Transformation Under the Gun

Birds Eye Iglo Group had just two years from its acquisition by Permira to move off its previous parent company's IT systems to a standalone IT environment. It was as much a greenfield opportunity to create fully optimized business systems as it was a do-or-die mission.

By Jennifer Zaino

When Tania Howarth was offered the position of CIO at U.K.-based food processor Birds Eye Iglo Group in 2007, she knew she would have a tremendous opportunity — and an equally enormous challenge — on her hands. The former CIO of Coca Cola Europe and Africa and of Walkers Snack Foods would be spearheading the transition to an independent IT system for the company's European operations, which cover Austria, Belgium, France, Germany, Ireland, Netherlands, Portugal and the U.K. The catch is: The transition had to be accomplished in a relatively short time frame, before the close of 2008.

There was no slack in that date: Birds Eye had been purchased from Unilever by private equity group Permira in the summer of 2006, and it would be reaching the end of its two-year service contract for the use of Unilever's IT systems. Birds Eye considered replicating the Unilever environment, which might have made for a simpler transition. But doing so would not have addressed long-term issues, such as higher operating costs, that come with running eight different platforms for the countries in which it operated. Nor would that approach put Birds Eye in a strong position for future growth. Its IT environments were characterized largely by each country's running different process models in different SAP systems that had been developed over many years, and localized and significantly enhanced from their original versions.

The decision was made to build, from the ground up, a standardized SAP system environment that would support its entire business — its eight marketing units in different countries, its three factories in Europe and its centralized supply chain. (The new environment would have some minimal localization to support things such as country-specific accounting requirements, or other differences for which there was no business case to make changes, such as Austria's unique order management and distribution model.) Project Pioneer, as this large-scale effort was dubbed, would ultimately encompass more than 11 SAP modules, for more than 1,700 users, and require transferring data from Birds Eye legacy SAP systems, as well as migrating some non-SAP applications, such as external services and factory systems, to the new infrastructure. This kind of greenfield opportunity doesn't come along every day for CIOs, nor might it have in this instance if the advantages to the business from the transition were not so obvious.

The cost advantages of having a new, efficient and single platform were apparent, of course — to the tune of cutting some 40 percent of IT run costs. Running on a fixed IT cost basis also has implications for helping the company better weather the storm of a recession. But there's more, Howarth points out. "The platform also gives us the ability to expand the business on a number of fronts. It's a ready-made platform for acquisitions, and for new geographies: We have the right transaction system support without buying new software," she says. In new markets for Birds Eye, the company will be able to streamline its transition by launching with the basic IT system setup. And beyond that, having a platform built for Birds Eye's own purposes, as distinct from the Unilever conglomerate's more complex processes, presents more opportunities to continue to drive efficiencies and cost savings throughout the business.

Reality Meets Expectations

The new system is living up to expectations in a number of ways. Take, for example, the fact that monthly accounting results now can be quickly consolidated for all eight countries, doing away with the time-consuming spreadsheet interventions that previously had to be done. That means a lot to an investor-owned business like Birds Eye. "When we first separated from Unilever, we were using the old systems and struggling to provide investors with visibility into our business," says Birds Eye CEO Martin Glenn. "The new system saves us a lot of time in getting great visibility into our balance sheet." (Read our interview with Glenn here).

And, by having supply chain processes running consistently on a common platform, the complexities of planning raw materials purchases and keeping inventory as low as possible are handled much more efficiently. "This is a massively complicated engine that goes on within a business like ours," says Howarth. "Turning our demand forecasting into a supply signal for factories and for raw materials suppliers is not easy to do. For the first time, now that we are live on the new system, we can do that end-to-end in one tool with one set of people, and that ultimately drives massive working capital improvements."

Birds Eye's new IT system is a ready-made platform for acquisitions, and for new geographies.

A new business intelligence engine services the supply chain planning activity. In addition to providing Birds Eye with insight into weekly results so that it can determine what to do on the customer front to improve sales, it helps the company understand opportunities to save money on raw materials. That's especially important for expensive and hard-to-source items like fish, which form a core part of its business. "You need to make sure you get the best deal possible," says Howarth. "There's huge efficiency now that we have systems in place that look at how we spend money, and whether employees are adhering to contracts or not."

Insight Into the Challenges

Where Birds Eye is today is a very different place from where it was last year. Now, it has rolled out Phase 1 and Phase 2 of Project Pioneer, bringing its eight markets onboard ahead of schedule and on budget. Most countries went live in May, and the rest in September. Birds Eye's factories are running smoothly, and no customers have missed deliveries since the transition, says Glenn. The company was prepared for anything, though, having put in place continuity measures so that the business could operate manually if problems had arisen, and doing daily checks during the first four weeks to ensure the integrity of all transactions.