Oracle ERP project woes force construction firm to delay financial filing

The company's annual report couldn't be finished without 'unreasonable effort or expense'

Problems with the rollout of an Oracle JD Edwards ERP (enterprise resource planning) system have forced a Pennsylvania construction company to delay the filing of its fiscal 2012 annual report with the U.S. Securities and Exchange Commission.

New Enterprise Stone & Lime Co. said late Wednesday that the system, which went live in certain locations and capacities on Jan. 1, "will enhance its operations and strengthen its internal controls over financial reporting."

However, "unexpected delays and other issues," primarily with system interfaces and operational and financial reports, have made it impossible to collect all the information needed for the annual report, according to a statement.

New Enterprise "has engaged substantial external resources and accounting staff in intensive quality control and review of the new ERP," a process that has also impacted its ability to finish the report "without unreasonable effort or expense," the statement added.

Because of the problems, the ERP implementation has been "tentatively rescheduled" for the first quarter of New Enterprise's fiscal 2014, according to the statement.

Meanwhile, the company expects to complete the fiscal 2012 report by July 15, but said "there can be no assurances" further delays won't occur, according to the statement.

Despite the system issues, New Enterprise's "current projects, material and product shipments, and customer experience have not been materially impacted," the company said.

New Enterprise is implementing JD Edwards Enterprise One, company president Paul Detwiler III said in a brief phone interview on Thursday. Prior to this, the company had used custom-written software, according to Detwiler, who declined further comment.

An Oracle spokeswoman didn't respond to a request for comment. It wasn't immediately clear what system integrator New Enterprise is using on the project.

The company reported US$215.3 million in revenue for the third quarter of its fiscal 2012 ended Nov. 30.

For now, however, the company has apparently so far avoided the sort of financial impact felt by other companies with troubled ERP implementations, which include Lumber Liquidators and Ingram Micro.

One expert on IT project failures made an educated guess on Thursday as to what went wrong at New Enterprise.

"It sounds to me that they implemented the ERP system and now they're having trouble getting out accurate data, which they need to do their closings," said Michael Krigsman, CEO of consulting firm Asuret, which advises companies on how to conduct successful IT projects. "They may have not sufficiently tested the interfaces to existing systems prior to going live."

"Many companies take shortcuts with testing, then discover a problem and only subsequently invest the time and resources needed to test sufficiently," Krigsman added. "To do a proper test is a project in and of itself."

Krigsman also questioned New Enterprise's contention that the system issues have had no material impact. "When an IT failure impacts a company's revenue or ability to make SEC filings, clearly the situation is severe."

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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Chris Kanaracus

IDG News Service
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