Wine producer Southcorp has been forced, despite investing millions of dollars in a SAP ERP system, to dump it after being acquired by the Foster’s Group earlier this year.
The company’s IT assets will be standardized on the Oracle-owned JD Edwards application which Foster’s uses, according to an internal employee memo issued by integration director Michael Brooks in the wake of the acquisition.
Brooks said that following an assessment of the benefits, risks and costs of leveraging the Southcorp systems, Foster’s management decided that Oracle, JD Edwards, and PeopleSoft best meet the company’s mid-term needs.
The decision was based on strategic considerations and integration risk management, rather than a qualitative analysis of the two platforms, the memo said. "Adopting SAP across the business would have involved more risk and time," Brooks said. "It was a choice of migrating two organizations onto a largely new system, mySAP, or migrating Southcorp onto the existing Foster’s platform."
While a company spokesperson was unwilling to disclose the cost of its SAP investment, Computerworld understands it was upwards of $20 million.
"It is important to note that this decision is no reflection on SAP software, we needed to migrate to one system and the JDE platform provided us with the best opportunity," a Foster’s spokesperson said, adding that the integration will take place over the next 18 months.
Foster’s CIO Ian Farnsworth told Computerworld integration planning for the two systems is progressing "very well" and in the last two weeks migration to JDE in the US was a smooth transition.
"In Australia, Foster’s is already well advanced in establishing a common platform for its wine and non-wine operations and a considerable effort has already been made in establishing a footprint to benefit our business operations," Farnsworth said.
Foster’s enterprise systems include JDE in conjunction with a "tailored distribution module" to support the front-end sales processes.
"There is also an industry-specific wine manufacturing module being developed in collaboration between Foster’s and Oracle as a standard application, which will be incorporated in the ERP suite," Farnsworth said.
Oracle’s E1 manufacturing is in use by wine companies globally and is being considered to replace legacy beer manufacturing solutions while its financial suite is being implemented across all Australian-based businesses to take advantage of the vendor’s "clear specialty" in this area, he added.
PeopleSoft is used locally for human capital management and payroll.
"Underpinning the ERP suite, other integrated solutions are being standardized across businesses to provide advanced supply planning, manufacturing optimization, business intelligence and other corporate management needs," Farnsworth said.
SAP Australia’s southern region general manager Allan Fairhurst said it is inappropriate to comment on the Southcorp migration.
Competing enterprise software vendor SSA Global’s Asia-Pacific vice president Jeremy Goddard said when it comes to buying ERP solutions go with the vendor that can solve business issues instead of "just selling you something".