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. 

Reg­is­ter today for ASUG­FOR­WARD, our vir­tu­al expe­ri­ence June 22 – 25. You’ll be able to exchange ideas and gain prac­ti­cal infor­ma­tion from oth­er SAP cus­tomers, includ­ing those oper­at­ing in the sup­ply chain and man­u­fac­tur­ing space.