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Levi Strauss, the iconic jeans company, has experienced a 19% drop-off in U.S. sales, and a 98% collapse in Q2 08 profitability. In an SEC filing and subsequent conference call, Levi Strauss placed much of the blame for the bad performance on SAP.
Levi Strauss, which began to roll out SAP globally in 2003, has certainly faced a challenging technology environment of late. From an IT perspective, the earlier part of this decade was dominated by trying to achieve compliance with Wal-Mart’s electronic trading mandates; afterwards, Levi Strauss installed SAP in its Asia-Pacific operations. The subsequent SAP project in the U.S. may have been rushed. Whatever the case, things came to a head in Q2 08 as Levi Strauss’ electronic systems simply shut down for a week. In addition to the platform problems, the company has also had to cope with falling demand for Dockers.
Levi Strauss hasn’t abandoned SAP, and is in fact hiring as many as 11 SAP consultants and experts to work in the company’s San Francisco headquarters. Nor has the company claimed that the SAP software is buggy; indeed, as most of Levi Strauss’ direct competitors successfully use SAP, that would be a hard claim to make.
CIO David Bergen, who was the SAP champion at Levi Strauss, is apparently no longer with the company, as his picture and biography on the Levi Strauss Web site were quietly dropped earlier this year (however, Bergen’s LinkedIn page still claims that he is CIO of Levi Strauss).
It’s worth noting that ex-CIO Bergen came from the IT application development world. He had only two years of experience as a CIO before joining Levi Strauss in 2000. From a risk management perspective, it was unjustifiable for Levi Strauss not to hire a senior CIO, well-versed in process-driven implementations and project management, to preside over the company’s IT strategy at such a critical time. Perhaps the company has paid the price for this decision.
In any case, SAP says that the software problem at Levi-Strauss is over: “We have a strong relationship with Levi Strauss and they successfully leverage SAP solutions to support many areas of their business,” stated SAP spokesperson Lindsey Held. “As part of this close partnership we work together to quickly resolve any challenges that arise. The software-specific challenge noted in their earnings was immediately addressed by the organizations involved and is largely solved at this point.”
Demir Barlas, Site Editor