Date: 3 May 2010
Location:
Ultimately, McCormick is very proud of what they have achieved, says Robertson, and staff are very happy with the outcome.
With multiple stakeholders and several partners communicating over differing time frames, McCormick Foods Australia's changeover to SAP involved many cooks to integrate their business operations and upgrade the system. But strong governance, exceptional teamwork and a clear strategy saw ‘Project Outreach' reach new heights.
The Australian operation of global food flavour experts, McCormick Foods, had been operating Prism as their primary ERP system for 25 years. "It was getting to the stage where it had been unsupported for quite a few years except for a local Prism consultant which we had working for us from time to time on site just to keep it going," says managing director, Graham Robertson. "Hanging off that, there was a whole spaghetti factory of interfaces written into Prism and none of them were integrated."
As a thriving 100 million dollar business, the decision to upgrade the system also became a risk management strategy, says Robertson. "Every time we had a problem with Prism it would affect the whole business, so the risk mitigation of moving to a solid platform that's in today as opposed to something that was 25 years ago was a major consideration as well."
Globally, the US, Europe and Canada branches of McCormick had already converted their legacy systems to SAP some years earlier in what the company dubbed ‘Project Reach'. McCormick Australia was originally scheduled to implement ‘Project Reach' but pulled out because "when we started to work on it we felt it was too big, too complex and too expensive," says Robertson. The company then focused on creating an SAP ‘light' version which would be a smaller scaled down version but with all of the functionality expected from the full-size system.
South Africa developed the first template of this version and then successfully implemented it in a six month role out program. This subsequently became the model for ‘Project Outreach' to be implemented in Australia and all countries outside the US, Canada and Europe.
After assessing a list of SAP's preferred partners, McCormick appointed Extend Technologiesas their Australian implementation partner. Robertson says Extend Technologies were chosen for several reasons including, the "extensive food implementation work they had done." McCormick was also very keen to have a high proportion of Extend Technologies' employees on their project compared to contractors "so that was also a critical part, together with the post Go Live support with their help desk."
In addition to partnering with Extend Technologies, McCormick would also be collaborating with South Africa's implementation partner and template owner, One Arch as well as McCormick Global, making for a truly international team.
Challenges
Discussions to implement SAP began in July 2008 and the implementation timetable came out in September 2008. Though the original plan to roll out was in November with a May 2009 Go Live, the global economic crisis put a crunch on expenditure and budget and the timetable was moved back to start the implementation on February 1st and to Go Live on August 1st 2009. "We just had to recut the deliverables and recut the timelines and the people's commitment. All in all we got started, but we started very slow building incline," says Robertson.
Keeping staff engaged and morale boosted was essential at this juncture. To minimise the impact of the delay, Extend Technologies started some of the long lead time developments such as EDI and data ahead of time to keep the momentum going, says Extend Technologies' project manager Samantha Downie. "We also brought forward some superuser training so that they could start getting a bit excited about SAP before the official kick off."
Once the timetable had been established, the first challenge was around selecting the project team, says Robertson. "The rule book says you've got to put your best people on the project and that means they don't do their ordinary day line jobs."
Putting their top functional people on the project did cause some concern but McCormick were able to backfill most of those functional roles internally to keep the business running. "McCormick actually made the sacrifice to give up some of their key people as much as they could and because they did that it went a lot better than some other projects I've been on," says Downie.
Technically, the key challenge was enhancing the functionalities of the template to meet McCormick's requirements within the budget. "The biggest issue from the point of view of the template is that McCormick Australia was probably the most sophisticated and most complex business in the Outreach group in as much that we service consumer, industrial and food service customers," says Robertson.
The company's product line is also extensive, supplying customers with both dry and wet food products of varying units of measure, from 10 grams up to 25 kilograms. "In terms of complexity they were much more similar to the big brothers overseas because they had EDI with customers and a much more complex reporting system but they were being required to use a simple template that was actually more suitable for much more simple, even third world countries that didn't have a sophisticated business environment or a reporting framework," says Downie.
