Avon’s US$125M IT Software Project Mistake

by drjim on August 20, 2014

Avon made a big mistake when they designed their new software

Avon made a big mistake when they designed their new software
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As CIO we have a number of different tasks that the company is expecting us to do. However, there is one task that takes priority over all of these other takes: implementing large software projects. Over at Avon they just did one of these big projects and it has ended in failure. What did the Avon CIO, Donagh Herlihy do wrong?

The Project

Avon knew that they had a problem. Their order management software system was old and out-of-date. Avon is a company that is built on a direct sales model. This means that its representatives are not employees. The order management software is a fundamental way that the company interacts with these front line troops and so it can be very difficult to make changes to this software system.

However, four years ago Avon’s CIO Donagh Herlihy who has been with the company since 2008 decided that it was time to update the system. Since Avon is not a software company, they knew that they needed a vendor partner for this project. They picked SAP AG as the partner that they wanted to work with.

There were three goals for the new order management software solution. The first was to boost the productivity of their representatives Next they wanted to improve their inventory management. Finally, they wanted to streamline their procurement.

What Went Wrong

In the end this IT project did not work out correctly. The new order management system was rolled out in Canada first with the expectation that Russia, Brazil, U.S., U.K., and Mexico would be next. However, the system was so burdensome and disruptive to the Avon Canadian sales representatives that instead of learning how to use the new system, they instead left the company.

So many representatives left the company because of the new software that the company has changed its mind and will not be rolling out the software to other countries. Instead they are going to write down between US$100M and US$125M.

What went wrong here? Donagh Herlihy brought in a respected software integration company, SAP, and a SAP spokesman is saying that “… the software is working as designed…” Having worked on a number of these SAP projects, I suspect that what he is saying is correct, but at the same time I’m willing to guess that the system is almost unusable and that’s why representatives are leaving in droves.

Something went wrong with this project. I am just guessing, but I think that the user interface is just too hard to use. Out of the box the SAP software’s user the interface is very, very technical. It is designed to be “hidden” from the end users as a part of the project. What I think happened to Donagh Herlihy’s project is that all of the time / money was spent on the back end of the SAP software hooking it into the various Avon ordering and inventory management systems. There was not enough time or money left over to change the generic SAP user interface enough to make it easy for the untrained Avon field representative to use.

What this means is that when Avon sat down with their Canadian sales representatives to show them what they were going to have to do to enter orders into the new system, it turned out that it was going to take a long time and be very difficult to do. Clearly the Avon CIO had not done enough research into just what the impact of the SAP software’s user interface would have on the end users.

What All Of This Means For You

Avon is in the process of writing off US$125M for a SAP order management IT software project that failed. The Avon Canadian sales representatives have been voting with their feet and have been leaving the company in large numbers rather than use this difficult and complicated piece of software.

Avon’s CIO Donagh Herlihy was in charge of this project. What went wrong? It’s not completely clear, but based on experience with other SAP projects the guess is that the user interface portion of the project was left being too complicated. The project’s money and time was spent on interfacing the back end systems and the user interface turned out to be too complicated for the Avon representatives to learn to use.

As CIOs we are ultimately responsible for the success of our IT projects. In the case of Avon, it appears as though the end users were not involved in the design of the new system. The end result was a solution that they were not willing to use. You need to make sure that you take the time to carefully work with your end users so that there are no surprises and the final product that you deliver to them meets their needs.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What do you think that Avon should do now? Their existing systems are still old and out of date…?

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What We’ll Be Talking About Next Time

The era of IT as we’ve come to know it is coming to an end. The IT department functions that have gotten us this far are now coming to an end. Keeping the company’s email systems up and running, implementing an big ERP project, and securing the corporate network from the bad guys is no longer what the company needs us to do for them. Will you and your IT department be ready for the new world?

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{ 2 comments… read them below or add one }

Sathyanarayanan June 21, 2016 at 9:02 am

The issue appears to be “Change Management” not handled properly more than the software “SAP” itself.

“the Sales representatives left the company” — The management while introducing such a big change should have —- First educated the users, Second take/incorporate the expectations of users in the system or Atleast at the time when the first Sales representative leave the company should have taken immediate/urgent measures in discussing with the Sales group what is the issue and pacify them.
At any point of time to get to the comfort level, the above three steps to be taken by the company…

Regards,
Sathyanarayanan.V

Reply

drjim June 28, 2016 at 6:03 pm

Sathyanarayanan: you bring up a very good point. I guess the key thing for all of us to learn from Avon’s mistake is that both change management and IT changes have to be managed at the same time…!

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