Since starting in 1988, after seven farmers convened at Wisconsin’s Viroqua County Courthouse to discuss the virtues of a cooperative, Organic Valley has grown to become one of the nation’s largest organic consumer brands. Today, Organic Valley has nearly 1,000 employees and works with more than 1,600 family farmers to produce its dairy, egg, and meat products.
As part of a long-term strategic plan to modernize, consolidate, and simplify its overall technology landscape, Organic Valley has made the decision to standardize on SAP solutions. Today, OV is in the testing phase of a full-scale deployment of SAP S/4HANA, SAP Integrated Business Planning, SAP Analytics Cloud, and SAP Business Technology Platform under RISE with SAP.
Almost two years into his role as Organic Valley’s CIO, Ron Gilson—a past ASUG Board Director—talked with ASUG about the organization’s past and future information technology (IT) landscape, the SAP project’s changing scope and challenges, and employees’ contributions to—and eager anticipation of—new processes, efficiencies, and results.
This is an edited version of the full conversation.
Q. Let’s start with a little background on the organization's history and use of SAP technology prior to your current SAP S/4HANA project.
A. Today, the Organic Valley technology landscape is a best-of-breed environment with a number of critical applications that are at or near end of life—including the legacy ERP solution. Additionally, in a number of instances we have duplicate solutions that were implemented over the past 15 years including five or six planning engines.
The SAP project started prior to my arrival at Organic Valley. The initial focus was to replace the legacy ERP solution and then build interfaces to the remaining legacy solutions. It started as an IT-led project with little business engagement.
At that time, when Organic Valley decided to go to SAP, the only SAP solution they had was SAP BusinessObjects for reporting.
In early 2022, we stepped back and we reimagined what the business transformation should look like for Organic Valley. We increased the scope of the project. Rather than just trying to implement SAP S/4HANA as a replacement for our previous ERP solution, we added in SAP Integrated Business Planning (IBP) for demand and supply planning. We added SAP Analytics Cloud (SAC) for analytics, as well as SAP Financial Planning & Analytics (FP&A) and SAP Sales & Operations Planning (S&OP). With the revised scope, we will be retiring more than 20 legacy solutions within our technology landscape.
Q. What types of changes were necessary from a business transformation perspective?
A. There were two primary changes that were necessary as we re-scoped our SAP project: IT transformation and business transformation.
Let’s start with the IT transformation first. There are a few guiding principles from our IT strategy that I believe are relevant and are significant departures from the prior technology strategy at Organic Valley:
- We will develop and leverage strategic partners and platforms to the fullest extent possible to maximize our return on investment in those partners and platforms.
- As we replace and modernize our legacy solutions, we will move all appropriate workload to the cloud and focus on a cloud first strategy.
- Technology lifecycle management will be a core competency and critical component of our technology strategy moving forward.
There is nothing new or innovative here—but it is a dramatic shift of the organizations approach to procuring, deploying, supporting, and maintaining our technology landscape. This is a shift that will require new skills and disciplines to be successful.
From a business transformation perspective, we needed to change the way the business viewed this project. Organic Valley is a 35-year-old cooperative. For many years, the co-op grew very rapidly. To support that growth, it took an ad hoc approach, implementing solutions to meet specific problems versus having a long-term strategy or roadmap for capability. Along with that came a lot of business processes that were not built around best practices but built around homegrown processes.
Business transformation is about maturing our end-to-end business processes and using best practices to focus on streamlining and optimizing these end-to-end processes versus being sub-optimized at the function or department level. We have a lot of very siloed processes and solutions. It’s about stepping back and making sure that we streamline, standardize, and optimize our end-to-end processes based on best practices.
As we reimagined the project, we focused on the critical areas of opportunity for the cooperative. Those fell into three basic areas:
- Create a foundation for the future to enable long-term growth with capabilities required of a modern consumer goods company.
- Drive employee efficiencies and dramatically improve the quality and availability of data through consolidation of solutions and standardization of business processes.
- Enhance the speed and quality of decisions by delivering an integrated planning and financial environment.
Q. Re-engineering processes is, of course, a lot of work. Are there particular departments or functions that have been leading the way in this area?
