After joining Levi Strauss in 2000, CIO David Bergen had three letters on his brain: SAP. He knew employees worldwide were unhappy with disparate back-office computer systems. Europe uses a flavor of Baan. Asia and Canada have a homegrown system of HP 3000s integrated with local Windows-based systems. The U.S. business uses a mix of mainframes, and Unix-based midtier and Windows servers. Assessing this lineup and Levi’s strategic goals led to the SAP choice, Bergen says.
Working with his team of 450 IT employees in the United States and 250 people abroad, he wants to get the entire Levi’s business on SAP. Rivals such as VF Corp. (maker of Wrangler and Lee jeans), along with Adidas, Nike and Reebok are all SAP shops. Bergen isn’t deterred by the problems some companies have had installing the systems. If you’re in apparel manufacturing, “you only see SAP,” he says.
Analysts estimate the project will cost Levi’s between $1 million and $5 million, plus consulting fees, which Bergen wouldn’t confirm. Levi’s is bucking the industrywide trend by going ahead with ERP now. “It’s expensive, high risk and requires a lot of cultural change, and unless you have a really compelling reason to do them you don’t [during a downturn],” says Paula Rosenblum, an AMR Research analyst.
In Levi’s case, the compelling reason was improving global performance, led by CEO Philip Marineau. Bergen says Levi’s, which was rapidly losing market share to rivals, understood his argument to install global computer systems to improve shipping, control costs, support future growth and stay current with fashion trends.
The company is moving slowly, however. Bergen’s first task as CIO was to get systems in the United States upgraded to do business with Wal-Mart. He says about half of those upgrades will be replaced by SAP applications. Though his methods might sound inefficient, Bergen says he had no choice but to upgrade immediately for Wal-Mart before installing SAP, which is a much more arduous, long-term process.
Levi’s first SAP project is set for the end of 2003 in Australia and New Zealand. North America is next in 2004 to 2005?”the big monster,” as Bergen calls it. The project includes 5,000 users and will take five years to complete, Bergen says. The question industry watchers ask: Will five years be soon enough?