ZIFFPAGE TITLEAvoiding Pitfalls

By Larry Dignan  |  Posted 2004-10-01 Email Print this article Print

For the last three years, you've been reducing expenses by tackling the low-hanging fruit. Now it's time to get serious. Nuke apps you don't need.

Avoiding Pitfalls

The biggest challenge to consolidating applications may well be people, not technology. Call it resistance to change. Cite executive buy-in. Whatever—this is likely to be your biggest headache.

Ask Michael B. Giusti, manager of procurement enterprise systems for Boise Cascade, a office supplies distributor based in Boise, Idaho, about this. Boise Cascade started its systems consolidation effort in 1995.

The company had 60 different systems in payroll, construction, accounts payable, purchasing and inventory. The goal was to standardize on PeopleSoft applications for everything from general ledger to inventory to procuring goods over the Internet.

The expected savings were $18.4 million on staff purchasing, systems maintenance and inventory.

Most of the rollouts were finished in June 1998, but users' unwillingness to give up purchasing forms and other time-honored ways of doing business have left Boise Cascade with shelfware and less savings than expected, Giusti says. Resistance to using the PeopleSoft purchasing system means the company only saved half of the $4.2 million it expected on purchasing.

A PeopleSoft billing and accounts receivable system also wasn't adopted by users and ultimately became shelfware until being installed companywide in 2003.

"Whenever you consolidate applications, you are taking away the autonomy of that system and the people who run it," Swanton says. "You have to get everyone to buy into the plan."

When Michael Grosbol, CEO of the Danish textile purveyor Mascot International, cut eight enterprise planning systems to one, he held training sessions nine months before going live. He wanted to get "super-users" on board first.

Grosbol defines a super-user as the head of information systems, the head of the business unit and anyone who relies on the system to do his job. The super-user operates as an informal technology manager—the worker who can wander down a cube or two to help a colleague figure out the software.

"We focused on the people responsible for making the department run," Grosbol says.

Fritterer also advocates marketing the project. And not just to the chief financial officer or CEO. The real focus has to be the rank and file. For Ingersoll-Rand's move to one planning system, he held frequent meetings with key managers, not just business unit leaders.

The pitch: This would make the company more competitive and financially stronger. The payback: Fritterer would get in return insight on the best way to create a business process.

"The older application has more risks than the new one because it limits growth," Fritterer explains.

"Our No. 1 priority is to clean up. It's like your house. Your attic, garage and basement fill up and you have to clean up."

John McCormick and Tom Steinert-Threlkeld contributed to this report.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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