Boag's finds great ERP takes time to brew

A major ERP implementation has sped reporting, added flexibility and supported rapid growth at this Tasmanian brewer -- but its employees still take their time, as David Braue explains.

It's well accepted that good things take time, but nobody has had to tell this to Tasmanian beer maker J. Boag & Son, which once ran a whimsical advertising campaign suggesting customers drink its products more slowly because "great beer takes time" to make.

This philosophy has spilled over into its gradual move to embrace enterprise resource planning (ERP) over the past decade. The company's go-slowly approach helped it build a broad technological foundation that has enabled growth, and is more recently enabling efforts to meet retailers' demands for smooth electronic distribution.

Boag's, which remains Australia's largest privately held brewery and has been brewing premium beer from its Tasmanian base since 1881, began a major reworking of its backend computer systems in 1997. At that point, the company's general ledger and stock control were being run by a McDonnell Douglas mainframe that had been in place since 1982.

-It was very ancient and we supported the software ourselves," recalls managing director Patrick Riley (right). -The hardware was at the stage where it was completely unmaintainable, and we needed to bring together our databases to make business decisions in ways that were better than what we had previously. Sound decision making data just wasn't there."

Facing the need to consolidate its accounts and provide room to grow in the future, the company began exploring alternatives and eventually settled on the ERP system from developer Pronto Software. However, as the company soon found out, that decision was only the beginning of a major restructuring that has continued driving change through its operations to this day.

Harder than changing beers
Boag's committed heavily to its systems update, implementing all but two of Pronto's modules on an IBM AIX Unix-based midrange system that is still kicking nearly a decade later.

While the technology was clearly well suited for the company's business, however, early on the project team faced another challenge as it became clear the people element of the project was going to prove somewhat more complicated than the technology.

With fully 85 percent of the company's 150 employees almost computer illiterate -- a fact correlated with an average of 22 years' experience with the company -- staff issues were a major consideration. The two-year project faced the very real need to combine a large technological leap forward with extensive staff handholding.

This process began even before Pronto was chosen, as the effort to involve employees in the project began with the four-month process of authoring the initial tender documentation. In the end, around 70 percent of that document came directly from the employees' own wish lists.

-This gave us a platform that started to engage our employees in fundamental change in the way they could do business," said Riley. -We were trying to get them involved in the decision making process so they had some ownership of the outcomes; we knew if we could get them that ownership, [we were] more likely to get acceptance of what was going to be a very difficult thing for them."

Better data, better auditing
This hands-on partnership approach continued, ensuring that employee resistance never became a hindrance for the project.

Looking back, Riley is confident that early efforts to ensure employee buy-in were a major part of the reason the system ultimately went in live and with -no disasters". In the years since, the Pronto system has overseen Boag's growth from a boutique brewery that expanded output from 16 million litres of beer in 1995 to 42 million litres in 2006. This growth should continue thanks to initiatives such as an AU$18 million packaging line, which opened in late 2004, part of a AU$55 million expansion plan.

Supporting this growth has been a range of management information that was simply unavailable from the old system, but which is readily available in the new environment. Regular reports provide updated views of metrics such as sales trends, production costs, and availability of warehousing.

More detailed reporting has given marketing staff, for example, unprecedented clarity into their marketing spend -- to the point where they can more effectively identify, target and monitor performance in marketing to key demographics.

Better information has resolved what Riley calls a -major problem tracking marketing expenditure", which accounts for around 20 percent of the company's total annual expenditure. Most of this funding is allocated early in the year, but had previously been difficult to follow up as campaigns took their course.

-With the [previous] purchase based system, it was inherently unreliable," Riley explains. -We were able to use Pronto's job costing system to keep track of those segments, with minimal data entry. It's to the point where we would be very disappointed if the marketing budget was more than a few thousand dollars off [projections]."

The job costing system is also used to track fringe benefit tax obligations -- a use for the technology that the software vendor didn't intend, but for which the module has proved to be perfectly well-suited.

By improving access to data and the production of regular financial reports, Boag's has been able to streamline its reporting requirements significantly. Monthly sales reports used to take up to 17 days to produce, but can now be produced in just four days. Efficiencies have been such that the brewer was able to produce its most recent full-year results report in just six days.

Data for the future
Improvements to logistics and warehousing processes are now on the radar, since around two-thirds of its produced volume is shipped from the Apple Isle to the mainland. The company is currently implementing PRONTO iSupply, a logistics add-on for the company's ERP environment that will support a recent and increasingly inflexible mandate from major retailers: that Boag's introduce straight-through data processing capabilities to streamline their supply chains.

Such efforts have been a major part of e-commerce strategies of retail giants Coles and Woolworths, and the brewer's investment in its ERP environment has prepared the company for the new requirements as they eventuate. No amount of investment can change some of the business processes -- leaving the company to resolve issues such as the increased costs that may come from having to comply with retailers' different packaging and delivery requirements.

Despite the improvement in management data, the strong focus on employee involvement also beget an unexpected consequence: while most of the employees have embraced the new system, even to this day some continue to apply traditional pen-and-paper accounting processes to the computer's data.

Rather than discouraging this, Riley says the knowledge that additional sets of eyes are looking over the computer's results adds an invaluable additional level of governance to the whole process.

-Pronto has given us confidence in the data so when we're making decisions, we actually have a solid thought process behind the processes," he explains. -In a rapidly expanding business, you place a lot of confidence in the data you're looking at."

-However, some people still like to do double-checking manually, and this is a great audit process," he adds. -For people not to have blind confidence in the computer system is healthy; if someone is actually doing a reconciliation so they can go home at night knowing the data in the computer is right, I'm very happy."