Rail freight operator Aurizon has terminated a major SAP program designed to overhaul its freight management systems, after a review found that continuing with the implementation carried significant risks.
Announced with much fanfare in January 2014, the Freight Management Transformation (FMT) program aimed to standardise 18 separate legacy systems for logistics planning, scheduling, ordering and billing onto a single platform, which leveraged SAP HANA and the company’s Supply Chain Execution Platform 9.1.
An announcement to investors said that though a number of elements of the program had been executed and delivered transformational benefits, “the project scope as originally envisaged was wide-ranging with significant risks to implement a number of subsequent modules”.
An assessment of the risks of ceasing the project compared with the achievement of further transformational benefits was also found to be negligible.
Project costs of $64 million have been recorded as an impairment charge against the company’s accounts, with $27 million remaining on the balance sheet in relation to software and licenses currently in use.
Andrew Harding, managing director and chief executive officer, Aurizon, said a key focus for the company is getting its core business right and continuing momentum with the transformation program.
“The FMT project was note delivering value for the business, was at high risk of over-spend and delays, and so it was stopped. By undertaking the freight review we’re getting into the granularity we need to make informed decisions and to clearly understand the future value and potential of the businesses in this area,” said Harding.