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12/12/2013
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Avon Pulls Plug On $125 Million SAP Project

Avon halts its global rollout of an SAP order management system after a Canadian pilot project prompts reps to quit in frustration.

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Avon has halted the global rollout of an SAP-based order management system after a failed deployment in Canada, The Wall Street Journal reported late Wednesday.

The project, which has been in the works since 2009, was intended to go global, but the cosmetics firm decided to halt further rollout because a pilot deployment in Canada caused "significant business disruption in that market, and did not show a clear return on investment," according to an 8-K filing with the SEC on Wednesday.

Jim Dever, an SAP spokesman, told the WSJ's CIO Journal that the company "only worked on the back end" of the order management system, but that doesn't jibe with what SAP CEO Bill McDermott told us in an October 2011 interview. "Andrea Jung [then CEO and chairman] at Avon wanted to have the Avon lady enabled on the iPad so she could digitize the experience with the consumer," McDermott said. "She wanted [goods] ordered on the iPad so the whole demand-driven supply chain would react instantaneously. This was innovating a 100-year-old company and making it brand new again."

[ Want more on troubled ERP deployments? Read "Oracle, Montclair State University Settle Bitter Contract Dispute." ]

An iPad-based Avon demo app was prominently featured at the SAP Sapphire event in 2011. McDermott presided over the demonstration and highlighted SAP mobile capabilities.

InformationWeek sent followup questions to SAP, but Dever declined further comment about the specific technologies involved in the Avon project.  [Update 12/13: After the publication of this article, SAP told InformationWeek that the concept app demonstrated at Sapphire was not what was deployed by Avon in Canada, and it repeated its assertion that it was involved only in the back-end applications behind Avon's project, not the front-end, sales-rep-facing application.]

Jennifer Vargas, an Avon spokeswoman, declined to talk about the specific technologies, but she cited statements Avon CEO Sheri McCoy made during its third-quarter earnings call (registration required). "While the pilot technology platform [in Canada] worked well, the degree of impact or change in the daily processes to the Representative was significant," McCoy told analysts. "This resulted in a steep drop in the active representative count."

An excerpt from Avon's Dec. 11 8-K SEC filing.
An excerpt from Avon's Dec. 11 8-K SEC filing.

In other words, the technology worked, but it was so hard to use that Avon salespeople -- many of them part timers who network among friends and hold in-home parties -- left the company in droves. That's not consistent with the kind of consumer-grade app experience that has made tablets so popular in sales and retail settings.

The decision to halt the rollout was made in light of "potential risk of further disruption," Avon said in the 8-K document. The company reported it would continue to use the software in Canada to avoid further problems in that market, but it announced a $100 million to $125 million writedown for associated software costs. "The Company's current focus is on stabilizing and growing the business and improving operating capability, which includes updating IT infrastructure in a way that delivers clear return on investment."

Doug Henschen is executive editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data, and analytics. He previously served as editor-in-chief of Intelligent Enterprise, editor-in-chief of Transform Magazine, and executive editor at DM News.

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D. Henschen
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D. Henschen,
User Rank: Author
12/12/2013 | 3:37:03 PM
Who did the mobile interface and back-end connections?
This deployment clearly involved a user interface -- that's what the sales reps experienced and why they left. It's also a fact that SAP showed off a demonstration (not yet in production), sales-rep-facing mobile app back in 2011 at Sapphire. I don't recall SAP acknowledging the contributions of any partners in that project (developing, say, the mobile front-end or middleware connections to the back end), so I have my doubts about this "we only worked on the back end" claim.

