How an SAP implementation brought a CIO out of retirement
When chemical company Old World Industries tapped Kevin Reilly's consulting expertise, it was clear to him the company was "in a spot where they hung on to old tech for a long time."
Private, family-run businesses operating outside of market pressures often escape technology criticism, which means the longevity of manual processes can go unnoticed.
For automotive and chemicals company Old World Industries, operations were stale. "Because they're not public, and don't have that scrutiny, they don't always stay current," said CIO Kevin Reilly, in an interview with CIO Dive.
Customer service obtained orders and sent them to fulfillment, where stock of the product was checked on Lotus Notes or manual spreadsheets. Small, private companies "might not feel the fear of trying to add new tools to the tool bag if the ones they had were OK," said Reilly, "It's a different kind of place."
Sometimes this equates to operating on a 20-year-old operating system.
Reilly joined Old World Industries as a consultant in May 2018, about a month after its former CIO left the company. He came on to guide the company through its SAP implementation. The consulting job turned into a full-time by September 2018.
Though his most recent CIO role was in wholesale distribution, Reilly knows IT doesn't exist in industry silos. The basic SAP system, for Reilly, helps CIOs take what they've learned and put it into practice.
He's since instituted basic blocking and tackling product management. It meant standing monthly meetings of the IT steering committee, which had been nonexistent unless there was a specific project.
Then Reilly started to build out a Center for Excellence based on the SAP model with the steering committee, business process owners and super users. Weekly activities are created for the super users while monthly activities are made for the business leads so all are aware of the IT perspective on projects.
Business leaders can offer input on strategic responsibilities which creates synergy.
Road to modernization
Reilly is a self-described ex-CIO who "flunked retirement"; he originally retired in 2014.
When Old World Industries tapped Reilly's consulting expertise, it was clear to him the company was "in a spot where they hung on to old tech for a long time," he said. The company was running on IBM's AS/400 with a lot "home-grown" applications and had been "taken as far as it could be taken."
Still the company's IT predicament paled in comparison to other consulting customers that were using punch cards and mainframes. Old World Industries just needed to know how it was going to replace a computer that had been "tweaked" for years.
This drove the company to focus on enterprise resource planning systems for basic business transactions, not including any customer relationship management systems. The company just needed to revamp its transactional systems.
"They did the typical demos and dog and pony shows of the various different software that was available to them" before deciding SAP was the best fit, said Reilly. It was about late 2015 when the company pursued the new SAP 4HANA, which presented the company another challenge — limited resources and talent to work the system.
Still, by Labor Day weekend 2017, Old World Industries went live with about 10-15% of its revenue on the SAP system. Then the company "started to bring SAP to the masses" in a phased approach.
The install was "full-blown" because it included features like procure to pay, plan to product, record to report. The features were wide ranging, but were limited to one part of the business.
The chemical company was dissatisfied as it started working on the next phase. Reilly says previous attempts to modernize did not get buy-in from leadership because there was "big money, big plans without necessarily tying the plans and the benefits tightly together."
This is where they turned to Reilly. The company continued its integration process and by Labor Day weekend 2018, Old World Industries had about 70% of transactions and more than one-third of its revenue online.
Because operations are "coast to coast," it required the involvement of various business processes. Now the chemical company is "in S4 with both feet."
"We have for the first time, opened a brand new warehouse, from the ground up" in the same 120 days it took to get the division on SAP.
Reilly had to lead the company through adding to S4 and creating a business data warehouse. Overhauling a technical system is daunting, especially for a family business.
Reilly adjusted his approach to asking for a budget that enables experimentation.
"Instead of saying I need X dollars to do this, instead I said, 'give me 3% of that budget and I'll do a pilot for you'" so the benefits can be seen without too much a financial burden.
Because of his industry connections, Reilly was able to "put a bare bones pilot together" with the data warehouse. He found a consulting team willing to allow Old World Industries to use its hardware to run the pilot.
And because is was a pilot and not in production, Reilly was able to use the consultants' licensing to do development work. "It's easier to get support when you say, first let me put a toe in the water before I jump in," said Reilly.
The chemical company is in the process of doing the same thing with C/4HANA. "There's nothing wrong in essence in running on [consultants'] machines with their licenses until you know what you want," he said, "then you can go license what you really want without guessing what you want before you get started."
As CIO, Reilly has to recognize every plan and timeline is essentially someone's best guess. And sometimes projects don't adhere to the parameters that were set.
"You just can't believe that you're going to your project software and you built this nice timeline and you publish the Gantt charts and they're never ever going to change," said Reilly, "that's a surefire way to an ulcer."
Though this was not Reilly's first time installing an ERP or SAP, "all of these processes have warts," he said. In other words, there isn't much that will make him feel like he wants to retire again.
Follow Samantha Ann Schwartz on Twitter