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By | Gavin Clarke 17th December 2013 15:28

Beauty firm Avon sticks spike heel into $125m SAP-based sales project

Canada experience wasn't pretty, says cosmetics giant

Avon is writing off a massive SAP-based order management project following a failed pilot in Canada earlier this year.

The cosmetics giant, famed for its door-to-door sales reps, is writing off development and future rollout of an order management system that has cost $125m and is based on SAP ERP and CRM applications with a third party e-commerce solution at the front end. The system had been in development at Avon since 2009.

Avon said it would swallow the cost, taking a pre-tax non-cash charge of between $100m and $125m on the cost of software in its fourth quarter.

The company dumped the system following an initial pilot at the start of 2013 among sales reps in Canada that seems to have gone badly and had been deemed too risky to extend.

The pilot caused “significant business disruption in that market, and did not show a clear return on investment,” Avon said in an SEC filing.

The decision to halt the further rollout was “made in light of the potential risk of further disruption,” Avon said.

It added: “The company’s current focus is on stabilizing and growing the business and improving operating capability, which includes updating IT infrastructure in a way that delivers clear return on investment.”

SAP suggested in a statement to The Register that the difficulty lay not with its own software or integration work, but rather with Avon’s use of a third-party piece of software.

Avon selected SAP technology on the back-end engine for its order entry solution. Avon did not use a SAP UI for the web front end.

The integrated Avon solution has been running as designed for more than seven months without significant technical issues or escalations.

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