Inside Chiquita’s ‘painful’ finance system overhaul

Four years ago, Cincinnati-based Chiquita Brands International Inc. launched an ambitious, multimillion-dollar effort to consolidate its financial accounting systems and create a centralized budget planning and forecasting system. The company has three semi-autonomous units — bananas, salads and other food products — each of which has multiple lines of business worldwide.

It hasn’t been easy, says Lisa Mullaney, former director of Chiquita’s financial planning and analysis (FP&A) department, who guided the project through a number of challenges, including initial business-unit resistance, software bugs, delays and staffing shortages.

“We’ve fallen off [deadline] quite a few times,” she admits. But she adds, “Are we at a point where we have a clear line of sight? Yes.”

The business performance management (BPM) system, built with Oracle Corp.’s Hyperion suite of tools, including Enterprise Performance Management System 11, finally went live last fall for Chiquita’s 2010 budget cycle. However, the company’s salad business continued to use its own tools for budgeting, and FP&A is in the process of redesigning the structure of the system. The forecasting function is expected to go live this month.

So the megaproject isn’t finished, but Mullaney says the work is now “moving at light speed.”

CIO Manjit Singh has a harder time seeing that level of progress. “The general perception is, we got it to work. But it was painful, and the [business-side managers] aren’t necessarily looking at this as a successful implementation,” he says. But corporate management likes the system — because it allows executives to get financial and operational data rollups.

“Once we start using it for forecasting, I’m hoping the reaction to the project will turn more positive,” Singh adds.

Both Singh and Mullaney sat on the executive steering committee for the project, but their divergent perspectives reflect how differently IT and finance groups tend to view BPM projects.

The finance view: “This is an application and tool set that’s owned by finance,” says Mullaney. Unlike an ERP implementation, she says, a Hyperion tool set for financial planning is “not designed to be part of the IT structure.”

The IT view: “This is viewed incorrectly as a corporate finance initiative. It affects all areas of the business,” says Singh. “A Hyperion implementation can be as complex as an ERP implementation.”

Both executives agree on the value of BPM software like Hyperion. Such tools allow the business to get to “one version of the truth” by moving everyone off the e-mailed spreadsheet merry-go-round for corporate budgeting and onto an integrated set of tools. All underlying assumptions that go into budgeting and forecasting within each line of business are visible to corporate finance, and results can be rolled up quickly and easily for corporate forecasting.

Selling the Business on BPM

Mullaney faced several challenges to the BPM initiative right from the start. The business units already had their own tools and ways of doing things and saw no reason to change. They viewed the BPM initiative as something that would benefit only the corporate finance group.

In addition, migrating to a centrally managed BPM platform would require extensive and potentially disruptive changes to existing business processes. Considerable time and effort would be required to understand, document and redesign those processes before the system could be fully designed and built. And with budgets lean, FP&A needed to rely on assistance from people within each line of business to get the job done.

“It’s a difficult project to lead when it’s global and when people were OK with what they were doing,” Mullaney says. So she committed to making sure there was something in it for each line of business. That meant providing lots of financial detail in the system and “allowing folks to do an extremely granular analysis by line of business,” says Xena Ugrinsky, a senior vice president at Titan Technology Partners LLC, the Charlotte, N.C.-based integrator that designed, built and now hosts the system.

But there was a downside to that approach. “It added a lot of complexity and resource coordination,” says Mullaney.

Singh was skeptical. He’d been down that road three times, the first two at other companies. Each time, he says, Hyperion sold to the finance group and bypassed IT, which was called in to support the project after contracts were signed. “That immediately sets one up for conflict,” he says.

For each project, he says, Hyperion and its consultants underestimated the complexity of the project, overpromised and ultimately underdelivered. Hyperion is a state-of-the art tool, but its complexity can’t be overstated, Singh says. “This is always the case with Hyperion. It’s so difficult to get one’s arms around the complexity of the product as well as the process changes that go along with an implementation like this.”

Those first two projects Singh had been involved with had failed, and over the summer of 2009, as the September go-live deadline of Chiquita’s initiative loomed, he worried that this one might go the same way. “The industry really suffers from overambitious vendors, the ones that paint the rosy picture and can’t deliver,” he says. Oracle declined to comment for this story.

