Fashion house Burberry’s massive SAP implementation continues to cause the company some anxiety, with its trading statement, released today, revealing delays, re-phasing and additional costs.
The company reports that its huge five-year Project Atlas infrastructure revamp, now in year two, continued successfully in the first half, with further progress in both improving business processes and in installing new IT systems. And it adds: “To accommodate the strong growth in our business, we have increased our investment in both areas.”
However, the report goes on to explain that to mitigate the risks of implementation at a time when Burberry is growing strongly, the company has decided to “delay certain elements of the IT roll-out into the third quarter”. That re-phasing, it says, has led to some additional spend in operating costs within the business and in IT resources.
“As a result of the latter, overall costs relating to Atlas in the current financial year are now expected to be approximately £19m [previously £15m],” says the company. “This still brings the total project cost to just over £50m in the three-year period. The programme remains on track to deliver the targeted £20m tangible benefits to profit in 2007/8.”
Project Atlas was originally billed as saving the company some £20m from 2007—2008, in particular as a result of improvements associated with its supply chain and distribution, product development and business decision-making processes, as well as its agility – all as a result of tight integration and modern platform technology.
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