A focus on long-term IT strategy helped David Leo embrace software as a service for Mexico’s largest restaurant chain.
by Aaron Lazenby
In 2004, David Leo joined Restaurantes TOKS just as the company’s IT department was beginning a major transformation of systems for Mexico’s largest restaurant chain. Management had just launched Innovatoks, a program to restructure IT strategy away from the mainframes of yesterday toward the cloud environments of today. The goal: to rebuild all administrative and operational processes on Oracle E-Business Suite On Demand.
Today more than 7,000 employees in TOKS’ 91 restaurants around Mexico use Oracle applications in the course of their workday—unaware that the software is running in the Oracle data center in Austin, Texas. But while the location of the software may be invisible to its users, the benefits stand out in black and white: significant reduction in the time it takes to process financial statements, procure ingredients, pay suppliers, and train staff.
Strategic initiatives such as the Innovatoks effort to modernize enterprise resource planning (ERP) systems have helped TOKS outpace competitors in the industry. Indeed, 2010 marked the seventh year the company grew faster than the industry average, with sales increasing by 8.5 percent while the rest of the market retracted by 0.1 percent.
“We continue to develop new strategies for our restaurants to keep us moving forward, with the goal of growing the business by 20 percent every year,” says Leo.
Profit caught up with Leo to discuss the efforts he and his team have made to remake TOKS’ business processes; how software, delivered as a service, can address the growing challenge of skilled labor shortages; and how embracing new technology can continue to drive growth in a customer-focused business.
Profit: What was your role when you first arrived at TOKS eight years ago?
Leo: I started in 2004 to assist with strategic IT planning for the company. In 2006, we began the Innovatoks initiative, which was basically a decision by senior management to use Oracle technology to power all TOKS business processes. This was a significant departure from the role the IT department had previously played in the strategic direction of TOKS. With Innovatoks, IT changed from being reactive to a proactive contributor to the goals of the company.
Since then, I’ve seen many new technologies emerge in the market. Some of those are just now finding a place in the IT department, and others have faded away. But software as a service [SaaS], outsourcing, or cloud computing—whatever you want to call it—has remained a critical element of our IT strategy over time.
Profit: At the beginning of the Innovatoks initiative, TOKS IT leadership chose to move to a SaaS model to upgrade business-critical applications. Why was that?
Leo: Outsourcing IT functionality has been one of the key success factors for Restaurantes TOKS. It has allowed us in the department to focus on the business and improvement of the processes instead of administering IT. Our philosophy is to hire the best vendors for outsourcing to ensure quality and services at our restaurants, because we have our IT operations in expert hands.
That’s why we chose to build our applications infrastructure with the managed services offered through Oracle Cloud Services—that way we can count on Oracle to support, monitor, and service our Oracle E-Business Suite system directly. If our IT is in the hands of the people who manufactured the software, then I don’t think we can be in better hands. This delivers a high level of confidence to end users and a high level of service for our operation.
We believe that this model of IT is the future and can reduce risk, improve efficiency, and improve service levels for our users. And you have better visibility into cost because you know what your monthly recurring IT fees are.
Additionally, while there is a strong professional base of IT workers in Mexico and the capacity of the workforce has improved, there are not enough certified professionals to address the current demand for skilled IT labor. Sometimes that makes it difficult to find the people you need to continue to innovate. So we turn to Oracle, by using Oracle E-Business Suite On Demand, to help us access these certified professionals.
Profit: Since retiring TOKS’ mainframe and replacing it with an outsourced IT model, what kind of business improvements have you seen?
Leo: For one, Oracle E-Business Suite On Demand has helped us deliver better service to our customers. We use the platform to manage all the purchases of raw materials—the eggs, butter, flour, vegetables, and meat, for example—that go into our food. This helps us make sure we have the ingredients we need from our suppliers so we can prepare meals for our customers. And all the invoices from those suppliers are being fed into our financial systems through Oracle iSupplier Portal.
The financial systems also track the sales from our restaurants, and all of the receipts from 91 restaurants are recorded daily in our Oracle ERP system. We have now eliminated most of the manual procedures associated with these financial processes and reduced by 30 percent the time it takes to generate daily financial reports and execute bank balances.
We have our financial statements ready on the second day of the month, always efficient and always accurate. This puts more information—and more cash—into the hands of the people responsible for the fiscal health of TOKS. I think that’s a major improvement.
We also use the Oracle system to manage the internal services we deliver to our restaurants—kitchen repairs, air conditioning maintenance, carpet cleaning, and the like. Requests for this kind of service used to be done by phone or over e-mail. Now, all the staff at all of the restaurants log those maintenance requests in the central system from their location, improving the response time of our service staff. And because the system also accesses restaurant receipts, supplier invoices, and budgets, our managers can get a unified view to monitor the daily performance of their restaurants.
Profit: How has the system helped address TOKS’ unique human resources challenges?
Leo: Each restaurant has around 75 people working in it, all in different roles. And we have 91 locations. Plus, we have different human resources demands at corporate headquarters. So training such a dispersed and diverse workforce can be difficult.
But our training is managed by the human resources module of Oracle E-Business Suite, so we can present a course catalog, and people throughout the organization can know what kinds of training will be available next month, for example.
In addition, they can get involved with the course via the Oracle software. They used to have to travel to a location to take a class. Now, the Oracle iLearning module allows us to send the training to each restaurant, and employees can get the information they need.
Profit: TOKS had already embraced SaaS long before the term cloud came into fashion. What do you see as the next technological innovations that will be crucial to your business?
Leo: Being able to conduct sales and payments through mobile devices will be something that keeps us busy over the next few years. And the revolution in social media, and how we integrate it within our strategic plan, will also pose a challenge. But social media holds a very high potential for us in terms of contact with our customers, soliciting opinions, and delivering promotions.
Profit: During this period of dramatic IT transformation, how has Restaurantes TOKS changed as a company?
Leo: Restaurantes TOKS has undergone a complete evolution in the past few years, with significant changes in brand, restaurant architecture, menus, the portions and flavor of the food, and the quality of customer service. To execute this strategy, all areas and processes of the organization had to be aligned to meet these goals—and IT was not an exception.
In the process of developing that strategy and choosing technologies for the company, we never overlook the important influence of the line-of-business managers, because each of them is an expert in a specific part of the business. We in IT listen to their ideas and then work together to jointly define the needs for each area. Our success metrics are based on the accomplishments of their needs, and we always orient a project to have clear benefits for each operation.
Our business faces several challenges: we have to deliver better customer service and food quality at a fair price to outperform our competitors. I intend to support TOKS with the best technology to keep it the best restaurant chain in Mexico. So we’ve had to evolve our applications to meet employee and customer needs.
Profit: What do you hope to achieve with IT at TOKS over the next five years?
Leo: In addition to supporting TOKS with the best technology available to keep us as the best chain of restaurants in Mexico, we’ll evolve our customer-facing applications to reach our customers wherever they are—always with an emphasis on excellent customer service.
Aaron Lazenby is editor in chief of Profit.