Deep dive: Inside Elders' IT transformation

Rural services firm Elders has kicked off the first phase of a major IT restructure under its four-year Connect business transformation project.

The restructure includes:

• An enterprise-wide SAP rollout on HP private cloud infrastructure in Sydney;
• The eventual decommissioning of its Adelaide data centre;
• Significant outsourcing and change management components; and
• System expansion to international operations.

Elders Australia's chief information officer Shaun Hughes told iTnews that the Connect program was about bringing a client-centric focus to the organisation.

The key planks of Connect focus on improving the company's sales performance, supply chain, capital management and developing an IT platform to underpin all activities. Hughes is charged with delivering that fourth plank.

Elders Australia took another step towards achieving that end-game by revealing a seven-year IT infrastructure and application services outsourcing agreement with HP this week.

The contract was signed in March and HP started servicing Elders in July.

"We're in our sixth month of steady-state service delivery," Hughes said.

"Things are going well. I'm very comfortable with where we are."

HP is not the only IT firm to pick up work for the technology portion of Connect. Accenture picked up two pieces of work around business process "roadmapping" and systems implementation; SAP took the core software piece and Telstra is providing carriage services to Elders' network of points-of-presence in rural and regional Australia.

The IT portion of Connect is divided into six releases. The first release, scheduled to go live in March next year, is a "head office foundation piece [that covers SAP] financials, core HR and indirect procurement".

The other releases are:

• Releases two and three - branch systems such as point-of-sale, CRM and direct procurement;
• Release four - Elders' meat and livestock division;
• Release five - New Zealand and other international operations; and
• Release six - Builds on capabilities in the first five releases.

Release six in particular "takes us to a higher level of advanced functionality", Hughes said.

Significantly, the SAP environment is being stood up in a private cloud environment operated from HP's Sydney data centre.

"We'll be running our SAP environment from an x86 architecture cloud," Hughes said.

"As we provision each release, we'll provision that out of the HP cloud in Sydney."

Hughes said the cloud agreement operated on a utility pricing model and provided flexibility to scale infrastructure depending on requirements.

"That was really important for us because what we're effectively trying to do is only pay for what we need as we stand [up] each release," Hughes said.

"Given that we've got a large number of quite complex development and test environments, because of the size of this program, we needed to be able to scale up each of those environments and then effectively scale them back down again when we didn't need them."

Over time, the HP cloud is expected to run a number of legacy applications that are currently hosted in Elders' own data centre at Adelaide headquarters.

Under the outsourcing arrangement, HP will manage Elders' legacy iSeries environment "in situ... under [which] we sunset or retire that existing infrastructure".

iSeries is an IBM mid-range computer system. Applications that are transitioned to the HP cloud will run on a BladeSystem architecture and HP storage.

"We effectively run iSeries apps internally and we run a series of Wintel servers as well running a number of bespoke apps," Hughes said.

"As those servers come up for refresh, we'll effectively move those into the cloud as well.

"The end state for us is that we retire the existing data centre once we've got to the end of the implementation. That will take us four years."

Read on to page two for Elders' software strategy under Connect.

One of the legacy systems slated for sunset phase is a Mid-Comp ERP system installed in part of the Elders business in April 2007, a year prior to Hughes' appointment.

Mid-Comp was effectively a "piecemeal implementation for a single part of the business", Hughes said - one that was symptomatic of the way Elders had approached software deployments in the past.

"We've done a lot of things over the past 20 years to solve specific problems around specific business units, or what we call products," he said.

"We found the way we'd gone about the Mid-Comp deal ... was really only fixing a small part of the problem rather than taking an enterprise view."

At the time of appointment, Mid-Comp trumpeted that they had beaten SAP to the deal. Four years later, they are being dumped for SAP.

Hughes knows that to achieve client-centricity means working towards a "single view of the customer which means having master data held in a single repository [and] the ability to present that entire customer view back to your sales force in whatever way they want to consume the data".

That requires a system that cuts across the entire business.

He said the implementation plan is to execute a "clean break" from the legacy software as much as can be achieved within the bounds of the old environment.

However, the complexity of the legacy architecture would play a part.

"We haven't got a modular services oriented architecture in place today in our legacy environment," Hughes said.

"What that means in practice is you can't just put in the new GL [general ledger, and] take out the old GL - it's a very complex program.

"We can't [just] rip out the old general ledger. We've got to basically work within that construct so there's a lot of mapping tables required."

Another source of complexity is that some of Elders' front-end systems - not scheduled for change until releases two and three - incorporate general ledger code that points to sets of numbers in the legacy system.

Delete or rationalise the back-end systems and "you effectively crash your [front-end] code", Hughes said.

In practice, that means legacy and new finance systems will run in parallel in the first release.

"Nothing goes away," he said.

Elders also plans to retain some bespoke agriculture systems.

"But we'll change the way the software operates so it works in the context of a modern ERP, and ensure that we have the data integrity that we need around that core customer," Hughes said.

Ditching the green-screen

Rationalising 20-plus years of IT into a central, enterprise-wide system poses complex change management challenges.

"It's always difficult to roll out new things into any environment but when you overlay that with our rural and regional footprint, [merely] getting people together for training is really challenging," Hughes said.

The change implications of Connect are broader than IT; Connect is a business project that incorporates IT, rather than being a pure-play technology project.

In recognition of that, Elders has set up a steering committee of "key general managers across the rural services business" to get a better understanding of the change implications of Connect.

It also runs a "large user advisory group" made up of people it effectively sees as "change champions".

"Rather than define something in a head office environment and then land it at the branch level, what we've got is quite an exhaustive user advisory group who are instrumental in helping us define the look-and-feel and operability of the systems," Hughes said.

"That is really important for what we're trying to do here."

Hughes said a recent change readiness survey showed there was an appetite for change among rural and regional staff.

The survey garnered a response rate of approximately 70 percent in the first 48 hours

"It was astounding," he said.

"People want something new because they know that what they have today limits their ability, makes their job difficult and complex.

"Our change readiness surveys that we've run overwhelmingly give us that indication."

Hughes said that while staff might be used to "intuitive", browser-based computing at home, Elders' branch networks run a "green-screen-based environment".

"[Staff] have a degree of technology [at home] that's not really commensurate with what we ask them to use when they come to the office," Hughes said.

"The challenge that we have is I think there's such a willingness to embrace what needs to be done.

"There's a concern around how we're going to do it, and those concerns are always right - but there's such a willingness to embrace it that our biggest challenge is the expectation gap.

"The challenge though is making sure the expectations aren't so high that we can't deliver them."