Bang & Olufsen complains of SAP implementation

German software vendor SAP got a slap in the face yesterday when Danish electronics maker Bang & Olufsen Holding put some of the blame for its lower-than-expected financial results on problems relating to SAP's R/3 ERP (enterprise resource planning) system.

Bang & Olufsen (B&O), a home entertainment company known for its sleekly designed stereo systems and televisions, among other products, implemented R/3 in February 1999, largely in order to counter year-2000 problems in a 20-year-old system. However, the R/3 implementation, already delayed several times, resulted in problems.

"The consequences included a total stop on deliveries lasting eight days and a generally unsatisfactory supply situation for both finished goods and spare parts," Bang & Olufsen wrote in the financial statement for 1998/99 filed with the Copenhagen Stock Exchange.

B&O also experienced a lack of financial oversight due to the system. During the first week of July, Bang & Olufsen discovered an unexpected increase in spending of DKK25 million (about $A5.45 million), which was reported to the Copenhagen Stock Exchange.

The SAP implementation has damaged the company's credibility, according to Bang & Olufsen. However, it didn't do serious damage economically. The revenue for the financial year 1998/99 was DKK3.4 billion, an 8 per cent increase over the year before. The operating profit of DKK333 million represented an increase of 11 per cent.

According to the financial statement, the R/3 system is still not sufficiently robust or efficient. However, B&O has not seen the need for a meeting on the matter with SAP, according to Niels Molzen, SAP's regional manager for the Nordic countries.

"Also we still have a good working relationship," said Molzen, who declined to comment further on the situation.

In a Danish newspaper, B&O's chief executive officer Anders Knutsen previously placed the responsibility for the problems on the SAP software as well as internal problems.

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