Case Study: Tubers - A Course Correction in ERP Implementation

From time to time, we feel compelled to share our findings and insights to help other organizations avoid falling into the same traps that befell a snack food manufacturer called Tubers. Their journey through digital transformation serves as a cautionary tale, highlighting the importance of balancing short-term cost considerations with long-term value creation. By examining Tubers' challenges and the strategies implemented to overcome them, we aim to provide valuable lessons and best practices for organizations navigating similar transformational journeys.

Tubers, a leading player in the salty snack industry primarily specializing in potato chips, faced a critical juncture when their aging AS400 accounting package became unsustainable. Recognizing the need for digital transformation, Tubers opted for a Microsoft Dynamics 365 Finance & Operations (D365) implementation. However, the journey was fraught with challenges as their system implementer (SI) failed to deliver as promised, leading to performance issues and resource gaps.

Challenges Faced:

• Initial Misrepresentation: The SI misrepresented their capabilities and experience, leading to unrealistic expectations.
• Performance Problems: Despite efforts to stabilize, performance issues persisted, impacting business operations.
• Resource Gap: The SI's continuous roll-off of resources created a knowledge gap and dependency.
• Overwhelmed IT Staff: The CIO's decision to leverage outsourced and offshore development firms disillusioned the remaining IT staff, leading to resignations and significant loss of intellectual capital.

Tubers' Sour Chips: The Cost of Cutting Corners in Digital Transformation

Tubers' journey into digital transformation pitfalls can be traced back to their initial decision-making process. Focusing on frugality instead of quality, Tubers opted not to hire independent consultant(s) to offset the SI's potentially hidden agendas. This choice was driven by a short-sighted focus on minimizing expenses rather than maximizing value. Their naivety led them to believe the SI's grandiose promises and big words without seeking a second opinion or establishing a second set of eyes to keep the SI's proposals in check. This lack of due diligence and reliance on the SI's representations left Tubers vulnerable to misrepresentation and manipulation, setting the stage for their subsequent challenges.

Impact of Cost-Driven Decisions

The decision to prioritize cost savings over value was a critical misstep for Tubers. By not investing in independent consultants or external consultants to provide oversight and validation, Tubers exposed themselves to the risks of vendor bias and misaligned incentives.

This cost-driven approach ultimately led to a situation where Tubers found themselves at the mercy of the SI's agenda, without the necessary checks and balances to ensure alignment with their own business objectives. The failure to seek independent advice and verification of the SI's proposals highlights a broader issue within organizations that prioritize cost over value, often resulting in costly and avoidable mistakes.

Turnaround Strategy:

Recognizing the need for a strategic shift, a moratorium was placed on all contract development resources. The existing partner resources were replaced with a lean, fully committed high-performing team consisting of:

• Project Managers: Reduced from 6 to 2, ensuring streamlined communication and accountability, essentially the organization had to many "boxtickers"^[1] instead of "doers"^[2].
• Business Analysts: Replaced inconsistent partner resources with 2 fully engaged analysts, offering training in D365 modules where applicable.
• Developers: Onboarded 2 full-time developers experienced in object-oriented development, with training in transitioning to x++.
• Solutions Architect: A seasoned ERP architect led the development team, ensuring alignment with business goals and establishing a firm foundation for future growth and innovation.

Results Achieved:

• Cohesive Team: The new team structure fostered a more cohesive unit, retaining intellectual capital and building robust relationships.
• Improved Efficiency: Initiatives were completed organically and on time, reducing reliance on external resources.
• Reliable Ecosystem: The care and feeding of the IT ecosystem became more reliable and less chaotic.

Key Takeaways:

• Invest in Internal Resources: Building a strong internal team reduces dependency on external resources and enhances functional knowledge of business operations.
• Streamline Communication: Having a leaner team with clear roles improves communication and accountability.
• Prioritize Training: Offering training and support for new technologies ensures a smooth transition and enhances team capabilities.

Tubers' digital transformation journey, though challenging, was successfully turned around by reevaluating their approach, investing in internal resources, and fostering a culture of continuous improvement.

Chipping Away at Short-Sightedness: Lessons from Tubers

Despite the successful turnaround at Tubers, it's crucial to address the common pitfalls in CIO efforts that prioritize short-term functionality over long-term sustainability. Often driven by political motivations or pressure to deliver results, CIOs may focus solely on the delivery of functionality without considering the technical debt incurred or the ability of in-house staff to support the solution in the long run.

This short-sighted approach can lead to wide gaps in support coverage when partner resources roll off or management pulls the plug on funding. It's essential for CIOs to adopt a more holistic and strategic approach, considering the long-term implications of their decisions on the organization's IT ecosystem. This includes investing in internal capabilities, managing technical debt effectively, and ensuring the organization is equipped to support and maintain solutions beyond the initial implementation phase.

Spousal Exclusion and Vacation Vacillation: Tubers' Recipe for High Turnover

Tubers' cost-centric approach not only affected their digital transformation but also contributed to high turnover rates. One key policy that exacerbated this issue was their spousal exclusion policy on health insurance, which excluded employee spouses from coverage if they had access to their own employer's insurance. This policy, aimed at cutting costs, had unintended consequences on recruitment and retention. Tubers, located in an IT talent-starved region, struggled to attract and retain skilled professionals due to this policy, further compounded by offering only two weeks of vacation for employees with over 20 years of experience. This disparity in benefits compared to other competitors undermined Tubers' reputation as a first-class employer, contradicting their aspirations and making it challenging to retain top talent.

Chips, Dips, and Digital Flips: Tubers' Journey to Tech Turmoil and Triumph

Tubers' journey through digital transformation highlights the pitfalls of prioritizing cost over value. Their initial decisions, driven by a desire to cut expenses, led to a series of challenges, including reliance on a system implementer's (SI) misleading promises, high turnover rates, and difficulties in recruiting and retaining talent. The focus on short-term gains, such as implementing cost-saving policies like spousal exclusion from health insurance and minimal vacation offerings, backfired, undermining Tubers' ability to compete for top talent and achieve long-term success.

Through a strategic turnaround, Tubers was able to address some of these challenges by investing in internal resources and shifting their focus towards building a cohesive team capable of driving organic initiatives. By recognizing the importance of long-term sustainability and investing in their workforce, Tubers was able to stabilize their digital infrastructure and improve their relationship with IT and other business units.

The key takeaway from Tubers' experience is the importance of balancing short-term cost-cutting measures with long-term value creation. Organizations embarking on digital transformation journeys must prioritize investments in internal capabilities, seek independent validation of vendor proposals, and align policies with industry standards to attract and retain top talent. By learning from Tubers' missteps, organizations can navigate the complexities of digital transformation more effectively and achieve sustainable growth in the ever-evolving business landscape.

1. Boxtickers: an individual who superficially completes tasks or checklist items without substantially contributing value to a project. They may focus more on meeting procedural requirements or appearing productive rather than actively engaging in meaningful work that utilizes well-defined skills or technical expertise.
2. Doers: an individual who consistently and effectively completes the work they are assigned, demonstrating a strong work ethic and a proactive approach to their responsibilities. Additionally, a doer actively contributes to the project beyond their immediate tasks by providing mentorship, expertise, or additional support in areas where they can add value, thereby enhancing the overall success of the project.