by Peter Sayer

ADM takes process-oriented approach to IT modernization

Sep 28, 2021
Agriculture IndustryDigital TransformationIT Leadership

Food ingredients supplier Archer Daniels Midland is consolidating IT systems as part of a transformation that includes standardizing many of its business processes worldwide.

Archer Daniels Midland is moving beyond its agricultural roots, and for the multinational food processer and supplier, IT is proving a key ingredient for its transformation.

For its first 110 years, ADM traded and processed agricultural products such as oilseeds, beans, and corn, transforming them into oils, flours, and syrups, but around 2014, the company began a series of acquisitions in food technology, taking it into the production of more high-tech ingredients for human and animal nutrition, including plant proteins, flavoring, natural coloring, and enzymes.

“We’re not just an ag company; we’re also a human and animal nutrition company now,” says CIO Kristy Folkwein, who joined ADM in 2016.

That move into specialty products called for a similar updating of the company’s IT systems — and a standardization of its business processes around the world. “We had a lot of different ways of doing commodity trading and invoicing. We had all this fragmentation,” she says.

After a century of growth, from its origins as a miller of linseed in Minneapolis to a multinational operating in more than 50 countries on six continents, ADM’s IT systems were in need of an overhaul. Prior to the wave of acquisitions, IT had not been an investment priority. “There was a lot of pen and paper and things built over time; very old systems: You name it, I probably had one,” says Folkwein. Among those treasures were a 1950s mainframe and a VAX.

Overhauling processes

In her first couple of years leading ADM IT, Folkwein and her team worked with other business and function leaders to tease apart the intricacies of ADM’s business processes, looking through the customer lens to identify areas where value was generated.

“From that, we started the global design of our technology and our processes,” she says. “As we defined the processes, we also defined how we’re going to measure them. We’re measuring so we can prove that we actually get the value. That’s a big part of the transformation.”

One of the first big changes Folkwein instituted was to outsource legacy support to Tata Consultancy Services. “That freed up head count to hire the new skills that we needed to bring in to help us deliver this transformation,” she says. Communication about who at ADM would be affected began early, giving staff time to look for other roles within company. Some were selected for training in new areas of technology. “We made every effort to ensure people had another opportunity, internal or external, with a partner,” she says.

In 2018, ADM restructured into three business segments: ag services and oilseed, carbohydrate solutions (corn), and nutrition (the specialty part). It also launched a new initiative called Readiness, to reduce costs, improve efficiency, and standardize business processes.

“We have a maturing process organization now,” says Folkwein.

For each major process — source-to-pay, for example, or prospect-to-cash — a member of the executive committee is accountable for prioritization, delivery, and results. “There is a formal organization that tracks the value being delivered.”

Employees across all parts of the business are familiar with this value management approach, as it is applied not just to IT projects but also to manufacturing projects, acquisitions, and more, she says.

Moreover, employees are encouraged to offer ideas for improving operations as part of ADM’s Readiness initiative, says Folkwein. As part of Readiness, the executive accountable for the area in which an idea is offered is responsible for figuring out whether the proposed change has value, and how to measure it. Only once it’s passed these tests does Folkwein consider it for funding, IT support or staff allocated, and then it’s closely tracked to ensure it delivers.

“As a CIO this is helpful, because the enterprise is deciding priorities based on value. We’ve a lot on our plate, the appetite for technology far exceeds the ability to deliver it,” Folkwein says. “But this process is run by a very senior member of our company and tracked and reported to every executive committee member. You’ve got to get through a lot of gates before you’re going to get my support to be able to deliver something as compared to other things we could be working on that bring more value.”

Technical transformation

One of the first software projects to go through this process was the rollout of a new indirect procurement tool, Coupa, as part of a program called 1ADM to bring together the company’s disparate IT systems.

“As we were going through global design, there was a recognition that standard SAP wasn’t going to meet what the procurement organization needed,” Folkwein says. To address this, ADM launched a rigorous selection process examining the business case for various options before selecting Coupa. Executive approval for the spend then enabled it to be added to the global software template. Folkwein describes the Coupa project as a partnership between the accountable executive — in this case the head of procurement — and the technology organization.

There are now a couple thousand staff using Coupa, which ADM CEO Juan Luciano described in a July 2021 earnings call as a best-in-breed technology, and a great example of the kind of productivity work that, collectively, will help ADM save $200 million 2021.

Looking back at the implementation process, Folkwein wishes she had done more testing: “There’s never enough testing,” she says. Another area that would have benefited from more attention was planning for the support phase, especially ascertaining whether the procurement team or central services should be responsible. And, she says, supplier onboarding could have been more rigorous.

It might seem that it’s too late to worry about that now that the implementation is done, but for Folkwein it’s all part of the process: The way the IT team rolled out Coupa is also the way they are rolling out SAP’s Success Factors, bringing a common data model to HR systems across the company, and how they will roll out S/4HANA. Folkwein is aiming to begin that in the company’s flavorings unit in October 2021: “They’re currently on an old SAP system, which is why we’re starting with them: At least they know SAP.”

Throughout the rollout of Coupa, “We were testing our processes for deployment, power-user networks, training, and support models,” she says.

The challenge initially was to keep the team looking beyond the task immediately at hand and to remember, “We are implementing a common way of working, that looks the same, feels the same, acts the same, delivers the same worldwide. That was probably the harder part, just to keep everybody’s eyes on the big enterprise goal versus these little deliveries,” she says.

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