A. I think the most change that is going to come to the organization is in our end-to-end planning processes—both financial and supply chain planning. The entire process from demand forecasting through supply planning, all the way back to the farm.
Q. Organic Valley chose RISE with SAP for your implementation. Can you share your thoughts on your decision to go with RISE?
A. We pursued RISE (S/4 Private Edition on Azure) for a number of reasons.
First, we had a significant change in our software bill of materials based on increased scope for our project. OV had previously licensed S/4 under a traditional on-premise perpetual license model. Although SAP still offers perpetual licenses, the ability to negotiate meaningful discounts under the perpetual model were extremely limited –we simply could not negotiate pricing that was acceptable under the perpetual model.
Second, the infrastructure purchased for the initial project was not sized appropriately and needed an upgrade/replacement. Additionally, we have a core strategic goal to continue moving workload to the cloud where it makes sense – both technically and financially.
The third component was the managed services component. We had an IT team that had limited SAP experience. Therefore, we did not have the internal skills or competencies required to implement and support the SAP technology stack.
Ultimately, we signed the RISE deal, and then we engaged SAP as the prime for the S/4 implementation. We then engaged MSCG (My Supply Chain Group), which is part of NTT DATA Business Solutions, for our IBP implementation, and Analysis Prime for SAC.
Q. Are you implementing SAP Business Technology Platform (BTP) as part of the RISE project?
A. Under the BTP umbrella, we will be implementing SAC—SAC Planning and SAC Analytics—as well as BTP Integration Suite. SAC will be our standard platform for reporting and analytics, as well as the planning engine for FP&A and S&OP. We will use SAC for the standard budgeting process. All the FP&A work, and all the S&OP reporting and processes, will flow through SAC. On the integration front, we have well over 100 integration points as a part of the project where we will use SAP Cloud Platform Integration (CPI).
Q. What have been the key challenges, and how did you meet them?
A. From a high level, one of the challenges that we have had is trying to align three implementation partners and a training partner along with our internal teams. There is a ton of cross functional and cross team alignment and communication that is required to keep everyone on the same page.
The number one issue, and biggest challenge for us, has been the integration of legacy solutions. Some of these solutions are 12 to 15-years-old and no longer supported–they are at end of life. These solutions do not offer the APIs or the integration points that we would like to use, so we must find workarounds to develop the integrations.
Organizational change management is another key challenge we have faced. To move from the legacy best-of-breed technology stack we have today to a SAP-centric solution based on best practices, we are changing a significant number of business processes, as well as changing roles and responsibilities in the organization. The change management is a heavy lift.
Q. As part of this change management process, has there been a communications plan, with internal communications and resources focused on that kind of work?
A. We have an internal Organizational Change Management (OCM) team, a full-time internal communications lead who comes out of our communications department, several resources focused on training and education, and a comprehensive super user program to support with regard to change, communications, and training. We are using another third party to help develop training content, and we are leveraging SAP Enable Now as a part of the training solution, building out training content there as well as an external OCM resource to support the OCM work.
Q. Any delightful surprises so far?
A. We're in the test cycle here, so we have a lot of folks that are really excited about some of the efficiencies and elimination of work that is going to go on once we get there. For example, we talk about the finance team spending a couple of days a month just reconciling data between legacy solutions, because they are not fully integrated. We talk about people having things available immediately versus having to wait for 24-hour batch jobs to generate. It’s thrilling to see so many people in the organization get excited about the new capabilities they will have.
Q. A year from now, what does that look like for you, for the organization?
A. We've been preparing the organization to understand that go-live is not the end of the project, but the beginning of the next phase. We are prepping the organization for six months or more of stabilization in the environment. There is going to be a steep learning curve and user adoption that we must get through, as there is significant process change and a lot of new technology. We are currently building out our 3-5 year roadmap in support of our long-term strategy. As a part of this roadmap, we are looking at activities like warehouse management and trade promotion management, and advancing our data and analytics capabilities.
For more S/4 customer stories, register for the Consumer Industries and Customer Experience Community Alliance Presents: S/4 in Consumer Products - Real World Customer Lessons Learned Task Force, on August 4, here.