Technology implementations can be complicated and time-consuming, but they are especially so when they occur across an entire organization and they are driven by a sunset date. Last year, Land O’Lakes, the food company and member-owned agricultural cooperative known in the U.S. for its butter products, migrated from Oracle Fusion to SAP Ariba. Land O’Lakes moved to the software as a service platform to keep track of its vast supply chain and procurement operations.
ASUG recently had a conversation with Debbie Olson, project manager for the SAP Ariba implementation project at Land O’Lakes, and Joe Dabat, senior director of development, applications, data, and infrastructure. Both were instrumental in getting the company’s SAP Ariba capabilities up and running. They discussed the reasons for making this change and the benefits they’re now seeing from running SAP Ariba.
ASUG: Let's talk about the legacy system you had in place. Can you tell me what some of the business problems were that you were trying to solve by moving to SAP Ariba?
Joe: We were on a hosted version of Oracle Fusion applications. We considered it a burning platform because Oracle is pushing its customers to the cloud. The larger problem was that we were trying to set up an enterprise-ready version of an indirect procurement platform that replaced the Oracle Fusion environment and integrated well with our JD Edwards ERP environments.
ASUG: How long did you have the Oracle Fusion system in place?
Joe: We started that effort in Q4 of 2011.
ASUG: What went into building a business case? What were some of the key components of getting executive buy-in at Land O'Lakes?
Joe: We’re not unlike other companies, so money talks, if you will. We had an internal rate of return of about 21%. That number was really driven by the amount of automation that we were able to enable on the SAP Ariba platform.
As an architect, when I look at procurement systems, purchasing is purchasing at the end of the day. I still have requisitions, purchase orders, contracts, and our RFx (request for x) process. But in my mind, what clearly sets SAP Ariba apart is its supplier network. It’s because of the network that the platform really drives up the level of the out-of-the-box automation. By building the business case around that, we targeted achieving a 75% rate of automation for our invoices. And we are very close to that. In the latest figures I saw, we were at 69%.
ASUG: What else made SAP Ariba the right choice for Land O'Lakes?
Joe: Let me go back to the business case. We didn’t have an upstream solution to really drive our contract process—the whole request for information (RFI) and request for proposal (RFP) process. By bringing that online, we benefited greatly. Before it was very manual and on a case-by-case basis. You lose visibility as to what all the requests are. So, we've consolidated all of that onto the upstream platform, which leads to more competitive bidding activities and pricing. But as with the other side of the business case, that went into hitting that internal rate of return of 21%.
Debbie: With our legacy system, we had very costly and time-consuming upgrades. Now with the cloud, we get quarterly updates pushed to us.
ASUG: What were some of the things you were able to accomplish with the new automation you added?
Joe: Because we’ve increased productivity in the administration of indirect procurement, we’ve been able to move people to work on more strategic initiatives. There is a desire to continue to deploy the SAP model. We stood up SAP Ariba by itself just because it was the most financially expedient thing to do at the time. But we still have overall enterprise goals of implementing SAP S/4HANA. As we get it up and running, we're going to bring more invoice processing to the SAP Ariba and SAP S/4HANA platforms to continue our automation push.
ASUG: When do you plan to move to SAP S/4HANA?
Joe: We would like to do this implementation in the next few years.
Debbie: In retrospect, if we had to do it again, I would have gone about the business case a little differently to try to make sure we implemented SAP S/4HANA.
Joe: We had to do a lot of back-end work to get this plugged into our very hybrid environment.
ASUG: Why did you decide on a big-bang approach? What were the benefits of doing so and where did you have to compromise, if at all?
Debbie: We really didn’t have any choice. As Joe mentioned, our legacy platform was going to be decommissioned, and we had a hard deadline. Instead of a phased approach by location or multiple cutover dates, we were able to communicate a consistent message to all our suppliers. Working with the SAP Ariba team, we started our supplier enablement activities early in the project. We established our “wave plan,” and the enablement activities occurred over several months. While it took a lot of coordination to cut over with 10,000 suppliers, it was the right decision for us.
