JDE ousted at Owens

A $13 million JD Edwards ERP implementation at Owens Group is to be abandoned as the freight forwarder's new owner, Mainfreight, puts its stamp on the company.

A $13 million JD Edwards ERP implementation at Owens Group is to be abandoned as the freight forwarder’s new owner, Mainfreight, puts its stamp on the company.

Mainfreight wants to move Owens to its financial system, On Account, by December 15, although it has found some potential “show-stoppers”.

Meanwhile, Mainfreight and Pricewaterhouse-Coopers, which carried out Owens’ JDE implementation, are believed to be in dispute over the work.

Neither party would comment, a PwC spokesperson saying it’s not the company’s policy to talk about “existing or past client matters”.

A source within Owens paints the abandonment of JDE as a decision based on a cultural clash between the two companies. Owens has a centralised “shared services” approach to financial management while Mainfreight has a decentralised structure.

However, the source says the JDE deployment, commenced in 2000, hasn’t been extended as far as originally intended. It is not deployed at a number of Owens’ project and freight forwarding companies, and “the planned cost savings were not achieved across the group”, the source says.

Mainfreight CIO Kevin Drinkwater (pictured) is more blunt, saying the ERP system fails to deliver the financial data On Account provides.

“We’ve written [JDE] off,” says Drinkwater; “they still hadn’t got it right.”

PeopleSoft New Zealand spokesman Andy Batchelor says the company has offered to assist the transition “in any way we can”. PeopleSoft bought JDE in the middle of the year.

Batchelor accepts that the needs of organisations change.

“It’s not a case of losing a competitive bid and it could create other opportunities.”

Whereas Mainfreight knows on a Monday evening how much profit it made the previous week, the same information takes a month to extract from the Owens system, Drinkwater says.

Mainfreight’s is an operational rather than ERP system, and according to Drinkwater’s reading of Owens financial documents, costs a fifth as much to run.

On Account is a Microsoft SQL Server-based accounting system that has gone from handling 4500 transactions a week to 50,000 a week as Mainfreight has expanded. Extending it to Owens will increase the load by a further 30,000 transactions.

However, it’s not scalability that could interfere with the December 15 deadline, but integration of pricing and owner-driver payments data, Drinkwater says.

The acquisition of Owens Group is the latest in a long list by Mainfreight. It paid $65 million for 80% of the company, which has revenue of about $440 million, in a deal approved in September.

Integrating the IT systems of its new businesses has been a major preoccupation, solved by creation of a Microsoft .Net-based application, Mainchain, for viewing records in about a dozen different databases.

Drinkwater says Owens Group will be linked into Mainchain in the middle of next year.

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