NCC Group experienced problems with its failed SAP system implementation from the very beginning of the project, the company indicated in its preliminary full-year results.
Two months ago, the provider of escrow and assurance technologies revealed that it was forced to revert to an old, group-wide IT system from Sage after suffering problems implementing a new, integrated system from SAP across the business. As a result, the company had to write off £6.9 million in the final year to 31 May 2012, which includes the expected £900,000 cash cost of reverting back to the old system.
In its preliminary results for the year to the end of May, NCC said: “Following a thorough period of extensive testing, which, along with the design process, had already seen an 18-month slippage, the system was piloted in the web monitoring part of the assurance division in October 2011. In March 2012 it was then implemented in the UK escrow business and the finance function.
“Upon going live the new system caused immediate and significant disruption to the group. It became clear that the solution would, if it remained in use as it was, significantly impair, rather than improve, business efficiency.”
NCC has so far refused to reveal the name of the company responsible for implementing the upgrade, citing legal reasons.
It said, however, that it decided to suspend the project after extensive evaluations confirmed that the “provider had no product, or prospect of being able to deliver an integrated solution across the whole business, for the assurance division to meet its essential resource scheduling requirements.”
“The board is extremely disappointed by the suspension of the implementation. After the rollback is completed, a new project team will be commissioned to look at all suitable options and alternatives,” NCC said.
Although the company insists that its old IT system is still “fit for purpose” and “scalable”, it said that the solutions are not fully integrated, and that it still needs to refresh the system.
“The group needs to install a group-wide solution that has a low degree of bespoke development to allow easier upgrades and essentially more flexibility. The group currently runs a totally bespoke version of its software with the associated limitations,” said NCC.
The company is now in the process of transferring its operations to the previous IT system, and expects to complete it by October 2012.