I was a little flummoxed to read that Levi Strauss, the venerable Jeans maker, reported a 98% drop in quarterly net profit last week. Well I wasn’t flummoxed about the drop in profit – these are difficult times after all. No, what really surprised me was the major reason given by Levis, after the economic downturn for this drop in profits: a new ERP system.
Yes you guessed it – ERP that, according to a Wikipedia definition should;
combine the data of formerly separate applications, simplify keeping data in synchronization across the enterprise, simplify the computer infrastructure within a large organization, and it standardize and reduce the number of software specialties required within larger organizations
In commenting on the ERP debacle, Levi Strauss said that;
Issues with the ERP system led to delayed orders and cancellations by retailers and amounted to a “substantial portion” of Levi Strauss’ revenue decline in the quarter
Now is it only me or is the tail wagging the dog here? Isn’t software meant to help business, and shouldn’t a new ERP system improve the results obtained with the former. Sure there is always a bit of stop/start when deploying a new solution but really, a 98% drop in profits, approximately half of which is attributed to the cost of software deployment?