ERP Rollout Continues to Weigh Down Symantec

Vendor blames weak earnings on process problems

Symantec Corp. continues to try to work through a challenging rollout of Oracle Corp.’s ERP applications that has started to affect its bottom line.

In an interview last week, Symantec CIO David Thompson said the problems facing the security and storage management vendor primarily involve internal process changes — not technical glitches. “We were changing the business processes fundamentally and dramatically, and the ERP system was enabling some of those changes,” he said.

CIO David Thompson

CIO David Thompson The rollout started in December 2005, and the new ERP system went live last November, combining what had been separate Oracle-based financial and order management systems at Symantec and the former Veritas Software Corp.

> Symantec, which acquired Veritas in July 2005, is running Oracle’s E-Business Suite 11i applications on Sun Solaris servers. Using an Oracle Fusion Middleware portal on the front end, the new system was designed to provide a single point of contact for the combined company’s customers and business partners, Thompson said.

Temporary Fix

Symantec also revamped its stock-keeping unit (SKU) product identifiers by creating a single set of codes for all of its applications. However, some smaller partners and distributors didn’t update their systems to handle the new SKUs in time and were unable to submit purchase orders electronically after the ERP system went live, Thompson said. To cope, Symantec temporarily processed the orders manually while extending the deadline for the partners to use the new SKU system from Dec. 1 to this month.

> Symantec also changed the way it sells software licenses, requiring all customers upgrading to new releases to register online and get a special electronic key for activating their applications. As reported previously by Computerworld, the new licensing process created confusion and delayed upgrades for some customers, particularly users of Symantec’s Backup Exec tool. (see: "Piracy ring hits Symantec, slows license rollout ")

Thompson said that led to a spike in call center activity, forcing Symantec to hire more workers to handle the increased volume of phone calls.

> Symantec cited the difficulties with the 11i implementation as a contributor to the disappointing financial results that the company reported for its third quarter, which ended Dec. 29. In its Jan. 24 earnings statement, Symantec said its results were below expectations, and it announced plans to trim $200 million in annual costs through layoffs and other restructuring actions.

> “Systems changes such as these certainly don’t come without issues,” Symantec CEO John Thompson said during a conference call after the results were announced. “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.”

> But, he added, “we believe the major technical and process issues are now behind us.”

James Beer, Symantec’s chief financial officer, said during the call that the company will spend a “modest amount of incremental money during the [current] quarter to remediate the handful of issues that remain.” Beer said he also anticipates that the fixes will require the use of some of Symantec’s internal IT resources.

> David Thompson declined to disclose either the cost of the fixes or the ERP project’s overall price tag. He said that Symantec is already paring down the number of call center workers it had added in response to the problems.

The company expects a variety of longer-term benefits from the new system, Thompson added. For example, having one set of ERP applications enabled Symantec to shrink its IT infrastructure and reduce its licensing costs with Oracle, he said.

> In addition, the system has been linked to Oracle’s PeopleSoft Enterprise human resources applications and to Salesforce.com Inc.’s hosted CRM software. 

Copyright © 2007 IDG Communications, Inc.

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