loss of profits or saving can be recovered from suppliers. 'It is up to the customer to ensure that the business case for the system is realistic and achievable - you should never expect to recover those types of losses from suppliers,' said a lawyer.
- Leader: page 21
AVOIDING IT PROJECT PITFALLS
To avoid large projects going wrong, Ovum principal analyst David Bradshaw offers the following advice:
- Look at all alternatives: don't assume the market-leading software is best for you
- Cut projects down into manageable stages
- Find a system integrator with a proven track record
- Don't believe what you read in case studies
- Shift as much risk to the suppliers as you can, or you will end up paying day-rate when it goes wrong.