ASUG: How did you approach moving your data over?
Debbie: We decided right up front to not convert any historical transactional data. We agreed to move forward and start fresh with SAP Ariba. We did, however, have to convert supplier data. We had a phase zero of the project to begin our master data cleanup, focusing on a couple of areas, primarily supplier data. We made the decision to bring over the suppliers that we had used in the past 18 months and started a supplier cleanup and rationalization project. We were missing a lot of contact information. We spent a significant amount of time gathering valid email addresses and contact information by working with our business partners, looking at existing invoice images, and when all else failed, conducting searches on the internet. That data cleanup spanned the life of the project and continues to this day.
ASUG: Did you have a team dedicated to data maintenance or was it all hands on deck?
Debbie: We had a portion of a team focused on master data and supplier enablement data.
ASUG: Did you stick to your project timeline and budget?
Debbie: We did. When Joe and I were doing the planning, we thought the project would take 18 to 24 months. We ended up implementing in 11 months.
ASUG: What do you think were some of the factors that allowed you to stay on the timeline?
Debbie: SAP Ariba shared services has a defined timeline for each module. We did exceed that, as we had time at the front end so we could get our team mobilized and familiar with the software before engaging SAP Ariba shared services. And we had multiple workstreams running concurrently (e.g., contracts, sourcing, buying, and invoicing).
Joe: We also staffed the internal Land O’Lakes team with both IT and business folks. We had team members who had previously worked on the Oracle Fusion implementation, so they were familiar with the space.
ASUG: What went into choosing your systems integrator? What were some of the things that you were looking for specifically?
Joe: As Debbie mentioned, we tend to take a very conservative view of how long these things will take, so the timeline took some convincing from the systems integrators (SI). We were looking for three things in our SI. One was the timeline the SI put forth. The second component, which is probably the most important, is the SI’s knowledge of the platform. With this version of SAP Ariba in the cloud, you need a partner that can work well with SAP Ariba and knows the platform and how it all ties together. And then the third component was how the partner handles organizational change management (OCM). That, honestly, was the deciding factor for us.
ASUG: How did the change management process work?
Debbie: When we kicked off the project, we established a change agent network that included a couple hundred people from all over the company. We brought them together monthly to provide updates on what was going on in the project. The idea was that they would go back and disseminate that information to their colleagues so that everyone would stay abreast of the current status. That worked out well. As time went on and we got closer to our go-live, the meetings transitioned to biweekly. We provided updates, conducted demos, allowed plenty of time for Q&A, and concluded each meeting with a survey so we could monitor whether we were providing enough information and gauge understanding of what was coming next.
ASUG: Have you needed to continue training after go-live?
Debbie: Yes. We have more than 300 training locations in the U.S. We couldn’t travel to each site to do training, so we conducted instructor-led WebEx training and created training videos. We augmented the team with some professional trainers for a few months. Now that we’re live, we have upgraded our materials based on feedback we’ve received and the questions that have come in via help desk tickets.
ASUG: Since your go-live, how has your experience been with SAP Ariba?
Debbie: We are pleased with the adoption and ease of use with SAP Ariba. It streamlines interactions with technology through one integrated system. We have simplified the handoff between functions and minimized waiting time throughout the process. We have improved the user interface with robust dashboards and intuitive navigation. For example, the guided buying tiles drive users to preferred suppliers and catalogs. Lastly, there are now mobile capabilities.
ASUG: How has SAP Ariba helped Land O’Lakes since its implementation?
Debbie: Automation! We’re achieving cost savings by digitally transforming and automating the indirect procurement process. With our legacy system, every invoice was manually keyed. With the SAP Ariba Network, in the first six months, we have achieved more than 70% automation with straight-through invoice processing. This allows our resources to focus on targeted, high-value-add tasks and strategic sourcing initiatives. We’re achieving some of our cost-savings goals by using the Sourcing RFX capabilities. We now have an automated and consistent approach to sourcing events. We’re also leveraging Contract Compliance to further automate and streamline processing for suppliers with a high volume of invoices.
ASUG: Thank you both for your time.
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