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Avis £30m ERP system crashes and burns

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Car rental firm Avis watched its shares crash ten per cent yesterday on news that it was binning an expensive new ERP system.

Shares recovered slightly today but are still worth about half what they were late last year. The company said it was ditching a planned ERP system at a cost of about £30m. The system was meant to help the firm cut costs after a difficult few years.

There were three objectives behind the new system: offshore backoffice functions to Hungary, install a new ERP system and make a wider review at IT within Avis. The move of backoffice functions to Budapest has been judged a success but the ERP system and wider review have both been binned.

A statement on the company's website reads: "the new ERP system has encountered substantial delays and consequently higher cost due to a number of fundamental problems with its design and implementation. A decision has therefore been taken to terminate the development of the new system as quickly as practicable to avoid further cost."

Murray Hennessy, chief executive at Avis Europe, said: "We have moved with urgency to review our back office and IT restructuring project... We are very disappointed that major IT parts of the project have incurred significant exceptional costs and will not deliver the anticipated benefits. We felt it was right to take decisive action on the results of the review."

Existing systems will not suffer because the system has not been rolled out. ®

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