Ace Hardware's IT Overhaul
April 2012 Integrated Solutions For Retailers
By Matt Pillar, Editor In Chief
SAP replaced 25-year-old homegrown legacy systems at Ace Hardware Corporation, improving the efficiency of business users and the IT department.
When business data is landlocked by inflexible, homegrown back office systems, IT departments bear the brunt of the strain. So it was at Ace Hardware Corporation, where IT personnel spent the majority of their time fielding requests from every angle, then hunkering down to figure out how to fulfill those requests. At issue were the 25-year-old IMS and DB2 COBOL-based order processing, warehouse management system, and price and promotion systems the company had. Rick Williams, IT director at Ace, puts it bluntly. “Our back-office systems were more an anchor than an asset. They had been patched, enhanced, and tweaked so much over the years that they had become fragile and inflexible.” As a result, the IT department was overtaxed as the rest of the company depended on it to pull virtually any decision support data it needed from the systems. The company also wanted to enhance some of its inventory management functionality, possibly adding back-order functionality and the ability to add a new distribution center, if the need arose. Business initiatives like these were often deemed too expensive and too risky to undertake due to the lack of support systems scalability and the huge expense the company would incur should it attempt to manipulate its legacy systems to enable the enhancement.
Changing The System’s Status Quo
Eventually, the company’s DC capacity constraints became too big a growth-hampering issue to ignore. “We realized that the roadblock to modifying our network of distribution centers came down to systems and specifically, our legacy system’s inability to handle it.” This fork in the road coincided with the onboarding of Mike Elmore as CIO at Ace, who brought a “buy, don’t build” philosophy to the company. “Our default position had always been to build it ourselves, but the amount of time we were spending every day working with DC teams to keep inventory moving really caused us to step back and reassess that philosophy,” says Williams. Thus began a determined, consultant-driven effort to understand what went into implementing an ERP (enterprise resource planning) system and migrating more than 25 years of legacy systems data into it. Though the project would be epic, Ace decided in 2007 to move forward with mySAP ERP and the SAP for Retail solution portfolio. “We chose SAP because we liked their technical direction, where the company was going with its NetWeaver product line [a tool for developing J2EE-based, multitiered business applications that tie together many SAP NetWeaver development technologies] and the controls we would be able to implement,” says Williams.
What began as a straightforward implementation focused on sales, distribution, and materials management grew quickly to include SAP Financials and tie in a JDA implementation for demand forecasting, which would enable the company to move from monthly to weekly forecasts. The SAP Financials piece was incorporated in 2008, and by 2010 it was enabling automated record to report (which produces financial management reports and statements), order to cash (which improved the order and accounts receivable interface with the cooperative’s 4,100 independent retailers), and procure to pay (which handles purchase orders and accounts payable) functionality. In the legacy environment, these controls were cumbersome and expensive to execute or altogether impossible.
Reaping The Rewards Of Automation
With the majority of its legacy applications displaced by its new ERP system, Williams says Ace Hardware Corporation is experiencing unprecedented control of its business. “We conduct internal audits continuously,” he says, “and these new systems are very clean from an audit perspective. With controls on core systems bolted down, we’re now applying them to noncore systems to further refine our efficiency.” The Ace IT team has also been relieved of much of its data mining and dissemination duties. “The business users have much more data available to them, allowing them to do their own analyses with limited dependency on IT, and that’s a big win in itself,” Williams says. Systems stability is a newfound phenomenon at Ace. “In our old system, the IT department was babysitting almost every step of the order and fulfillment process, around the clock. Now, it’s almost eerie how quiet it is around here. We do very little in the way of crisis response anymore.”
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