SA - Solomon Not to Blame for Siltek Downfall

As Siltek wraps up operations, allegations that the Solomon accounting solution installed at the company caused it to write off R150 million to R200 million are being questioned, and the local Solomon distributor says the blame rests with Siltek which heavily customised the system and went live before testing.

At the time of the liquidation announcement, Siltek CEO Dave Lello said the company was hit by several problems, among which was the Solomon's accounting system installed at SDD. He said the software was detrimental to SDD's business as it resulted in poor stock controls and the cost of the system had to be written off.

He added that although the Ability package was installed in April and helped return the situation to normal, the margins were lower as a result of the previous software. Lello placed the total cost to Siltek as a result of delayed payment and lost invoices over the time it was used at between R150 million to R200 million.

Rob Heywood, MD of Software South Africa, local distributor of the US software, says that at least 50% of the solution was heavily customised which meant the Siltek IT department was really writing software rather than doing an implementation.

Added to this was the timing of the project, which went live in November 1999 in a rush to have it up and running before the turn of the millennium and the associated Y2K fears.

Heywood says this meant the system went live before it was properly tested with the idea that it would be patched along the way.

According to Heywood, the system gradually improved after the bumpy start, until Siltek had a fall out with the contractors. He notes that a team from Solomon USA was called in to run the system, which also did not last long as Siltek had to pay for the support in dollars. The net result, explains Heywood, is that Siltek was left with a system with no support.

Although Lello was not at the company at the time of the Solomon implementation, he agrees that the system was highly customised which may have led to some of the difficulties.

He says there was immense trouble with the interface between the warehouse management and the enterprise resource planning components of the system, which was customised in-house by the Siltek IT department and a division of Enterprise Connection, which has subsequently closed down.

Lello points out that the decision to go live so soon was taken because the project was running behind schedule, and should have been up and running a few months previously.

Lello says the lost documentation and late payment of accounts resulting from hiccups in the system cost the company dearly, affecting its cash flow significantly, resulting in the R150 million to R200 million write off.