NEW YORK (TheStreet) -- Avon (AVP) announced today that it expects to pay a $100 million to $125 million charge due to the problems related to the rollout of an SAP-based (SAP) order management system after an exodus of sales representatives.
The beauty company started using the SAP system earlier this year after preparing for the rollout for four years. The system, according to the Wall Street Journal, was "so burdensome and disruptive" to the routine of Avon's representatives that many of them left the company.
Avon's failed rollout of the system is an example of employees demanding tools that as simple to use as their own devices. This trend is referred to as the "consumerization of IT" where company IT departments increasingly have to compete with consumers devices and services.
"Consumerization of IT" poses a threat to enterprise software companies like SAP, Oracle (ORCL), and IBM (IBM) who offer powerful tools that may not be the easiest to use. The trend favors companies like Apple (AAPL) and Google (GOOG) who produce hardware that consumers actually want to use.
TheStreet Ratings team rates SAP AG as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate SAP AG (SAP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, compelling growth in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow."