Bungled ERP Installation Whacks Asyst

Computerworld - A troubled ERP installation at a joint venture in Japan has forced Asyst Technologies Inc. to restate earnings and spend up to $2 million for damage control. The semiconductor automation products maker also faces a possible delisting from the Nasdaq Stock Market.
The ERP problems came to light when Fremont, Calif.-based Asyst announced its fiscal second-quarter results on Dec. 20, seven weeks later than planned.
Company spokesman John Swenson said the delay was largely the result of a bungled ERP data-conversion project at the Asyst Shinko Inc. unit. He declined to identify the ERP program. The flawed upgrade at ASI affected the entire company's accounting processes and prevented it from closing its books to meet quarterly reporting deadlines, Swenson said.
"It's a classic problem with ERP systems -- everything you do has a financial impact," said Bill Swanton, analyst at Boston-based AMR Research Inc. During conversion, data can be lost and "you end up with garbage," he added.
As a result of the upgrade problem, Asyst had to to revise its first-quarter results and increase its net loss by $1.4 million. And because it was late in filing a required 10-Q form for the second quarter with the U.S. Securities and Exchange Commission, Asyst had to appear before the Nasdaq Listing Qualifications Panel on Dec. 15. Although no action has yet been taken by Nasdaq, "the matter remains open," according to a company statement.
Asyst runs its own ERP system separate from the Japanese unit. That system has performed without trouble. ASI functions as an independent company and has to report its own finances, Swenson said.
Asyst paid $65.7 million in late 2002 for a 51% stake in ASI. Japan-based Shinko Electric Co. owns the remaining 49%.
In-house Problems
ASI had relied on a third-party IT services provider until last June, when the unit brought the function in-house with the implementation of the ERP system.
That implementation, which was apparently still under way when the company's second quarter ended on Sept. 25, led to the reporting delays.
Part of ASI's problem stemmed from the complex nature of its work selling automated material-handling systems and providing services to semiconductor customers. ASI's contract projects can involve many individual work orders, said Swenson. After the ERP data conversion, the worth of some of these orders was reset to zero in the new financial application.
"The conversion process was not managed well," Swenson said.
Rebecca Wettemann, an analyst at Wellesley, Mass.-based consultancy Nucleus Research Inc., said that companies often underestimate the importance and cost