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ERP Failures Must Be Anticipated To Be Prevented

How important is a top-to-bottom Enterprise Resource Planning (ERP) system to a hard-charging business? Very, especially when it leaves that business stopped in its tracks in the case of a major failure.

That's what apparently happened to automotive wheel making supplier, Superior Industries International, which recently experienced ERP software problems that caused the company to delay its second-quarter earnings report as mandated by the U.S. Securities & Exchange Commission (SEC), according to an article published in PCWorld.com by IDG News Service.

Fortunately for Superior, the delay only lasted two days. The results were originally scheduled to be announced on August 11, but instead were unveiled on August 13. So what caused the late reporting and earnings announcement?

"The postponement is the result of delays in finalizing the quarter financial close due, in part, to the recent implementation of a new Enterprise Resource Planning (ERP) system," the Van Nuys, California-based company said in a statement on August 11 when the earnings call was postponed. "Superior is working diligently to finalize its second quarter results and will provide new dates and times for the earnings release and earnings conference call in a forthcoming news release."

Somewhat surprisingly, the problems were resolved in about two days and the earnings call and announcements were made on August 13, according to a later statement from the company, which supplies aluminum vehicle wheels to Ford, GM, Chrysler, BMW, Mitsubishi, Nissan, Subaru, Toyota and Volkswagen.

Still, a two day delay is not something you want to undergo when it comes to dealing with the S.E.C. or shareholders and their lawyers who look for causes to file class action lawsuits.

What wasn't explained was what ERP software application Superior is using, and we'll have to wait to see if the S.E.C. fines or punishes the company for its late report.

The lesson learned from all of this is simple - ERP systems are complex, from ERP deployments to updates to patches and everything in between. Software glitches are not acceptable excuses for delays in the case of S.E.C-related matters. Thorough project management and contingency plans are the bare minimum when making enterprise software changes.

In Superior's case, maybe they did all the required post-deployment testing for the new ERP application, or maybe something was left out by accident. Regardless, this isn't something that can be left to chance or any possible failure scenario.

It's one thing when your troublesome ERP software causes you to miss a shipment to a customer or partner, but it's much more major when you are running afoul of a government agency and regulatory requirement that can make your life miserable.

This case is a great reminder to be sure that you check all of your newly installed applications on non-production systems before you go live and that you confirm all is well long before important reporting or other regulatory deadlines are approaching.

The Superior ERP glitches are also another reminder that businesses often still experience problems with their complex ERP systems, and that they should give themselves time and flexibility to work out the issues before trouble arrives.

Work closely with your ERP supplier and your project team to coordinate patches, implementation schedules and connections to other key business applications. Check and re-check everything. Test and re-test. Software and business software applications are imperfect, and problems will always arise. There must be a process to flush them out, address them and move on.

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