There's a cautionary tale here about highlighting deployments that have yet to be proven in production.
Laurianne
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Laurianne,
User Rank: Author
12/12/2013 | 4:07:05 PM
Re: Who did the mobile interface and back-end connections?
This type of iPad application, for roving sales people, is one of the most common. So many companies to learn from already. It will be interesting to hear more about how this one went wrong, whether it was the back end work, the UI, the training...or some of several factors.
D. Henschen
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D. Henschen,
User Rank: Author
12/12/2013 | 4:43:50 PM
Re: Who did the mobile interface and back-end connections?
We do know that SAP demonstrated an Avon-sales-rep-facing iPad app at Sapphire in 2011, and an Avon executive participated in the demo. But it's not clear that the app used in Canada was mobile or was entirely developed by SAP. Avon's 8-K makes no mention of "mobile" or "iPad," and SAP insists it was only involved in "back end" work. It's pretty obvious Avon was talking about and would want its reps to have a dead-easy iPad app. That's why I ask: Who did the interface and the back-end-connections?
Furqanamalik
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Furqanamalik,
User Rank: Apprentice
12/17/2013 | 12:41:40 AM
Re: Who did the mobile interface and back-end connections?
It is a simple case of complicating technology solutions that can be deployed in very simplest means and at much much lower costs. The Avon team appears to be disillusioned by all the fancy tech gears you guys are finding the blame at. The flaw in my opinion primarily does lies in how it was implemented or who implemented; the flaw is in the solution design. Why complicate life when all that is needed is a fancy IPadinterface..! I myself have been managing SAP ERP solutions from the business side of equation. And I am a strong believer in relying less and less on the external vendors and focus on developing internal capabilities as we know our business better; Plus we can dig deep better than the vendors to find solutions as our (the internal team) intention is always to find solution, and not to save time by applying a quick (badly designed/ temporary) fix and walk away. That being said, all the comments on lack of application testing and who did what and what was shown and what was delivered is all fine. As its a normal reaction when bad things happen. What I'm pointing at, is the complicated solution design that somehow, someone, somewhere really got fascinated about and decided to sell it to the management. Let me tell you, it always sounds sweet as heaven when the tech gears vendors come and present their solutions :-) (I'm trying to be open and frank here, just stating matter of fact so that we all learn). Now it all boils down to the customers (specially the tech teams) to disect what has been presented, the risks involved, and have a walk through demo of the capabilities. A project of this scale demands that internal tech team must be trained on the technology being acquired before the project kick-off. And I'm and hope this is the case... In short, since SAP already is at the back end, then the SAP portal would be have been a lighter and easily manageable platform; as I'm sure the Avon tech team (I believe) have the capability (since they have SAP at big scale) to manage this SAP portal with order management component deployment all internally or at lesser cost by engaging a "trusted and tried partner"; instead of investing in a redundant Technology of websphere (plus it's Java roots) and on top of that a third party (as you guys are highlighting) to tie all these three nots... Hmm mm.... It's a serious lesson to learn for all users of such leading solutions that to think and find simpler solutions to the opportunities at hand.
Mary-LynnM222
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Mary-LynnM222,
User Rank: Apprentice
12/17/2013 | 9:26:37 AM
Re: Who did the mobile interface and back-end connections?
Not only did the SAP system that Avon named 'Promise' fail us but so did Avon Canada.

When Promise launched - there were not enough staff in the Contact Centre to take calls and some reps were on hold (on their own dime) for more than 2 hours.  And when contact was made with Avon - they denied the problems being caused by their system.

In every instance, since Promise launched, Avon staff made the representative feel like that the error was caused because the rep didn't know what they were doing.  They came short of calling us stupid.

I have been a representative for 25 years and have seen a lot of changes but this, by far, was the worst change.  I lost over half of my team - yes, the ones who sold Avon to supplement their income - the ones that did it part time.  Honestly, I don't blame them - it was far more hassle than it was worth!  And Avon has been pushing hard for leaders, such as myself, to recruit more people into the business but how can a leader, in good conscious, bring new reps into a company that uses a flawed system and doesn't accept responsibility for it?

Now that Avon has announced that they are not rolling this program out globally, but will leave Canada on the system just goes to prove that once again, the Canadian representatives are being hung out to dry.

Management and staff at Head Office maintained their full salary, of that, I'm sure of..............but reps/leaders lost significant income and customers with the launch of this flawed system!

I'm almost embarrassed to tell people that I am with Avon..............and all I can say, is shame on you, Avon!
anon7105122790
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anon7105122790,
User Rank: Apprentice
12/12/2013 | 5:11:16 PM
Re: Who did the mobile interface and back-end connections?
The old axiom is that no CIO survives an SAP implementation. I've lost count of the number of SAP implementation horror stories like this one that I've heard through the years.

