ERP Woes Delay Wheel Maker's Financial Results

Problems with a recently installed ERP (enterprise resource planning) system have partly forced automotive wheel maker Superior Industries International to hold off filing its second-quarter results, according to a company statement and U.S. Securities & Exchange Commission filing on Wednesday.

While company management "has been working diligently," it is "unable, without unreasonable effort or expense" to complete the financial statements due to "unanticipated delays," the SEC filing states.

The problems were primarily due to closing a quarter for the first time with the ERP system, along with changes to Superior's legal structure in Mexico, it added.

The company recently implemented a product from QAD, CIO Ross Perian said in an e-mail. He did not respond to requests for further details on the project, which went live on March 29, according to another SEC filing.

But Superior is not anticipating major further delays, believing it can finish the work within a five-day extension period, according to the SEC filing.

QAD didn't immediately respond to a request for comment.

Superior, based in Van Nuys, California, reported US$419 million in revenue during 2009. It clearly felt the brunt of the economic downturn and slumping auto industry, as revenues were $755 million in 2008.

Meanwhile, Superior's ERP woes don't seem nearly as severe as those felt by companies like Levi Strauss, which actually experienced a negative impact on its earnings in 2008 due to ERP project cost overruns.

Overall, it is important to place ERP project difficulties in the right context, said Forrester Research analyst Paul Hamerman.

ERP platforms present companies with both opportunities and potential problems, since they can be tailored to the needs of a business, he said. "That's oftentimes the downfall of these big projects. [The core software provides] 70 to 80 percent of what they need, and then they get into expensive customizations. They get into that, and never finish."

Poor project management and inaccurate assessments of how well the application will fit present other hurdles, Hamerman added.

However, "most of these systems go in successfully, even if they're a little bit late," he said.

The SaaS (software-as-a-service) market for ERP hasn't seen the same sort of high-profile project failures as with on-premises applications. One reason could be the fact that SaaS ERP options still mostly cater to midmarket or small companies, and don't necessarily provide the same level of possibilities for customization.

Dominant ERP players like SAP are taking deliberately incremental steps toward SaaS for large companies, rolling out on-demand applications that serve as extensions to on-premises systems.

But SAP does have a full SaaS ERP suite for smaller companies in the form of Business ByDesign, which competes with the likes of NetSuite.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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