IT problems prompt MFI profits warning

MFI's profits have been directly hit by ongoing problems with the implementation of a multi-million-pound SAP-based supply chain modernisation project that has resulted in customer orders being sent out incomplete.

The company hinted there were teething problems with the new system in its July financial results but a review last week of August Bank Holiday sales found the problems were more serious than it initially thought.

"Since the interim results statement in July, UK Retail has experienced significant issues with the newly implemented supply chain system. This has led to an unexpected shortfall in the Group's ability to deliver orders as planned," a statement said.

MFI said the resulting difficulties with customer deliveries have directly impacted both margins and sales dispatches. "Margins are being negatively affected through the costs of remedial work with customers and the costs being incurred to address the ongoing systems issues."

But the company said it has identified the key issues with its systems and is working to resolve them "as soon as possible".

A spokeswoman for SAP would not comment on the causes of the problems except to say its own software is not to blame. "MFI is a customer of ours we are working with. It's not an issue with the SAP software but we are actively engaged in helping MFI reach a resolution," she said.

Dale Vile, service director at industry analyst Quocirca, told silicon.com that it is unusual nowadays for software to be the cause of ERP implementation problems.

"Post mortems on most major project failures very rare since the Baan days to find software problems are at the root of them," he said.

Vile could not comment specifically on the MFI situation but said that the relationship between the customer, software vendors and the third-party integration companies is usually the critical factor in the success or failure of ERP systems

"It's a three-way deal. It's not possible for any professional services company to end up with a successful implementation unless the customer plays their part in articulating requirements, expectations and timescales well and puts the required resources into the mix," he said.

MFI could not be reached for comment.