Software troubles hit firm's bottom line
Milwaukee manufacturer Brady misses its earnings targets, yet another company tripped up by the difficulties of installing business-management software.
Brady's effort to install applications from SAP in December led to "temporary disruptions" in its direct marketing business, the company told investment analysts last week.
Brady, a maker of industrial label printers and software, partially blamed the SAP project for a revenue shortfall that will result in the company missing revenue targets by 50 percent. Continuing sluggishness in the U.S. economy and a shift in sales to lower-margin products are also at fault, the company said.
Brady joins a legion of other companies that have blamed botched software projects for hamstringing their operations and affecting earnings. Software from SAP, along with rivals Oracle, PeopleSoft and i2 Technologies, have a long history of being named the culprit in such cases. Such software, which often costs millions of dollars to license and set up, is supposed to help companies save money by automating everything from bookkeeping to coordinating activity on the factory floor.
Brady spokeswoman Carole Herbstreit said the company doesn't blame SAP for its problems. She said the trouble stemmed from the company's efforts to load large amounts of data from other business systems into the SAP applications. When the company switched on the SAP system last month, some of the data hadn't been loaded properly and was incorrect, she said. Brady employees also had trouble using the software, slowing the normal pace of entering orders into the system.
A representative from SAP declined to comment on the project.
Sneaker giant Nike encountered a similar glitch two years ago installing applications from i2 Technologies.
Brady has yet to fix the problem, but anticipated it would soon have it solved.
The company has successfully installed other SAP applications over the past two years, Brady said. The December project was more complex because of the volume of orders, number of products, and the high level of call center activity involved, Herbstreit said.
SAP, based in Walldorf, Germany, is one of the largest makers of corporate software in the world. The company reported on Thursday that it booked $8.05 billion in sales last year.