By the time Singh got involved in the project in 2008, the finance group had selected Hyperion software and integrator Pinnacle Group Worldwide. Hyperion was already in transition, having been bought out by Oracle in 2007. And Pinnacle was subsequently acquired by Titan Technology in July 2009, just two months before the new system’s go-live date.

Singh immediately suspected that the expectations both vendors had set with FP&A were unrealistic — and he fretted that IT would get the blame.

One of the first decisions IT faced was whether to support the BPM infrastructure of about 40 servers internally or have Pinnacle host it. Singh worried about giving Pinnacle too much control, since it had missed deadlines during earlier phases of the project. He did agree to have Pinnacle host and maintain the system, but Chiquita purchased all of the hardware and software.

It also set up a secure MPLS connection between Pinnacle and Chiquita’s data center and deployed the client software in its Citrix thin-client environment. “It’s our hardware. We own all of the licenses and products. It’s part of our network and domain,” says Jack Ortman, director of technical support and architecture at Chiquita. “The way we did the implementation, it would not be tremendously difficult to move it back.”

While Titan handled design, setup, integration, training and hosting, Chiquita’s FP&A group retained control over some operational aspects of the Hyperion application, including ongoing configuration, design changes and application security. The complexity of the contract created confusion at times over who was responsible for what and required strong coordination among Titan, FP&A and IT to succeed.

IT also assigned a project manager, Julie Glick, to assist Shannon Burket, the hands-on manager at FP&A, who worked with the business units, Oracle, the IT team and the integrator to develop the system and manage resources on the project. “This is the only thing I’ve lived and breathed for the last two years,” Burket said last fall when the system went live.

Burket’s involvement started back in 2006, when she led a global review of finance processes. Her goal: Improve accuracy and reduce the timing window for forecasting. At the time, the company used Excel spreadsheets, a few Microsoft Access databases and an old Hyperion Essbase system that IT was no longer actively managing. “We really needed a new tool set,” she says.

Chiquita’s situation isn’t unusual, says Nigel Raynor, an analyst at Gartner Inc. Most finance departments still rely on spreadsheets, and each business unit has its own “shadow” planning system that it uses internally. The business units forward spreadsheets to corporate finance, which must aggregate everything into “the mother of all spreadsheets,” he says. As part of that process, the finance group must reconcile a mishmash of data, with no view into the assumptions underlying the numbers provided. “That’s a terrible practice,” Raynor says.

But there’s a good reason why things get to that point, says Singh: BPM implementations are complex and expensive. As most companies grow, they develop a series of disjointed and disparate systems, putting off the expense of a full-blown BPM deployment until they’re large enough — and the pain is great enough — to force change. “By the time you invest in the tool set, you have a very complicated financial structure,” Singh says. For its part, Chiquita had to unwind and redesign 120 years of deeply ingrained business processes.

With just one other full-time person working on the project in FP&A, Burket needed part-time commitments from 40 people outside of the finance community, in the business units worldwide, to help with the transition. FP&A needed people who understood finance, systems and data — a combination of skills that’s not easy to find. Those who did commit had other work to do; the finance project was not always the priority.

And while top management had approved a part-time commitment, not everyone was on board. “Because business units weren’t as bought-into the benefits [as FP&A was], they weren’t as eager to make those resources available,” Singh says.

Training was another issue. Hyperion is a complex tool that requires extensive training — and retraining. “The first time you go [for training], you don’t even know the questions to ask,” Burket says. She strongly recommends holding multiple training sessions for users.

On the Bleeding Edge

Hyperion was acquired by Oracle during the early phases of the project, and a major upgrade to the Hyperion tool set — the first under Oracle — launched in June 2008. Chiquita decided to go with the new version, including the Hyperion Enterprise Performance Management Architect (EPMA) component.

It was a decision that would come back to haunt the team.

FP&A chose the EPMA release because new features in that module could potentially save Chiquita a lot of manual work. In essence, EPMA functioned as a central repository for financial metadata across all Hyperion applications and facilitated the sharing of data. It automated the process of bringing in data from a variety of other systems — work that otherwise would have had to be done manually, says Ugrinsky.

But by using early-release software, FP&A was taking a risk. It didn’t take long for Burket to realize that EPMA was very buggy. Delays ensued as the team struggled to work through the bugs — and to get Oracle to help, Mullaney says. (Oracle had no comment.)

