Jeweler cites SAP project in its bankruptcy filing

An Englewood, Colo.-based jewelry retailer said that cost overruns and functionality issues related to an SAP software implementation were partially to blame for its move last week to file for Chapter 11 bankruptcy protection.

Shane Co. did note in papers filed with the U.S. Bankruptcy Court in Denver that the move was mostly due to a "precipitous decline in retail sales, particularly in luxury goods," during the current recession.

Shane agreed in 2005 to buy a "sophisticated point-of-sale and inventory management system" from SAP AG that would cost $8 million to $10 million and could be rolled out within a year. The rollout took 32 months and cost $36 million, it said.

When employees started using system in September 2007, it "did not yet provide accurate inventory count numbers," and the stores became "substantially overstocked," Shane said.

The SAP system "became stable and functional" toward the end of 2008 but still doesn't deliver "the full functionality originally contracted for," the filing said.

In separate statements, Shane and SAP said they continue to have a strong working relationship. SAP said it believes "the bankruptcy filing inaccurately summarizes the implementation and cast SAP in an unfair light."

This version of this story originally appeared in Computerworld's print edition.

Copyright © 2009 IDG Communications, Inc.

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