SAP’s US$125M Product Mistake At Avon

by drjim on August 25, 2014

SAP product manager's didn't make Avon look good

SAP product manager’s didn’t make Avon look good
Image Credit

Product managers are responsible for solving the problems of their customers. This is a pretty simple idea to understand. However, when we don’t control the complete solution that our customer is trying to put into place, what level of responsibility does a product manager have? Over at Avon they just did one of these big projects and it has ended in failure. What did the SAP product manager do wrong?

The Project

Avon knew that they had a problem. Their order management software system was old and out-of-date. Avon is a company that is built on a direct sales model. This means that its representatives are not employees. The order management software is a fundamental way that the company interacts with these front line troops and so it can be very difficult to make changes to this software system.

However, four years ago Avon’s CIO, Donagh Herlihy, who has been with the company since 2008 decided that it was time to update the system. Since Avon is not a software company, they knew that they needed a vendor partner for this project. They picked SAP AG as the partner that they wanted to work with.

There were three goals for the new order management software solution. The first was to boost the productivity of their representatives Next they wanted to improve their inventory management. Finally, they wanted to streamline their procurement.

What Went Wrong

In the end this IT project did not work out correctly. The new order management system was rolled out in Canada first with the expectation that Russia, Brazil, U.S., U.K., and Mexico would be next. However, the system was so burdensome and disruptive to the Avon Canadian sales representatives that instead of learning how to use the new system, they instead left the company.

So many representatives left the company because of the new software that the company has changed its mind and will not be rolling out the software to other countries. Instead they are going to write down between US$100M and US$125M.

What went wrong here? Donagh Herlihy brought in a respected software integration company, SAP, and a SAP spokesman is saying that “… the software is working as designed…” Having worked on a number of these SAP projects, I suspect that what he is saying is correct, but at the same time I’m willing to guess that the system is almost unusable and that’s why representatives are leaving in droves.

Now, in all honesty, the SAP system was not the front-end system that the Avon reps were going to use. Instead, a 3-party integrator was going to create the front end interface. IBM WebSphere e-commerce software was the e-commerce software that was going to be used. WebSphere is an application and e-commerce server, so it would presumably connect to SAP’s ERP and CRM APIs and deliver the front-end application and user interface. Clearly this didn’t happen.
Over at InformationWeek, Doug Henschen estimates that Avon lost somewhere in the neighborhood of 16,000 sales reps because the new system was just too hard to use. Additionally, Doug reports that reps could not log into the system, it would not accept new orders, and it would not reserve inventory for reps. Talk about frustrating!

Something went wrong with this project. I am just guessing, but I think that the user interface is just too hard to use. Out of the box the SAP software’s user the interface is very, very technical. It is designed to be “hidden” from the end users as a part of the project. What I think happened to Donagh Herlihy’s project is that all of the time / money was spent on the back end of the SAP software hooking it into the various Avon ordering and inventory management systems. There was not enough time or money left over to change the generic SAP user interface enough to make it easy for the untrained Avon field representative to use.

What this means is that when Avon sat down with their Canadian sales representatives to show them what they were going to have to do to enter orders into the new system, it turned out that it was going to take a long time and be very difficult to do. Clearly the SAP product manager had not done enough research into just what the impact of the SAP software’s user interface would have on the end users.

What All Of This Means For You

Avon is in the process of writing off US$125M for a SAP order management IT software project that failed. The Avon Canadian sales representatives have been voting with their feet and have been leaving the company in large numbers rather than use this difficult and complicated piece of software.

The SAP product managers who were responsible for their part of the project clearly drew some lines in the sand in order to show where their responsibility ended. The problem with doing this is that the entire project ended up being a big failure and SAP is being blamed along with everyone else. No product manager ever wants this to happen to their product.

So what should the SAP product managers have done? Simple, get more involved in the Avon project. The SAP manager know that the user interface on their product is not easily usable by unskilled users. This means that they need to make sure that whoever is creating the user interface does a good job of it. They can’t allow this to happen without their input otherwise the project could fail and they could be left looking bad. Sorry SAP product managers, you don’t get to limit the scope of your responsibilities.

As product managers we are ultimately responsible for the success of our products. In the case of Avon and SAP, it appears as though the end users were not involved in the design of the new system. The end result was a solution that they were not willing to use. You need to make sure that you take the time to carefully work with your end users so that there are no surprises and the final product that you deliver to them meets their needs.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What do you think that Avon should do now? Their existing systems are still old and out of date…?

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What We’ll Be Talking About Next Time

There is an old phrase that goes something like this “Don’t judge someone until you’ve walked a mile in their shoes”. As product managers who have to deal with sales people all of the time, this phrase really relates to us. It can be all too easy for a product manager to become fed up with his or her sales teams. You think that you’ve provided them with all of the information that they need in order to go out and sell your product including your product development definition, and yet they are still having problems. What’s a product manager to do?

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{ 2 comments… read them below or add one }

Franck Depierre August 30, 2014 at 3:34 pm

Hi Jim,

Thanks for this post.

I’ve been a R&D manager, a Program Manager and today a Product Marketing Manager.
Implementing, adapting a big system like SAP into a big company is a full time job and I’m not sure a product manager has the time to do this. Why a Program manager has not been assigned to this project? I could sound crazy, but after selling a big system to a customer, you need to meet not only the project manager of this company, but all the stakeholders/users in this company with the company project manager. You need to help this company project manager to ask the good questions, you need to be a hidden leader who helps the customers. I’m not sure a product manager who is already too busy with next deals can do this correctly.

Regards.
Franck.

Reply

drjim September 5, 2014 at 11:19 am

Franck: you make a very good point. On any big project, there are going to be a number of different people involved — including, hopefully, a full-time project manager. Where things get interesting is that the product manager really owns the “customer experience”. With a little luck the project will go well and everyone will be happy with the product, but this is exactly the kind of thing that the product manager has to keep checking on. In the Avon case, clearly the product manager had moved on and was not staying in touch with the customer while the project was going on. Maybe that’s the biggest message we can take away from this situation…

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