Go to the mobile version of this Web site.

Login | Contact Us | Site Map | Paid archives | Electronic edition | Subscription Questions | Extras

Shane Co. puts blame partly on software

Rocky Staff and Wires

Published January 14, 2009 at 12:05 a.m.

Text size  

More More Business

More stories »

Shane Co., the family-owned jewelry retailer that sought bankruptcy Monday, told a U.S. judge the company's decline was triggered partly by delays and cost overruns for a $36 million SAP AG inventory-management system.

SAP, the world's biggest maker of business-management software, took almost three years to implement the system instead of one year, while costs "ballooned" to $36 million from a projected maximum of $10 million, Shane said in papers filed in U.S. Bankruptcy Court in Denver.

Shane, based in Centennial, became "substantially overstocked with inventory, and with the wrong mix of inventory," when Walldorf, Germany-based SAP finished the system in September 2007, according to the filing. The software "adversely affected sales" through the first nine months of 2008, it said.

Shane, with 23 stores in 14 states, blamed the Chapter 11 filing primarily on the U.S. recession and a 32 percent decline in holiday sales over the year earlier. Most retailers nationwide suffered from what may have been the worst holiday-shopping season in four decades, triggered by rising unemployment and declines in credit.

SAP spokesman Saswato Das said Tuesday by telephone that the company is "assessing the situation" and couldn't provide additional comment.

Comments

  • January 14, 2009

    12:18 a.m.

    Suggest removal

    BillK writes:

    Why in the #$@! did the Shane Co. need a $10 million SAP AG inventory system in the first place?!?!

    Somehow I think they could have managed their inventory quite easily with a couple of servers, two $90,000/year database admins and a copy of MySQL…

  • January 14, 2009

    6:14 a.m.

    Suggest removal

    Ike writes:

    Why use a simple system when a complicated one is available? It is human nature to see a simple problem and find the complicated solution to it.

    Bought our last baubles and bangles from Jared because I didn't want to subsidize those Tom Shane radio commericals. Rather then blame the software, look to the business model instead.

  • January 14, 2009

    7:18 a.m.

    Suggest removal

    rockiefan888 writes:

    Obviously neither of you have ever owned a business or have the slightest inkling what is involved with an ERP software implementation. The typical conversion usually take 18 - 24 months and can easily take much longer.

    Hopefully, they can pull through and get their act together. Competition is a good thing for the consumer, and a requirement for a free enterprise system to thrive. It keeps prices in check and also forces companies to focus on customer service.

  • January 14, 2009

    7:36 a.m.

    Suggest removal

    sam919 writes:

    I started a business because my previous employer decided to make a software change with close to the same reults as above. I have seen first hand how the wrong software or implemtation can destory an otherwise healthy and viable business.

  • January 14, 2009

    7:53 a.m.

    Suggest removal

    The_KIMN_Chicken writes:

    Yes I agree with the gentleman above, these software companies, SAP, PeopleSoft, Oracle, etc. come in with their fancy presentations and awe these execs into buying into their "dream" and then invariably the system doesn't work, it needs to be customized, rebuilt and then get's outsourced to India, there are mistakes, miscommunication, employee and leadership turn over, the scope of the project expands then get's drawn back, etc. etc. you get the picture. It's very very easy for a 1 year 10 million project to turn into a 3 year 36 million project and I'm guessing they will never have a sysem that works as promised. Eventually you just get them to built you a system that provides the bare minimum and you cut your loses and move on.

    And yeah, I've been through it, it's a nightmare.

  • January 14, 2009

    8:08 a.m.

    Suggest removal

    sam919 writes:

    It sounds like Shane didn't have anyone do due diligence or understand what they were getting into. Usually a case of upper management egos not will to listen to their employees or seeking advice. There is alot of industry specific software (canned) that would have handled Shanes business at a fraction of the cost and fit the 18-24 month timeframe mentioned above,
    such as Eclipe, Mincron, infor, etc.

  • January 14, 2009

    9:05 a.m.

