January 26, 1998 SAP Instal lation Scuttled Unisource cites internal problems for $168M write-off By Tom Stein nisource Worldwide Inc., a $7 billion distributor of paper products, said last week it will write off $168 million in costs related to an abandoned nationwide implementation of SAP enterprise software. Unisource began installing SAP human resources, financial, and distribution modules in 1994. The company planned to complete the implementation in two years and budgeted a total of $300 million over 10 years, says acting CIO Bob Richards. But more than three years into the project, Unisource executives decided SAP wasn't the right enterprise software for the Berwyn, Pa., company. Unisource had hoped to replace a number of legacy systems and consolidate its 11 far-flung servic e centers onto a single, integrated R/3 system. The problem that scotched the implementation, Richards says, was that Unisource had grown by acquisition, and each service center had its own way of processing orders and doing procurement. "As a result, we would have had to roll out a customized SAP system for each center," he says. "That was proving too expensive and too time-consuming." Most of the $168 million poured into the project went toward consulting fees, Richards says. Furthermore, Unisource was working against a year 2000 deadline and thought the SAP project wouldn't be completed in time, Richard says. Now, the company will spend $12 million to make its existing systems year 2000 compliant, he says. Richards, who recently was named acting CIO in the wake of the failed implementation, says Unisource should have instituted common practices across its operations before trying to implement R/3. Kira Kashuba, a client manager at SAP who worked on the implementation, says the Unisource decision i sn't a major setback for the vendor. "SAP is not dead here," she says. "Once they streamline costs and restructure the company, there will be an excellent platform for SAP." A Unisource spokeswoman confirms that SAP is operational at one of the company's 11 service centers. She says Unisource will rely on its legacy systems for the next few years but is "not ruling out a future with SAP." Back to News in Review Send Us Your Feedback Top of the Page

---