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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.

IT groups need data analytics software that's visual and accessible. Vendors are getting the message. Also in the State Of Analytics issue of InformationWeek: SAP CEO envisions a younger, greener, cloudier company (free registration required).

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IW Pick
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




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.
D. Henschen
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?
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
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.
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