“We were on a burning platform,” says Josep Coderch, vice president of business solutions for PepsiCo International Europe. “We are experiencing tremendous growth in Eastern Europe, and we have a target of continuing growth well above the food-and-beverage industry average in Europe. This brings a lot of new acquisitions into the portfolio that need to be integrated and supported in a different way.”
It’s the same challenge Oracle management faced when ramping up the company’s acquisitions strategy in 2004, says Mahon. Oracle’s response, she says, was to minimize the complexity of the company’s IT systems and then standardize business processes on best practices across all enterprises. “If you’ve got that standardization in place, it’s much easier to absorb growth without completely breaking your systems and processes,” she observes.
That’s exactly what Coderch hoped to accomplish when he was asked in 2004 to integrate different versions of Oracle Applications across several countries. Localized solutions were dated and in need of upgrading, support costs were unpredictable, and processing support for mission-critical applications was patchy at best. Another issue was the high number of customizations, many brought about by short-term operational pressures. Coderch recalls, “The question I continually asked was, ‘How do we reduce the number of moving parts?’”
Simplify and Standardize
For inspiration, Coderch turned to PepsiCo’s Tropicana brand, which had been using the Oracle platform since 1999. “Tropicana’s extensive experience with the Oracle platform gave me an appreciation of what works,” says Coderch. “Tropicana also needed upgrading, but it had had some experiences I knew we should leverage for the broader European operations.” PepsiCo International Europe upgraded all systems to a compliant version of Oracle Financials, Oracle Purchasing, Oracle Inventory, Oracle Order Management, Oracle Business Process Management, Oracle Project Costing, and Oracle self-service applications. Tropicana’s experience with Oracle On Demand served as the delivery model.
Coderch and his team faced two potential hurdles. First, how could they simplify and standardize and at the same time preserve several distinct brand identities? Second, how could they accomplish this goal without alienating existing IT staff? “Our culture is very entrepreneurial,” says Coderch. “Each area is very much in control of its own system, and there’s a tendency on the part of the people in the organization to say, ‘Leave me alone—I’ll fix it myself.’ But in today’s economy, you can’t be trying to fix yesterday’s issues. You have no choice but to address tomorrow’s issues.”
The solution was to systematically standardize customizations according to the standards set by Oracle On Demand, which limits intrusive modifications into the software. Oracle On Demand has an established framework for exceptions, and Coderch and his team heavily trimmed the number of customizations without stepping on any toes. This initiative established a system that could be supported across several countries with high reliability and minimal internal effort at a predictable cost.
Coderch attributes part of his company’s success to early and ongoing involvement with Oracle Service Delivery Manager Carl Hauptfleisch. “Carl pulled together an overall master plan for PepsiCo’s upgrade and consolidation,” notes Mike Hutchinson, Oracle vice president of service delivery management. “Our delivery model allows different PepsiCo regions to work with Oracle On Demand staff in local languages and time zones, while Carl makes sure that all those PepsiCo units are in sync.”
“It has enabled us to put into place the regional governance we were lacking before,” says Coderch. “We now have a very compliant solution that we can manage holistically, moving forward. We have been able to divert internal resources to other strategic projects we were not able to tackle before, and we have positioned ourselves across the region in such a way that other merger-and-acquisition activity can be accommodated in the same infrastructure.”
Standardization has also created new ways to track and manage costs. Users are now able to pull supply chain data from across systems and produce aggregated information from the supply- and spending-level perspectives and even gain an activity-level view of specific items. Standardization also provides a higher level of granularity and transparency in cost-of-goods calculations and creates a broader picture of trade spending—the promotions, discounts, and allowances a company offers its customers to help them do business with end consumers. “We now have additional visibility and transparency in how we’re performing across markets on these costs,” says Coderch. “It’s allowing us to increase productivity going forward in a way that we were not able to do before.”