Premier Foods cooks up IT transformation

Premier Foods’ Hovis bread division is on track to have SAP rolled out over the next 12 months

Premier Foods ­ – the UK’s largest food producer –­ is facing the challenge of delivering a major technology-led integration programme while IT budgets are cut and the cost of raw materials and manufacturing rise.

Fusion, the firm’s business transformation programme, has a group-wide implementation of SAP software at its heart (see below) and aims to build central resilient services with increased capacity and flexibility, at a lower cost.

The company introduced the plan to enable the consolidation of key processes and systems, following an acquisition spree that included the buyout of Campbell Soup’s UK operations for £460m last year.

“We want to take the complexity out of IT through this rationalisation process, drive proper value from our applications as well as better service levels, which is difficult to do when you have a mixed environment,” said Mark Vickery, group IS and change director at Premier Foods.

The project also involves infrastructure work, which should be completed by year-end, but the software overhaul represents the most testing aspect of the programme, said Vickery.

“The work on datacentres is important and needs to be done, but on the applications side you also have to change ways of working, and the people challenge is massive,” he told Computing.

“Also, when you are consolidating businesses, boards and project sponsors change too, so you have to continually communicate when you don’t have a stable base.”
Since joining the firm from United Biscuits in 2005, Vickery says the significance of technology in the business has changed from being a back-office function to a real driver of change.

“Businesses tend to go through cycles of heavy change and Premier Foods is right in the middle of that. IT has a huge focus –­ it’s in the board, in the forefront of people’s minds and very much in the sunshine,” he said.

But despite the crucial impact of technology across Premier’s operations, financial pressure has led to yearly budgets being reduced by a third to £50m.

“Given the complexity of what we are doing with the Fusion programme, we have a high capital investment, but my maintenance costs are quite low. Like all businesses, we have cash and capital expenditure targets and are fighting to keep costs down,” said Vickery.

Now the merger activity has subsided, the company is looking to the future, as well as driving integration. The SAP implementation in partnership with Atos Origin will continue, and Premier is also improving processes at its shared services centre in Manchester, which has already delivered “significant” business benefits.

Another project this year is the introduction of a real-time interface with SAP at the bakery division, where barcode scanning for bread baskets aims to mitigate issues such as loss of products under the current manual system.

Vickery expects that keeping a renewed enthusiasm and ensuring value for money under stringent business objectives will be his main leadership challenges over the next few months.

“The primary attraction of this job is the interesting challenge we have here ­ – you won’t find many projects of this size in the UK. And we tend to do what we set out to do,” he said.

Vickery manages about 400 staff, of which 60 are contractors ­ – a figure that shifts up or down depending on implementation rollouts. Finding the right skills has not been a big issue.

“You have to think of how you source the skill. Other than SAP, we are not using the bleeding edge of technology, so we are not fighting for specific pockets of expertise. If I were [using the latest], I would create a problem,” he said.

“But I have noticed some people who seem to rise rapidly without having that fundamental experience. During my professional life, I have been exposed to everything from technology to mergers and acquisitions. Now you see people who are SAP experts but do not have anything else. That is why businesses should look at their talent pools and have clear progression plans to ensure human capital is developed properly.”

Premier Foods technology overview

Information systems director Mark Vickery’s main responsibility at Premier Foods is the delivery of Fusion, a business transformation programme with SAP software at its heart, to simplify business processes and generate savings from acquisitions.

Following implementations across the firm’s grocery division, Premier’s cake business went live with the new system over Easter, consolidating operations such as warehousing, manufacturing and planning on to a single platform and removing 11 legacy systems and six tactical databases.

The main focus for the next 12 months will see the rollout of SAP across the Hovis bread division. The system – which aims to reduce the firm’s legacy portfolio of about 1,000 applications to 200 – is such an integral part of the business that it is also being used to manage more than 700 product development projects across the group.

“SAP is core to our strategy, but while we use the latest technology around that area, on the infrastructure side we are using proven tools efficiently instead of going down the brave new world of technology,” said Vickery.

As the SAP rollout progresses, it is expected that demand for capacity at the firm’s two Capgemini-run datacentres – consolidated from seven sites over a four-year period – will increase, so the firm will make use of VMware software for its 450 IBM servers. Some 270 physical boxes have already been virtualised.

To drive down costs and increase flexibility, Premier will continue using Citrix thin-client technology – 2,000 terminals are already in place – while reducing the 3,500 PCs currently in use.

Microsoft products are widely used across the firm, although Lotus Notes is the email client. According to Vickery, alternative tools such as Google Apps may seem attractive, but the cost factor would hinder the business case for a replacement.

“Cloud computing is interesting and we are looking at options, but that wouldn’t deliver value to us at the moment due to the cost of change,” said Vickery.

“As we go through these leaps of integration, we will look at new technologies that could help us become more effective. If the cloud gets somewhere near to where its proponents are imagining it will, it might have space in our business,” he said.