SAP: Don't blame us for DHL's logistics woes

The upgrade gone wrong has already led to a write-off of €345 million

Deutsche Post DHL

Deutsche Post DHL Group is struggling with a software upgrade in its DHL Global Forwarding division. 

Credit: Deutsche Post DHL Group

A languishing software upgrade project at Deutsche Post DHL Group has forced the German mail and courier company to take a write-off of €345 million, but software provider SAP is taking pains to make it clear that it's not to blame.

"Recent media reports suggest there is a connection between SAP and problems with the implementation of a new logistics system at DHL," the company said on Friday. "These statements regarding SAP are incorrect."

Just over a week ago, a story in the German online publication Manager Magazin suggested that DP-DHL might seek damages from SAP and IBM, both of which have been involved in the project.

Dubbed the New Forwarding Environment (NFE), the upgraded software for DHL's Global Forwarding division was to enable a variety of new capabilities, including better shipment visibility through improved capture, management and display of operational milestones, and a reduction of paperwork through greater use of a document management system.

After the project hit the skids earlier this year, DP-DHL warned investors in late October about the anticipated financial impact.

"2015 is a year of transition," said Frank Appel, the company's CEO. "Our objective for a renewal of our forwarding business remains valid. We are now undertaking further measures to make this renewal business-centric."

The write-down was formally confirmed by the company earlier this month when, as part of an earnings report, it announced further one-off effects of about €200 million. Part of the costs were attributed to removing the new software from the locations where it had been piloted.

The company now plans to take a more cautious and incremental approach to upgrading its technology, Appel said in a recent interview with German online publication DVZ.

As for SAP, "we are not the general contractor," said Hilmar Schepp, the company's head of strategic innovation and senior director for global corporate affairs. "It is SAP's software. We sold the licenses, but we are not responsible for the implementation."

DP-DHL appears to agree.

"As far as we can judge at present, this is not primarily an issue with the base software provider, technically or commercially," confirmed Daniel McGrath, a representative for DHL Express and Deutsche Post DHL Group, via email. That provider -- SAP -- is "only providing the base software for the NFE solution and is not primarily responsible for the configuration, enhancement and piloting," he added.

Such responsibilities fall instead to the general contractor for the project, and though neither SAP nor DHL would confirm it, that role apparently belongs to IBM.

"At this moment in time, we would prefer to refer to the roles within the program, without specifying the names of individual partners/suppliers," McGrath said.

"We expect the general contractor who is primarily responsible for the program to fully deliver in line with their contractual obligations," he added.

IBM did not respond to a request for comment. 

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