    Suggest removal

    Willy writes:

    This is an example of why an SAP consultant can always find work. SAP is good product when it is properly implemented, but it is a terrible fit for a company like Shane.

  • January 14, 2009

    9:05 a.m.

    Suggest removal

    zivo24 writes:

    This reminds me of one of my favorite jokes:

    A man in a hot air balloon realized he was lost.

    He reduced altitude and spotted a woman below.

    He descended a bit more and shouted, "Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am."

    The woman below replied, "You're in a hot air balloon hovering
    approximately 30 feet above the ground. You're between 40 and 41 degrees north latitude and between 59 and 60 degrees west longitude."

    "You must be an engineer," said the balloonist.

    "I am," replied the woman, "How did you know?"

    "Well," answered the balloonist, "everything you told me is,
    technically correct, but I've no idea what to make of your
    information, and the fact is I'm still lost. Frankly, you've not
    been much help at all. If anything, you've delayed my trip."

    The woman below responded, "You must be in Management."

    "I am," replied the balloonist, "but how did you know?"

    "Well," said the woman, "you don't know where you are or where
    you're going. You have risen to where you are due to a large
    quantity of hot air. You made a promise which you've no idea how
    to keep, and you expect people beneath you to solve your
    problems. The fact is you are in exactly the same position you
    were in before we met, but now, somehow, it's my fault."

  • January 14, 2009

    9:15 a.m.

    Suggest removal

    underthebusinvestments writes:

    The true cost of outsourcing:

    http://esj.com/news/article.aspx?Edit...

    http://www.cio.com/article/29654/The_...

    Unless your side hobby is charming snakes, watch out for the bus!

  • January 14, 2009

    9:18 a.m.

    Suggest removal

    sam919 writes:

    Zivo - Ha Ha Ha !!

    Very good

  • January 14, 2009

    9:53 a.m.

    Suggest removal

    ofcourse writes:

    Mr. Peter Principle just found another home.

    To bad "no" wasn't in their volcabulary.

  • January 14, 2009

    10 a.m.

    Suggest removal

    JustSayin writes:

    sam919 - you have it correct (as well as zivo does with the tale!)

    I have a friend that works with CDOT, and they have implemented a software that requires CDOT workers to spend about an hour each day entering in details of what they did all day. More busy work to get a detailed workflow/inventory for some bean-counter manager, more state money flowing to software companies and consultants, and less production from the guys who are supposed to be plowing snow or cutting down the hazardous dead trees lining the roads. No surprise - it's SAP!
    (don't know if this link will work, but.....
    http://download.sap.com/industries/pu...

  • January 14, 2009

    10:37 a.m.

    Suggest removal

    sam919 writes:

    Just

    Your comment says it all .... the actual workforce is miserable trying to make cumbersome software work, costing the company money and tying up valuable resources (manpower) while mangement is totally oblivious or not willing to acknowledge that there is a problem.

  • January 14, 2009

    3:19 p.m.

    Suggest removal

    jokboy4u writes:

    now you have an enemy in the software business. i've always hated the shane company's predatory ways. no big loss.

  • January 14, 2009

    6:39 p.m.

    Suggest removal

    jersey writes:

    Zivo: LOL. I heard a similar version with a Native American walking into a bar with a rifle and a bucket full of crap. Both are synonymous in meaning. I do find it a bit ironic though with the acronym being SAP.

  • January 21, 2009

    9:43 a.m.

    Suggest removal

    retailITguy writes:

    For every Shane Co. there are thousands of small and mid-size companies successfully using SAP and other complex ERP software systems. These companies are receiving tremendous benefit. My father worked for the State of California and hated his SAP software too... because he had to enter data. The savings to the state was the elimination of hundreds/thousands of clerical workers...Yes, the system created work for some, but provided overall efficiencies and cost savings for the state and tax payers. I was laid off by SAP recently, so I am in no mood to defend them, but I have personal knowledge of SAP's success with many other retailers of Shane Co's size...The project problems at Shane Co. were mostly Shane Co.'s. Shane Co. wanted the 10 carat - grade 0 - custom cut diamond....but from an IT perspective they were only ready for cubic zirconia.