Global ERP slinger Infor has paid UK hardware and construction retailer Travis Perkins £4.2m in settlement for a four-year failed ERP project that cost £108m.
In its half-year interim results [PDF] published last week, the retailer said the “gain of £4.2m is the result of the full and final settlement of claims in relation to the cancelled replacement of the Group’s merchant ERP system”.
The settlement relates to an earlier statement from Travis Perkins’ full-year 2019 results [PDF], published in March 2020, which said: “Following the change in approach to the replacement of the Group’s merchant ERP system announced in July 2019, the Group terminated its relationship with Infor… in October 2019 and formally set out its damages claim.”
The full-year results also detailed a £108m impairment relating to the halting of the ERP replacement programme. The decision to end the programme leaves the £7bn-revenue retailer, a household name in the UK, running its main enterprise systems in green-screen environments dating back to the 1980s, sources close to the implementation told The Register.
In fact, Travis Perkins admitted as much when then CEO John Carter told the audience of Infor’s New York conference in 2016 that its systems were “being held together by Sellotape and elastic bands”.
With great fanfare, Carter and then Infor president Stephan Scholl shared the stage to discuss the 24,000-user implementation of the CloudSuite version of Infor’s core M3 ERP product in a deal expected to be worth $200m to the software vendor over 15 years.
According to reports, Scholl declared: “It’s the largest cloud ERP transaction in this game.”
But sources speaking to The Register said it was not long before the project started to go wrong. A central problem was a lack of scrutiny of the design phase, which did not include functional specifications for interfaces, database schemas and security schemas. With barely any input from the IT department, business leaders in charge of the project said these aspects could be decided later during the construction phase.
“It was just an absolute mess,” one source said.
By 2018, Travis Perkins was no longer able to hide problems with the project. Half-year results [PDF], published in June 2019, said the “ERP replacement programme in December 2018 as this programme has continued to face significant challenges”.
The trading statement continued: “As a result, the Group is considering whether to implement the various elements of an ERP system as separate items, after modernising the Group’s core IT architecture. A revised approach may incorporate components from the existing project, however under accounting standards the Directors have concluded that the existing assets of £111m should be written off.”
But by the end of 2019 it was all over. As well as ending the relationship with Infor, the full-year results detail the Group’s “possible obligations under the relevant contracts, which include break clauses limiting the Group’s maximum possible contractual exposure to circa £65m”.
“In the view of Directors, it is probable that the Group will be able to successfully resolve this matter without making any payments to the software provider,” the results said. “Accordingly, no provision has been made in respect of these contracts. The Directors expect this matter to resolve in the next 48 months.”
It continued to describe “improvements required to core IT and digital platforms to enable the businesses to perform, and to adapt their propositions as customer demands change”.
Travis Perkins has not responded to The Register‘s requests for comment.
Infor’s revenue was $3.2bn as of 2019 [PDF]. It was bought by the privately owned Koch Industries in February 2020 in a deal thought to be worth $11bn. It has also declined the opportunity to comment on its relationship with Travis Perkins. ®
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