Under Armour

Athletic apparel firm Under Armour is one of SAP’s most-touted customers. At a New York event in October, the software giant trotted out an Under Armour enterprise transformation executive to describe the company’s journey toward adopting S/4HANA, SAP’s in-memory enterprise management business suite.

But, as it turns out, Under Armour’s SAP implementation project isn’t going so smoothly.

On Under Armour’s third-quarter earnings call on October 31, Patrik Frisk, the company’s president and chief operating officer, said the struggles with the July 1 launch of its integrated ERP business solution “negatively impacted” third-quarter results by causing disruptions in Under Armour’s supply chain.

“During this system migration, we have encountered a number of change management issues impacting our workforce and manufacturing partners as they adapt to the new platform and processes,” said Frisk. Those issues caused delayed shipments and loss of productivity, he added.

Explaining the problems to an analyst on the conference call, CFO David Bergman said that “the change management [has] been a little tougher than we expected, including working .. with our inventory partners, our vendors, trying to get them up and trained on the system as well and just getting all of the things in place.”

Bergman emphasized that the system is now “operating well” and is “stable,” but he did say that Under Armour is still working through “the change management and the learnings and the reporting.” While those issues won’t impact fourth-quarter earnings as much, Bergman said, “they won’t be completely gone yet.”

Under Armour earned $54 million, or 12 cents a share, on revenue of $1.4 billion in the third quarter.That was down 5% from a year ago. The company also lowered its outlook for 2017 earnings and revenue. It now projects year-long profit of 18 cents to 20 cents a share, compared with the 37 cents a share expected by Wall Street analysts.

Due to the system implementation, inventory rose 22% in the third quarter, to $1.2 billion.

Under Armour’s SAP install is sizable, involving point-of-sale, warehouse management, inventory control, merchandising, and product allocation systems in both North America and Europe.

According to SAP, it currently has 6,300 customers in 25 industries on S/4HANA.

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5 responses to “Under Armour Discloses Hiccups in SAP Implementation”

  1. Many companies struggle with smooth transition of their SAP systems to HANA because they fail to assess the HANA readiness of their systems. It is important for Organizations to engage with HANA providers in defining unique SAP HANA roadmap that would best suite their business processes giving a clarity on their system preparedness, time and cost involved. The project should cover a detailed Business Case, Measurable Objectives, Resource Plan, and Project Plan for leveraging SAP HANA and how HANA can impact your organization’s ability to achieve short and long-term goals.

  2. We (Brightwork Research & Analysis) are an SAP research company. We have been sounding the alarm on the immaturity issues with S/4HANA for some time now. We just completed research into S/4HANA’s implementation history that shows a very large discrepancy between what SAP says about S/4HANA and its actual implementations. Also, SAP has nowhere near the number of companies live on S/4HANA that it says it does.

  3. Regarding the quote: “According to SAP, it currently has 6,300 customers in 25 industries on S/4HANA.”
    SAP is actually referring to the number of customers who’ve purchased S/$HANA licenses. SAP recently stated that it has hit 1,000 customers ‘live’ on S/4.
    IMHO: S/4 is SAP’s Microsoft Vista. Forget it and move on.

  4. I’ve been part of four Sap implementations and currently involve with an S4 implementation.

    There is nothing wrong with the software per say. The inherent problem with SAP is the lack of quality training materials and the lack of of focus on reporting and metrics.

    The t-codes and process flows are not intuitive; therefore the need for quality training materials.

    To implement an ERP system , you need clear metrics driving the performance of the business and the tool. The “standard” SAP reports generally are in sufficiently integrated across the modules to provide meaningful metrics; therefore the company must invest in custom reporting and a lot of training.

    Implementing an erp system is a massive undertaking. It’s equivalent to a class 5 hurricane hitting your existing software processes. In short, it can’t be done on the cheap or led by novices.

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