What went wrong?
Long term business target operating model SAP transformation programme “Elwis” with over £500m expended written off and the programme shelved, causing major reputational damage for both the discount supermarket giant and SAP.
A media feeding frenzy ensued….
Why did the Transformation Programme fail?
A combination of factors were at play; in fact far too many…..
Operating model – Resistance to change, Lidl wanted to adopt inventory and stock management processes that were not the industry standard, and to retain legacy working practices. A standard failure point, it is our belief is that the Target Operating Model needs to be designed and agreed with C level leadership and global process owners in advance. (Top tip link business leadership teams personal performance targets to the programmes success.)
Institutionalised Optimism bias – Lack of reality, We quite often see a transformation culture develop based upon historic success not routed in the now, so the Lidl transformation team believed they could take the business with them and make the technology do something it wasn’t designed to do.
Blind Governance – making sense of the data, Lidl are an intelligent client, so we would imagine that governance would have been first class and progress was being made. SAP is actually live in a number of countries so the major programme wrecking risks and issues must have been understated and when linked to institutional optimism downplayed. It’s clear the SI wasn’t listened to and SAP’s capabilities are well known so the fundamental programme failure here was likely governance and the inability to interpret and act on the information to hand.
Too many conflicting transformation priorities – And finally and we believe this to be the real reason, Lidl leadership took their eye off the ball and went ahead with a 100 store expansion into the USA, which belly flopped. It is well known that organisations have a limited bandwidth to consume and sustain change, too much change and we get the Lidl result. The end result for Lidl a collective corporate regression back to what they know best, European retail, their way on their systems.
What was the Impact?
Firstly it has to be said that this wasn’t a total disaster, SAP was rolled out in a more limited fashion, licensing used and major lessons learnt, and SAP is still the actual long term answer to their requirements.
The real impact outside the significant costs and of loss of reputation (how did such a mature organisation get this so wrong) !!!
Is the regression back to the legacy operating model and legacy retail markets, what a lost opportunity at a time when Walmart and Tesco are now fighting back.
The lack of a viable go to market set of retail options supported by a best of breed retail supply chain execution model will come back to haunt Lidl.
This combined failure could the historic high water mark as Lidl’s competitors scramble to emulate and then overtake their retail model.
How could One Eighty Advisory have helped save this failing SAP programme?
We have experience in helping regional organisations with global aspirations rescue their failing transformation programmes.
Our Turnaround Assessment would have identified and helped deal with the vying business priorities. Our assessments would have focused the leadership team on the 15 key themes that ensure successful business transformation, and how to avoid institutional optimism.
We would have advised Lidl to carve up the SAP programme so that it focused on the areas that provided real business value. The great thing about SAP, when you fully understand its power for change, is that you don’t need it all, here at One Eighty we believe in augmentation to enable bite size agile delivery linked to fast, tangible, EBIDA based benefit realisation.
We would have advised a multi template playbook model, instead of a one fit for all SAP centric operating model providing regional autonomy whilst leveraging the best of a global supply chain model linked to near real time analytics. No one in retail needs real time stock valuation and profitability analysis, a 1 minute lag isn’t really all that bad is it??
If you would like more information on how One Eighty Advisory can help your Business Transformation Programme you can contact us here.