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SAP upgrade hurts Ingram Australia

The global headquarters of technology distributor Ingram Micro has blamed declining financial performance over the first quarter of its 2011 financial year specifically on failings associated with a troubled upgrade to a new SAP-based enterprise system in Australia.
Written by Renai LeMay, Contributor

The global headquarters of technology distributor Ingram Micro has blamed declining financial performance over the first quarter of its 2011 financial year specifically on failings associated with a troubled upgrade to a new SAP-based enterprise system in Australia.

The upgrade has been in the works for some time, with the local division of the company standardising on the SAP platform it uses globally, and shifting off the Adonis platform it was using previously. In January this year, the company said that it was planning to switch on the upgrade with minimal disruption, but a series of glitches led the company's local MD Jay Miley to ask partners for patience with the platform in mid-February.

In a statement issued late last week, Ingram Micro's global operation said that its operating and net income over the past quarter did not meet its expectations, "largely due to complications with our ERP system implementation in Australia".

"We're diligently addressing these issues to drive improved profitability and performance as soon as possible," the company said. "We are confident the future benefits of the new system outweigh some of the hurdles we are facing today."

The company's net income over the quarter to 2 April this year dropped 19.9 per cent to reach US$56.3 million, compared with the same quarter in 2010, although net sales had actually risen by 7.8 per cent in the period. The cost of sales, as well as operating expenses, rose over the period. Asia-Pacific sales also rose by 9 per cent. "This year's lower income is primarily the result of the system-transition issues in Australia, which experienced a US$21 million decline in operating income compared with the prior year," the company said.

SAP said that Ingram Micro is a valued customer, and that they remain "strong and positive partners". "SAP is actively engaged with the company in completing their implementation and we believe this is solidly on track," it said. "When complete, we are confident Ingram Micro will reap significant benefits from the system and it will continue to be a critical element in the company's growth strategy."

It is believed that Accenture is the implementation partner for the project at a global level. The company was not immediately able to comment on the issue.

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