It appears these stories are fairly well know through the industry, so why do companies keep putting themselves through this wringer? The only one who appears to benefit is SAP. Heck, SAP got $125M out of this one. I'd hate to be part of Avon's IT management right now.
KarensBeautyStudio
IW Pick
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KarensBeautyStudio,
User Rank: Apprentice
12/13/2013 | 7:27:15 AM
From the Trenches
I am an Executive Leader and one of the top 10 Sales Leaders in all of Canada.  Once the pilot project was actually rolled out,  I lost over half my sales force, along with all the other sales leaders in Canada, as we watched the program they had named *Promise* annihilate our businesses.  Before I continue, I am pleased to say that I have rebuilt and always stayed in the Top 10 in Canada even through this, but rep count and sales were reduced and we are still struggling to hit the same numbers by the end of 2013 that we had in 2012.

This article, from a trenches point of view, is deceiving.  It was not because the technology was too difficult, it was because the technology was flawed.  Initially the Promise Program was scheduled to be launched earlier in 2013 but they were not ready and held back.  It was still not fully ready but I believe it was launched under pressure, in May 2013.  The system did not work correctly right from launch.  There were so many glitches and bugs in the system, that those of us with 10 + years experience, with significant sized businesses saw our reps leave in droves out of frustration.   We in the field would report to corporate that many features of the website were not working but it took much time before they believed the reports.  The website and programming produced so many errors it was impossible to tackle what should have been a simple task of placing orders and registering new representatives.  Representatives were getting locked out of the system just trying to get logged into the new site and the Customer Care Support that was in place had not been increased enough to deal with the calls, leaving reps to be on hold for 45 mins to over an hour at a time.

The article said, "In other words, the technology worked, but it was so hard to use that Avon salespeople -- many of them part timers who network among friends and hold in-home parties -- left the company in droves. That's not consistent with the kind of consumer-grade app experience that has made tablets so popular in sales and retail settings."

The article is making it sound like it was a mere app for an iPad and that just fell short.  An entire new system and website was launched and failed.  The app for the iPad did not allow many aspects of the system to be used and failed as a the sole platform for any rep who only had this as an option, but that was just one feature out of the entire program's failures. 

In my own estimation, of someone who has worked this business for 11 years and has consistently been ranked in the top of the nation, the bottom line is that the website and technology was what failed.  When a system is launched, a few glitches are expected, but the amount in Promise were monumental.  A company cannot introduce something into the field that does not work and expect people to stay in business.  The non stop assurance that things would be fixed were a long time in coming.  It was launched in May and we find ourselves in December now, still dealing with glitches and errors.  It has improved, but for those of us who stuck by our businesses, we have the Promise Battle Scars to show we made it through.

Karen Edwards

 

 

 

 
D. Henschen
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D. Henschen,
User Rank: Author
12/13/2013 | 9:48:53 AM
Re: From the Trenches
The points you take issue with were based on Avon's CEO statement to financial analysts in 3Q that "the pilot technology platform worked well." What you're saying suggests the app was flawed from every perspective. As for the mobile access, I'm hearing from sources that it's a mobile web app, not a native iPad app. That would suggest the interface available on tablets isn't much different than what you see on desktop or laptop computers. It would also explain why, as you say, it made no difference how you accessed the app, it's the underlying system that's flawed.
Lorna Garey
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Lorna Garey,
User Rank: Author
12/13/2013 | 1:27:31 PM
Re: From the Trenches
Good for Avon for being willing to pull the plug. Many companies wouldn't have made a clean break and cut their losses.
KarensBeautyStudio
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KarensBeautyStudio,
User Rank: Apprentice
12/13/2013 | 6:12:12 PM
Re: From the Trenches
Clean break for the rest of the globe.  According to this article, Canadian reps will have to limp along and hope they fix the remaining problems as we rebuild our businesses becauses of poor corporate decisions and bad website creation.
Ultimate Consumer
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Ultimate Consumer,
User Rank: Apprentice
12/13/2013 | 4:59:03 PM
Re: From the Trenches
Karen, thank you for your thoughtful and candid post.  All of the politically correct and responsibility-avoiding comments by the parties responsible are transparent to most.  The lack of accountability, at $125MM over the course of several years, is much more troubling than the still generally accepted view that SAP applications should not be customer-facing.  Now that this is public knowledge, what does it make the 2011 SAP - Avon Customer Success story?

