ERP rollout whacks Symantec's bottom line

Computerworld - Symantec Corp. continues to work through a challenging ERP rollout that has impacted its bottom line.

The Cupertino, Calif.-based network security and content software maker cited difficulties with an Oracle Corp. E-Business Suite 11i implementation as contributing to disappointing third-quarter earnings for fiscal 2007. In its Jan. 24 earnings statement, the company said it missed prior earnings guidance for the quarter and unveiled plans to trim $200 million in costs.

During a conference call with investors that same day (download PDF), CEO John Thompson discussed the ERP challenges. "Systems changes such as these certainly don't come without issues," he said. "And, we may have had more than our fair share of them with this set of changes, where we incurred higher expenses than planned and lost some revenue opportunities during the quarter."

He noted that Symantec incurred additional labor and administration costs for tasks such as duplicating documents to complete transactions or create records. "We believe the major technical and process issues are now behind us," he said.

During the call, Symantec Chief Financial Officer James Beer also said the company will spend a "modest amount of incremental money during the March quarter to remediate the handful of issues that remain." Beer also expects work on the fixes to use some of Symantec's internal IT resources.

In an interview with Computerworld this week, Symantec CIO David Thompson elaborated on the issues, which primarily involved process changes -- not technological glitches. "We were changing the business processes fundamentally and dramatically, and the ERP system was enabling some of those changes," he said. The rollout started in December 2005 and went live last November. The main goal behind the initiative was to boost customer satisfaction.

Among the specific project goals was the consolidation of two versions of the Oracle E-Business Suite 11i. Both Symantec and its Veritas Software subsidiary, with which it merged in July 2005, used 11i. That prompted Symantec to collapse the two systems into one version of the E-Business Suite, which includes financials and order management modules and runs on Sun Solaris servers.

Using an Oracle Fusion middleware portal on the front end, the new system provided a single point of contact for partners and customers. The portal could be used to order Symantec's enterprise network security and content applications, as well as its Veritas backup and storage applications.

The new Oracle system was linked to Symantec's Oracle PeopleSoft Enterprise human resources applications on the back end. On the front end, it tied into on-demand CRM software from Salesforce.com Inc. Customers and partners purchasing any application licenses did so through the E-Business Suite, which also calculated the sales revenue and tracked sales volume, said Thompson.