Delivering a comprehensive BI solution that would match McCormick's previous in-house reporting system was part of this technical challenge. Extend Technologies' BI Practice Lead, David Simpson, says the first challenge was understanding what McCormick required and "then working with them to get the global solution changed so that we were able to roll out a more comprehensive solution for them. The second challenging part was being able to implement that within the time frames."
Additionally, McCormick's Prism data manager had to prepare all thinterfaces into a useable form to drop into SAP. "We actually had to map them all, unscramble them and then work out where they fitted within the SAP template, and if they didn't how to build them," says Robertson.
Implementation
Strong governance and having senior management directly involved in the project were vital to the project's success. Throughout its duration, monthly steering committee meetings were led by Robertson with representation from each of the project's four principal partners. "I hear so many times that the reason projects fail sometimes is that they don't have support from the top," says Robertson.
"I think that really was a critical part, not only [having] myself but also the senior management group which fundamentally made up the steering committee." Downie says Robertson also did an excellent job of keeping everyone focused on the fact that SAP was going to be a big disruption. "One of the [traps] that other companies fall into is that they don't recognise that moving to SAP is going to be the big business project for the year and they try and do other massive projects simultaneously which really dilutes the business focus."
Team cooperation was also encouraged, says Robertson, and "there was no preciousness between the McCormick team and the Extend project team. There was mutual respect and support from the user side and from the technical side." Affectionately called the ‘SAP shack', project staff worked together in one large dedicated room, specifically designed to keep communications open and fluid. "That gave people a good feel for the fact that SAP was integrated."
Much effort was also put into change management. "It was a challenge. Quite a few projects agonized over what to do with change management, whether to give it to the SAP partner or to get an outside consultant, or to do it internally." Internal staff member Meredith Bradley led the change management program and was also instrumental in training the 130 future SAP users. "This was probably one of the highlights of the implementation," says Robertson. "There were very few reschedules, it was delivered well and there was high attendance."
Strict adherence to time line management permitted the project to run smoothly without much overtime. "It allowed us to actually do full end to end testing well before Go Live," says Robertson. The company was then able to test data coming in through EDI as well as perform other operations through the system. "One of the triumphs of the project was in the end we actually brought the Go Live forward by a month which is very unusual," says Downie.
Results
"The standardisation of processes and measures is ultimately going to be a significant benefit to the business," says Robertson. By the end of week two (post Go Live) McCormick were running at pre Go Live legacy system levels and by week six, after completing a six week stabilisation audit, the system was stable.
As all the information is now centralised in an integrated system, Robertson says McCormick expects to achieve various cost benefits from upgrading to SAP. "I think there is a direct labour cost savings straight away just by switching off the legacy system." Ultimately, the company also hopes to save on inventory costs as well. "We're not actually looking to save headcount per se, we're mainly looking at boosting efficiencies, lowering unit costs and taking inventory out of the business."
McCormick's stock control will also benefit, says Downie. "Their management of inventory within production has improved greatly and will continue to improve with the new management warehouse system in place." The company has also been delivered a full EDI solution, giving them "much better transparencin their EDI transactions of problems and issue resolution and that means more checks and balances," says Downie. Extend Technologies has also integrated their forecasting package into SAP whereas previously they had a separate forecasting package.
In terms of reporting, Simpson says the key benefit for McCormick is increased optimisation of their supply chain. "A lot of what they're doing reporting wise gives them greater visibility across their supply chain and greater opportunities in order to optimise their supply chain." The BI component is still a work in progress, says Simpson, and Extend Technologies are working through to help McCormick operate a reasonably flexible dynamic BI solution within a global model. "They're used to having their own reporting system where they just do whatever they want and now they've got a global system with procedures that they've got to go through which is a challenge for them."
Ultimately, McCormick is very proud of what they have achieved, says Robertson, and staff are very happy with the outcome. "There's actually a lot more involvement in what people are doing in the business as well, which I think is a hidden benefit." Downie anticipates the new system will empower staff to improve business processes because now they have a group of superusers across the business who were involved in the project. "Those people are more empowered because they actually understand the IT system and they understand how they can improve their productivity."
Though McCormick Australia is still in its early stages of stabilisation, the future is looking bright. Says Robertson: "We are known for this project internally in McCormick as the best cutover and implementation of SAP in the business."