CPJ calls in new IT experts after asset write-off, one manager gone - Expects tech resolution by next midsummer
Published:Tuesday | November 20, 2018 | 12:00 AM
Caribbean Producers Jamaica (CPJ) has pulled the plug on the vendor that built its new IT platform, which failed at implementation, costing the company US$930,000, and at least one manager is out the door.
CPJ has written off the entire asset and reverted to its legacy system in order to cauterise rising operating expenses arising from surcharges on a backlog of its containers at the port, linked to the delayed system. Still, while CPJ closed the September first quarter with a net loss of US$1.3 million, its sales weathered the disruption, albeit with only a marginal uptick of US$11,000 to US$24.315 million for the quarter.
CEO David Lowe said the sales numbers performed as expected in what is seasonally the slowest period for the company.
The state-of-the-art IT platform that should have sat on top of CPJ's operating accounting platform, called Great Plains, sputtered and was pronounced dead soon after its June roll-out at the end of the manufacturing and distribution company's fiscal year.
The new system was part of a two-track effort to expand CPJ's footprint and integrate its three operational sites in Miami, Florida; Montego Bay, Jamaica; and St Lucia.
The second part of the programme, a new 56,000-square-foot distribution centre, at the Montego Freeport - which is CPJ's main operating base - will be finished on budget and ahead of schedule, said CEO David Lowe. The facility will be commissioned by December, well ahead of its original February deadline.
Full accountability
Lowe declined to name the vendor that supplied the IT system and the manager who was held responsible for the failure, saying only that there had been full accountability.
"We saw the hiccups, but we were being given the assurance that the appropriate fixes would be applied and there would be successful integration," he told the Financial Gleaner.
"We were under the impression that this vendor could sell us a system that could operate on multiple levels at different sites working together, plus manufacturing and supply chain management."
CPJ gradually re-transitioned to its legacy platform, upon which they layered a home-grown system developed over a quarter of a century ago but had served CPJ well, he said.
"Legacy does not mean obsolete but rather, that this was the system that brought us to US$100 million in 25 years," Lowe said, referring to the US$107.8 million in annual revenues achieved by CPJ for the year ending June 2018 a new record for the company.
"Prior to June of 2018, this platform took us to a point where we earned US$100 million, with all the complexities that you know of CPJ. The only two reasons why we went down this road [with the new system] is that with the advent of greater complexity, we needed to have as much functionality as possible to be in a position to minimise risk," he said.
CPJ has not decided yet whether to pursue legal action to recover the US$700,000 it spent on the platform and the other US$230,000 additional costs incurred from its failure. Lowe said guardedly that CPJ got legal as well as other third-party advice.
"We can't just roll over. The fact that we've frozen and we've put a position forward, we have to be able, in the interest of our shareholders, to pursue anything that we think is due," he said.
In the meantime, the company has called in a different set of experts to deal with the aborted IT project, and given the scope of the work so far, now expects the current situation to be remedied within nine months - around August of 2019.
"They've sent a specialist to work with us in doing the integration groundwork in a way that the other vendor did not do," he said.
As to the other capital projects, CPJ is expanding its St Lucia warehouse, which is being upsized by one-third from the current 30,000 square feet of space to meet expected demand from both the tourism and retail sectors in the Eastern Caribbean.
The expansion, costing US$600,000, is to be completed by next March.
CPJ is investing US$5.6 million overall in the Jamaican and St Lucia projects.