Systems errors at WS Atkins.

(From Financial Director)

Byline: Tom Berry.

Vendors of large, integrated IT systems will tell you how well their technology can streamline and rationalise business processes. But an IT cock-up at support services company WS Atkins meant its shiny new billing and accounting system failed to send out GBP 20m-to-GBP 30m-worth of invoices in financial year 2002, contributing to pre-tax profits that declined by a third.

The news must have stunned shareholders. Just hours before the WS Atkins annual general meeting, on 1 October 2002, the company issued a profit warning detailing the impact of the systems failure. "The introduction of the new systems has been more difficult and costly than expected ... This has resulted in an increase in net debt to around GBP 120m at 30 September 2002," the statement read. Atkins' share price slid 72%.

Then, as had long been planned, the company's FD, Ric Piper, stood down to join Trinity Mirror as its finance chief - only to be sacked by the media group the day before he was due to join because of the Atkins debacle.

But was Piper to blame? Perhaps not entirely. According to Atkins' 2002 annual report Piper didn't assume direct control of the technology until March 2002. The system was first approved in 2000 and went live in January 2002. Piper took over only after the director in charge of the project had resigned to join another company. At this time, the board realised there were significant risks attached to the system. Additional debt facilities were obtained to cover the expected increase in working capital. "The board believes this period of stabilisation will be essentially complete by the end of Autumn 2002," the annual report reads.

So what went wrong? Atkins' system was based in its Worcester shared-services centre. It was designed to handle all billing activity for the company's 170 offices worldwide, and also the outsourced accounts processing of its clients. It was little different from a score of other shared service facilities operated by multinationals.