Enterprises frequently pursue acquisitions to boost growth. While this strategy may yield a more robust balance sheet for the acquiring company, the one near certainty is that the CIO will be left to wade through quagmires of legacy technology to integrate multiple financial systems as a result.
That’s the challenge Stephen Katsirubas has been working through at Hunter Douglas, which hired him in 2016 to helm an ERP consolidation for the United States’ leading maker of blinds and other window coverings. As HD acquired Comfortex, Levolor and other brands, it saw its financial system footprint balloon to include 18 distinct ERP implementations.
Katisirubas’ primary mission? Winnowing those systems into a single SAP S/4HANA software suite, driving out costs and injecting efficiency into business operations.
“This was to be a catalyst for a business transformation around improving the supply chain, simplifying the business and improving the customer experience,” says Katsirubas, CIO for the company’s $2.6 billion North American business.
An ERP and predictive analytics engine in one
Introduced in 2015, S/4HANA is SAP’s fourth-generation ERP business suite, which includes apps for managing supply chains, enterprise warehouses and business intelligence. Incorporating an in-memory computing platform (called HANA), the suite enables companies to run predictive analytics, which businesses view as vital for generating real-time business insights.
Migrations to S/4HANA from an earlier version of SAP are increasingly common, as the company reports 12,000 customers on the suite through its third quarter, up 25 percent from a year ago. But in 2016, most CIOs were afraid to become posterchildren for failed migrations to a new, unproven ERP model.
Yet Katsirubas, who had experience with SAP ERP systems as CIO of Crocs and other roles, accepted the challenge. “The timing was right for our business,” says Katsirubas, who elected to host S/4HANA in a private cloud hosted by Dell’s Virtustream unit, which specializes in operating SAP environments.
As with most ERP migrations, HD ported the business in stages, starting with the Levolor business, U.S. manufacturing operations and the dealer-facing sales organization. HD wrapped up the initiative in August. Along the way, HD resolved resiliency and performance issues that inflicted “a certain degree of pain,” Katsirubas says.
He added that while it’s too early to cite ROI or quantify other success metrics, the move has already improved HD’s visibility into its supply chain. In time, HD expects S/4HANA will reduce significant maintenance costs, reduce scattered inventory and generate real-time analytics. Ultimately, consolidating ERPs should make it easier for employees to make decisions and for customers to do business with HD, Katsirubas says.
Speech analytics boosts CX
As some of his 130 IT staff worked on the consolidation, Katsirubas facilitated or collaborated on other projects. For instance, his team created an iPad application that HD’s 5,000 dealers use to show customers how blinds or shades will look in their house. HD also built The Link, a dealer management and ordering platform that enables dealers to manage marketing, sales, ordering, fulfillment and customer service from one Web portal. HD dealers also now use Salesforce.com Community Cloud to manage their calendars and view orders, leads and other opportunities, Katsirubas says.
HD is also using software from TopBox to analyze customer service calls, social media and email messages to better understand how customers struggle with its products and to take corrective action. For example, Topbox helped HD identify an issue in the ordering process that caused a high volume of daily support calls, costing the company time and money and creating friction for dealers and customers. With this insight, changes were made to improve navigation within The Link, reducing daily call volume.
Ultimately, HD is working to better integrate its business and supply chain and share inventory and product knowledge, which will help it more efficiently route dealers to opportunities by geography. It’s a quest Katsirubas likened to searching for “the Holy Grail.”
An integrated ERP capable of running real-time analytics should help. But Katsirubas remains an outlier on the S/4HANA front. CIOs running the traditional on-premises SAP ERP Central Component (ECC) have put off evaluating SAP S/4HANA because it is complex and requires software engineers to ramp up on a different architecture.
Research firm Gartner advises CIOs not to wait. SAP has said it is ending support for its ECC and other traditional ERP suites by 2025. Moreover, “planning for this critical conversion requires significant effort, not least to evaluate justifiable business cases, but future innovations in data analytics and AI/ML will greatly benefit many organizations,” say Gartner analysts Duy Nguyen and Paul Saunders in a research note published in April.
Tips for a healthy S/4 migration
Meanwhile, Katsirubas offers fellow CIOs planning an ERP migration the following tips.
Manage expectations. Rarely do ERP migrations wrap on time and under budget, so plan the project thoroughly, sell it up and down the organization, budget wisely and align your change management strategy.
Pick a solid project leader. Your project is only as good as its captain. Some organizations cede this responsibility to a third-party partner, but Katsirubas recommends against such a delegation; there’s no substitute for a sound leader who knows the business and possesses a strong sense of ownership and responsibility.
Round out the staff early. You’ll need program and project managers, engineers and analysts. If you don’t have them, hire them early and bring them up to speed. Katsirubas picked people from within and hired externally. “You want the best and brightest,” Katsirubas says.
Fill in the expertise gaps. Consulting firms are great for general expertise, but your business may require specialized help with knowledge of your sector. For example, during the latter stages of his ERP migration, Katsirubas hired Fujitsu for its expertise in designing manufacturing execution systems.
Beware the staff allocation tax. With HD operating several legacy ERP instances during the migration, almost all of Katsirubas’ staff was working on the program, making it harder to pursue and complete other projects. He added incremental on-shore and off-shore support to keep systems running.