 
KarensBeautyStudio
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KarensBeautyStudio,
User Rank: Apprentice
12/13/2013 | 6:13:48 PM
Re: From the Trenches
All I know is, all corporate employees received their full salaries since the roll out in May 2013 but those of us who are on the front lines had our earnings reduced by half or more and are still trying to rebuild.
ginger13
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ginger13,
User Rank: Apprentice
12/16/2013 | 8:48:12 AM
Re: From the Trenches

Better testing is what was needed here. I use SAP in my real life job and it works great. That being said you need a great programmer that knows SAP to create a great program. I don't believe AVON had a great programmer and they failed were every failed IT project fails and that is with the testing. They did not do enough testing with the common AVON rep. They used their top sellers and in some case those that let's just say have a reason to stick it out with AVON. They did not ask the little rep to do any testing. They also told us that we would need to upgrade our systems. I am sorry but not all of us can afford to upgrade, that is why we have taken on a part time job, to give us that extra needed money. Especially not when I lost half of my team and therefore over half of my commissions.

 I would not say that I as totally tech savvy, but I and not a computer dummy either and I have had troubles with the new system. Also what we were lead to believe we were getting and what we got were not the same thing. When you tell me that I am now going to get my own personalized AVON site I take that to mean that I will be able to have customers order and pay with credit cards right from my site just like many other MLM companies do. That is not what we got. There is now no way for the customer to pay for their order with a credit card unless I am will to accept them with a 3rd party company.

AVON dropped the ball on this roll out and I for one am happy that no other country has to worry about getting this system. I only hope that with time they can improve what we here in Canada have and make it better for us.

Sacalpha1
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Sacalpha1,
User Rank: Strategist
12/20/2013 | 4:51:48 AM
Let's Have Truth in Reporting Here!!
@ Doug

You should write another article to clarify the story.  And to be clear, I don't work for or have any particular allegiance to SAP.  But I do expect the truth.  From reading this and the other article, here is what I would surmize happened.  Avon already has SAP installed as its core ERP solution.  Avon wanted better mobile sales apps for its reps.  SAP probably demoed their own webstore and their own mobile sales apps back in 2011.....which by the way work just fine.  For whatever reason, Avon decided to build a custom Websphere application or set of applications to front end SAP and provide the mobile sales and web based ordering capabilities rather than configure and tweak the delivered SAP capabilities.  And for whatever reason, it seems Avon did not involve any or enough sales reps in the designing and testing of this new front end app.  I also have to wonder (reading between the lines) if Avon made the right manufacturing and distribution process changes to match the way the technology was set up around pegging inventory to orders as they are placed.


There also seems to be something missing from this picture.  I can't believe a company would spend $125 million on a front end application to support mobile sales and order entry.  That in its own right is suspect.  You could complete a global SAP full ERP implementation (order to cash, plan to produce, requisition to payment, post to close, recruit to retire) for a multi-billion dollar organization for that amount of money


Who is to blame:  #1 is Avon.  Mutiple bad decisions on their part at multiple project junctures

#2 would be whoever built the Websphere apps

#3 could be SAP or maybe they are not to blame

 

I get so tired of the stories about failed SAP (or replace with generic ERP or CRM) when it is rarely the technology that is at fault.  Yes, I am sure SAP as a provider of both technology and integration services has had some failures.  But more often than not it is the bad decision making of the customer implementing the solution that is to blame for the failure.


So Doug, how about getting your facts straight and talk to some experts (who can read between the lines like I did) before you start pointing fingers at companies.  Poor reporting like this just generates the asinine comments like the first post on this article about a CIO never surving an SAP implementation!!
ElizabethN941
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ElizabethN941,
User Rank: Apprentice
12/20/2013 | 10:05:15 AM
Avon Cancelling but leaving Canada with a Flawed System
 Avon has cancelled Promise yet leaving Canada with it. I wonder why we, the representatives, are not getting some kind of explanation from Avon's head office addressing why we are being left with a system that they obviously realize is flawed. To say we don't understand the system is a polite way to say we are stupid. Well I want the CEO to know that I have a BA & finished a very successful 25 year teaching career. I'm also quite knowledgeable of the computer. Yet I encountered & still encounter problems with Avon's Promise system. The only thing "Promise" does is promise to continuously give us problems putting in orders, receiving orders, getting order invoices before deliveries, trying to make customer invoices & trying to understand account statements. I'm hoping the New Year Avon will see the error of their way & scrape Promise here also.
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