In the Business Technology section of Wednesday’s edition of the Wall Street Journal, an article appeared that is often the nightmare of any provider of enterprise software. The article, Avon to Halt Rollout of New Order Management System (paid subscription or free metered view) reports that Avon Products has elected to pull the plug on a $125 million SAP software implementation. That is no small amount.
It is further a fresh reminder for supply chain leaders and technology selection teams of two very fundamental shifts occurring in software evaluation deployment and acceptance.
Readers familiar with Avon Products will recall that they practice a unique business model. Independent (non-employee) salespeople of all walks of life represent and sell Avon products to friends, colleagues and acquaintances, with sales assistance tools provided by Avon. The personal relationships among the independent Avon representatives sustain continuous sales cycles involving varieties of product offerings. Orders are continuously inputted by the independent sales representatives and order status is in-turn provided on a continuous basis.
The WSJ reports that Avon began its implementation of an SAP order management system in Canada in the second quarter of this year, and while the system was described as working as planned, it apparently was disruptive for Canadian Avon representatives. Plans called for a broader worldwide rollout over the next four years. The WSJ further reported that this was not the first broad system implementation problem encountered by Avon. Two years ago, the Brazil operation attempted to move from manually intensive operations to a deployment of enterprise software from Oracle, without acceptance.
According to a filing with regulators this week, Avon elected to halt the company-wide rollout and expects to incur anywhere from a $100 million to $125 million write down of the cost of the software. The company will continue using the software in Canada. In the earnings conference call, the CEO of Avon acknowledged the issue in Canada but indicated the system was working as designed. Further acknowledged was the degree of disruption that occurred in daily processes associated with independent representatives that resulted in steep fallout of sales resources.
In the article, a spokesperson for SAP is quoted as indicating the order management system “is working as designed, despite any issues with the implementation of this project.” A further statement indicated a “solid and productive relationship.”
Solid and productive, but at a significant cost write-off and another lesson learned.
While we may not have added testimony to what did or did not occur at Avon, Supply Chain Matters has two observations to share with our community of broad supply chain management followers.
The first and most obvious is the critical importance and weighting of user acceptance in any evaluation and systems implementation. The most advanced and sophisticated technology is of little use if those that interact with the system on a frequent basis have no confidence in the system’s value in helping with completion of their work or providing deep insights to decisions. Avon’s unique requirements concerning daily use from thousands of independent representatives had to have been a key concern. With today’s increased availability of cloud-based software alternatives, end-user acceptance and uptake takes on even more meaning.
The second involves the groups that are involved in selection and accountability for the results from investments in advanced technology. Last week, Supply Chain Matters called attention to IDC’s validation that the information technology buyer influence continues to shift to the business side. The industry analyst firm predicts that 61 percent of technology focused projects will be business rather than IT funded. The implication is that business and supporting supply chain functional teams now hold far more influence on specification of required business process and associated technology investments. With that comes more direct accountability for successful implementation and timely business benefits.
While some may view the Avon story as another knock on the complexity and cost risks of complex ERP systems, it is rather important to focus on how important user input, change management, comprehensive training and acceptance make for successful systems implementations.
The business is clearly gaining more influence in technology specification, selection and deployment. Gaining timely business benefits and expected outcomes is ever more dependent on insuring the commitment of those end-users accountable for getting the work done is incorporated into planning and deployment. Too often, teams dwell on specifications and cool functionality without allocating adequate time for user acceptance.