VideoAs a newcomer to ERP, Agri Beef is something of a, dare we say, rarity. Large ERP projects these days are more likely to involve standardization, particularly when acquisitions have left companies with disparate systems. That's the case at Tyson Foods Inc., which, following its recent closing on its acquisition of $14 billion Iowa Beef Packers, is rolling out the latest version of ERP software from SAP across the entire merged business. Senior vice president and CIO Jeri Dunn says a key driver is the need to get all the company's financial groups on the same page. "Our GL is not common yet," she says, "and my CFO wants that in order to reduce the number of days it takes to close."
To that end, Tyson has established a companywide effort called Project Won. The project involves more than 400 people, some of whom have traveled to Germany several times, working closely with SAP to make sure the software meets Tyson's needs. While some of those needs are similar to those at Agri Beef — integrating formerly separate systems in various areas of accounting, for example — others are highly specific. Tyson and SAP worked together to customize the system so it could cope with the company's "sell in cases, bill in pounds" procedure, a rare example in which customization, often the bane of ERP projects, made sense.
Dunn has some advice for those installing or upgrading their ERP systems, particularly SAP's. First, she says, treat finance as more than a separate module in SAP. "All roads lead to finance in SAP. So if you get it right, you can close your books very quickly. But if you get it wrong, you will end up with an army of financial people trying to close at the end of the month."
Dunn also recommends paying special attention to change management — that is, the people aspect of organizational and technological change. "SAP won't map exactly to the way your company looks and operates today," she says. "Your company must undergo significant cultural change. For that you will need communication and a training team to minimize the pain of ERP on the organization." Dunn's latest hire, in fact, is a vice president of organizational change.
Dunn also suggests that companies embarking on an ERP effort take care not to underestimate the amount of work needed to develop a clean overall set of master data. The chart of accounts, product data, and other mission-critical information has to be accurate from the get-go, she says, or mistakes will multiply throughout the system. Many an ERP project has been scuttled or gone south altogether because companies failed to do this kind of basic blocking and tackling early on.
M.R. Rangaswami, the former lead marketing executive at ERP vendor Baan Co. who now runs Sand Hill Group, a San Francisco investment firm, suggests that current users of ERP systems pause to first take stock of what they have. "They should really look inward to see if they are getting value from the applications they already have, before going on to the new ones," he says. "Ask why you need that upgrade. Is there anything of a compelling business nature?"
Therein lies the rub: just what constitutes "compelling"? While ERP vendors have extended their products into a vast number of areas — from CRM to analytics to, inevitably, Sarbanes-Oxley compliance — the software is almost never seen as a source of competitive advantage, which might make its complex implementation easier to bear. As Rangaswami says, "The problem with ERP is, how do you justify the high cost? The answer is, you've got to have it — ERP is a necessity."
It's worth noting that despite its problems in 1999, Hershey Foods embarked on a massive upgrade of its SAP system in late 2002 and could point to dozens of quantifiable process improvements by the end of the year. That's a happy ending — by ERP standards, at least.
Doug Bartholomew is a writer in Berkeley, California, and former senior technology editor at IndustryWeek.
The Fast(er) Track
Tips for keeping ERP projects on the rails.
Have a clear, simple corporate vision and objective before you start, and measure and publicize successes as you proceed.
Have a group dedicated to business-process improvements. Also rely on experienced project managers (possibly including internal or external managers who have been certified by the Project Management Institute). Involve key stakeholders as early as possible.
Create a financial analyst position or team to track and analyze project costs and realized benefits.
When choosing a new vendor, put a premium on vertical-industry expertise. Avoid customization, or demand that such requests meet rigorous criteria.
Make sure that data cleansing is addressed as part of the project.
Sources: CFO IT; Accenture; SAP
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