Symantec continues to try to work through a challenging rollout of Oracle’s ERP applications that has started to affect its bottom line.
Symantec CIO David Thompson says 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 says.
The rollout started in December 2005 and the new ERP system went live in November, combining what had been separate Oracle-based financial and order management systems at Symantec and the former Veritas.
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.
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 says. To cope, Symantec temporarily processed the orders manually while extending the deadline for the partners to use the new SKU system from December 1 to early February.
Symantec also changed the way it sells software licences, requiring all customers upgrading to new releases to register online and get a special electronic key for activating their applications. The new licensing process created confusion and delayed upgrades for some customers, particularly users of Symantec’s Backup Exec tool.
Thompson says that led to a spike in call centre activity, forcing Symantec to hire more workers to handle the increased volume of calls.
Symantec cited the difficulties with the 11i implementation as a contributor to the disappointing financial results it reported for its third quarter, which ended on December 29. In its January 24 earnings statement, the company said its results were below expectations, and it announced plans to trim US$200 million (NZ$292 million) in annual costs through lay-offs 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.” He 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 says Symantec is already paring down the number of call centre workers it had added in response to the problems.
The company expects a variety of longer-term benefits, he says.
For example, having one set of ERP applications enabled Symantec to shrink its IT infrastructure and reduce its licensing costs with Oracle. In addition, the system has been linked to Oracle’s PeopleSoft Enterprise human resources applications and to Salesforce.com’s hosted CRM software.