Avis cancels PeopleSoft ERP system

The car rental company is set to take a hit of €45m, partly due to IT restructuring which includes cancelling the PeopleSoft system because of problems with its 'design and implementation'

Car rental firm Avis Europe has taken a multi-million-pound hit on its bottom line due to problems with its IT.

According to the company's annual statement, it will take an exceptional charge of between €40 to €45m as a result of shutting down its credit hire business Centrus and problems with the IT restructuring.

One of the main culprits was a new ERP system. Development of the system has been terminated by Avis Europe on the grounds it had "encountered substantial delays and consequently higher cost due to a number of fundamental problems with its design and implementation".

The company also said in a report that it had cancelled the system "as fast as practicable to avoid further cost".

Avis Europe made the decision, as outlined in its 2003 annual report, to switch its ERP provider to PeopleSoft.

PeopleSoft has confirmed in a statement that Avis bought licences in the first quarter 2003 but said Atos Origin KPMG (now Atos Consulting) was in charge of the implementation.

The impact of cancelling the ERP system will be minimal, according to Avis Europe, as it has not been rolled out to any of its operations. IT restructuring connected with the ERP system will also be scaled back.

The company, which does business in several European countries, also announced that its ongoing project to create a shared service centre for centralising back office work in Budapest, Hungary, would cost the company a less-than-predicted €14m in future accounting periods.

Murray Hennessey, CEO of Avis Europe, said in a statement: "We will continue to implement the successful aspects of the project but we will halt immediately the parts of the project that are not going well or will no longer deliver a satisfactory return on investment.

"We are very disappointed that major IT parts of the project have incurred significant exceptional costs and will not deliver the anticipated benefits. We felt it was right to take decisive action on the results of the review."