By June 2009, the relationship was improving and issues were being addressed. Did Chiquita end up spending more time dealing with the new version of the software than it would have if it had done the data integration work manually with a more stable version? “Quite possibly,” Ugrinsky admits. But at the time, the benefits seemed worth the risk of possible bugs.

Software wasn’t the only area where Chiquita faced challenges. Singh says IT’s relationship with Titan was a “roller coaster” as the systems integrator missed multiple deadlines. Each time, Titan would scramble to add resources to the project, as the contract required, but then it would miss the next deadline.

Titan seemed to be learning the ins and outs of the new version of the tool set along with the FP&A staff, says Singh, noting that he felt that individuals assigned to the Chiquita project early on lacked an adequate level of expertise. That may have been due in part to the fact that Pinnacle lost some people during the course of the project and during the Titan acquisition, says Ortman.

“Things are still running behind. We are in the process of doing an application redesign, because performance is not acceptable and we do still have some items that have not been completed,” Singh said in late June. “Because we’re doing an application redesign, it’s safe to infer that we are still not that happy with the performance of Titan.” (Titan didn’t respond to requests for comment.)

At one low point in April of this year, Ortman says, there were “rumblings” that perhaps the project should be moved in-house. “We could eliminate hosting fees and MPLS connections,” he says. “Even if we added an internal resource to do the work, I think there still may be some cost savings.”

But Mullaney says the deadline issues are largely behind Chiquita now. “Are we on track for delivering in that short-term horizon? Yes,” she says.

IT played a key supporting role with the integration work and lived up to the letter of its agreement, but Burket wishes the IT group had helped even more. “I got the support I needed, but we could have done things more quickly if we’d had a little more engagement [from IT],” she says.

But Singh says the project was led by FP&A and its integration partner — with IT relegated to technical support for the hosted environment and data staging. “It was expected that the implementation partner would perform any and all development work. IT did not allocate development resources for integration activities,” he says.

Seeing the Benefits

Chiquita’s BPM system went live as planned for budgeting on Sept. 22, 2009, and now serves about 500 users worldwide.

The new system provides financial and operational metrics that benefit not only FP&A but the business units as well. For example, Chiquita’s FP&A group previously had no insight into the fact that total volumes for shipments hinged on the assumption that ships were loaded to 95% of capacity. A drop to 80% of capacity increases costs, but no one in FP&A had the information necessary to understand why costs went up. “Those are the types of things that were locked into the Excel files,” says Burket.

Individual business units are also seeing benefits. The company’s North American transportation organization can now get reports about shipments on a weekly basis, instead of just monthly. And the salad business can now see a rollup of how much product gets discarded each week.

While the new system offers some benefits to each unit, individual lines of business must also give up some control. With the new system, for example, salespeople can no longer create new ship-to addresses for their customers — they must request that new addresses be created. That eliminates duplicate addresses but also creates delays of up to two days.

But on the whole, the results have been positive, Burket says. “It used to take a month to do a global overhead report,” she says. Today, not only can that information be rolled up immediately, but the Hyperion tool set can provide a detailed analysis to find out, for example, why transportation costs went up.

By May, says Burket, individuals who were initially skeptical of the new system were starting to embrace it. “That’s been a huge morale-booster for the team,” she says.

Overall, the system has been a win for the lines of business and FP&A, according to Burket. “A standardized approach to planning and forecasting is bringing huge benefits to the company,” she says. “I’m proud of what we did.”

Epilogue

In late May, shortly after Computerworld’s last interview with the FP&A group, Lisa Mullaney left Chiquita. A successor has yet to be named. Shannon Burket continues to manage day-to-day operations of the system and the relationship with Titan. IT, says Singh, is ready to add resources to help with the transition. “We’re going to step up and assign a project manager. We’re going to redo some things, but we’ll do that in close partnership with whoever steps up in FP&A,” he says.

Singh says that in the wake of the challenges of the past two years, “people are more grounded on what needs to be done” and are making adjustments. “I’m confident we’ll be up and running by the end of this year,” he says. “It’s just difficult getting there.

“This is what I’ve seen with all of these Hyperion projects,” the CIO adds. “What irritates me is that Oracle continues to sell this as easy to install and deploy, and it’s not. Companies need to be realistic about the time and resource effort it will take to have a successful implementation. It’s all about process and change management. It’s not about technology.”