McDonald's cans billion-dollar network project

McDonald's has publicly admitted the widely-leaked abandonment of a billion-dollar worldwide revamp of its networks and ERP...

McDonald's has publicly admitted the widely-leaked abandonment of a billion-dollar worldwide revamp of its networks and ERP systems.

In the company's fourth quarter results, published last week, which posted a £211m loss, chairman and chief executive officer Jim Cantalupo said, "Our first priority is to fix our existing business. Already we have abandoned a billion-dollar technology project and decided to close additional underperforming restaurants."

The statement confirmed earlier reports that the fast food chain had halted the implementation, called Innovate, of a new network and an Oracle ERP system to its 30,000 restaurants.

The project was begun in 1999 and was expected to make operations more efficient by integrating systems in 121 countries.

The decision to stop the project came to light earlier this month in a leaked memo which said, "It is imperative we narrow our focus and make tough decisions regarding our spending and resource commitments. With that in mind we have made the very difficult decision to immediately stop all work on Innovate."

McDonald's refused to give further details on why the project was abandoned or the fate of the IT staff working on it.

According to industry watchers, long-term projects with a lack of clear business goals are out of favour in the recessionary circumstances.

Simon Bragg, of ARC Consulting, said, "There is little enthusiasm for long-term, visionary projects that are backed by a nebulous, arm-waving justification. The current fashion is for short-term projects, backed by defined objectives, each chunk of which delivers a demonstrable business benefit."

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