By ADAM GIFFORD
Fonterra has denied claims that a three-month delay in rolling out a $120 million information management system could add up to $45 million to the bill.
Fonterra has pushed out the "go live" deadline for its Empower project from late March to June, but is still expressing confidence in
the project.
But Massey University agribusiness professor Bill Bailey says the extended timeframe could cost Fonterra an extra $30-$45 million.
Bailey told the Herald that his sources inside Fonterra indicated one reason for the delay was the sheer complexity of the project, which links a core management system provided by German software maker SAP with as many as 175 existing systems.
Donald Moore, Fonterra's IT strategy head, said Empower had taken longer than expected but was still within its original budget, and "it won't be over- budget at the time we go live".
"Development is complete and we are doing final acceptance testing. Because of the seasonality of the industry we have time up our sleeves to do extra testing and user training," he said.
Industry sources say the SAP project alone is worth about $120 million, as the co-operative tries to tie together systems and processes from the former Dairy Board, New Zealand Dairy Group and Kiwi Dairies.
Up to 400 consultants are thought to be involved.
Empower uses SAP's order management and logistics modules to replace Boss, a mainframe application developed by the Dairy Board and which involved considerable manual input.
"The dairy industry lives and breathes in Boss," Moore said. "With SAP, we wanted more automated order management and logistics."
Farmers were told there would be about $300 million in benefits from the merger that created Fonterra, much of it from supply-chain improvements and combined information systems.
