By Tom Steinert-Threlkeld  |  Posted 2001-10-29 Print this article Print

For 115 years, Avon Products has been employing personalization--in the form of its ubiquitous Avon ladies--to sell everything from cosmetics and fragrances to sundresses and bug repellent. Yet when the Web, with its ability to let companies interact one-

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Goal: Replace Paper With Electrons

In the end, this is a story of trying to bite off more than one company should chew. From 1997 to 2000, Avon changed CIOs three times, and tried to launch multiple Web initiatives, retail initiatives and redesigns of a good chunk of its business processes, all at the same time. The company nearly had a "corporate nervous breakdown" in the process, current CIO Edelman acknowledges.

Avon traditionally has sold its products door to door through a network of reps, with paper forms keeping track of their progress; one channel, one way of doing business.

But in a matter of a couple of years, Avon tried to transform its paper processes to electronic ones; encourage reps not just to sell offline, but online as well; and move into multiple means of selling its products. Its reps would continue to sell in-person, but also on the Web.

As if all that weren't enough, the company would also start selling in retail stores. By now, Avon was supposed to be selling a new, pricier brand of cosmetics through both J.C. Penney and Sears stores. But Sears pulled out of the cosmetics business earlier this summer, leaving Penney as the only retail partner for the moment. And Avon is left trying to learn how to design, manufacture, distribute and market products in a whole new arena in which it has no experience. Even a seemingly minor change—such as the redesign of Avon cosmetic packaging so that a bottle would sit properly in a retail-store display—has to be thought through for the first time.

Even though Avon had neatly sidestepped the technological dislocation of its century-old representative-centric strategy, while simultaneously moving into the era of electronic selling, Avon's IT staff was still expected to provide tools that would effectively allow the reps to compete against Avon's own online and retail selling efforts.

"It was very stressful. Very, very stressful," says Edwards. "We finally all sat down and said, 'Hey, guys, we're trying to do too much too fast. We need to slow down a little bit.'"

It wasn't just on the Internet side of the house that Avon learned the hard way that it shouldn't tinker simultaneously with too many systems.

While it was undertaking a full-fledged overhaul of its Web-based order-taking processes, Avon also was attempting a wholesale upgrade of its largely mainframe-based order-management, campaign-management, financial reporting, manufacturing and supply-chain-management systems.

In 1993, Avon's corporate IT department, under the reign of then-CIO Ray Perry, instituted a program called Project FIRST (Fully Integrated Representative Sales Toolkit), which was slated to be a complete overhaul of Avon's existing homegrown order-management system. Avon's order management tracks representatives' orders through entry, processing and fulfillment at the company's distribution centers. Avon hired its auditor Coopers & Lybrand—which also was in the business of providing information systems consulting—to assist the company in deploying such a system.

After scrapping FIRST as too unwieldy, Avon toyed with the idea of trying to roll out globally an order-management system developed by its Argentinean subsidiary instead. But, according to former Avon IT executives, that plan also proved too complex, politically and technologically. So, Avon, in conjunction with Coopers & Lybrand, resurrected the FIRST project, this time under former CIO Ron Mastrogiovanni, a one-time Coopers & Lybrand executive.

But FIRST never materialized. The Securities and Exchange Commission currently is investigating the $15 million in costs that Avon wrote off as part of a special charge connected with FIRST. Avon decided in October to write off an additional $25 million it said it spent developing FIRST—which it had previously carried as an asset on its books.

Edelman declines to comment on FIRST, saying the company was not prepared to talk at all about the initiative. PricewaterhouseCoopers, which purchased Coopers & Lybrand, also declined comment, citing the SEC probe.

Says one former Avon IT executive who worked at the company during those years and requested anonymity: "It (Project FIRST) was a fiasco. It cost the company tens of millions of dollars."

Tom was editor-in-chief of Interactive Week, from 1995 to 2000, leading a team that created the Internet industry's first newspaper and won numerous awards for the publication. He also has been an award-winning technology journalist for the Dallas Morning News and Fort Worth Star-Telegram. He is a graduate of the Harvard Business School and the University of Missouri School of Journalism.

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