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Toll Group ditches SAP for Oracle in AU$400m IT overhaul

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Image: Toll Group

Transportation and logistics company Toll Group operates a network of 1,200 sites across 50 countries, covering road, rail, sea, air, and warehousing.

Following a number of acquisitions, Toll found itself in a position where it had multiple IT systems that didn’t talk to one another and no business directive to stop anyone from purchasing anything IT-related.

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Francoise Russo joined Toll about 18 months ago as the company’s CIO, and shortly after Michael Byrne was appointed as Toll’s managing director. Both executives entered the organisation with a transformation mandate.

“The company had been changing in any case, but it was amplified when he came in — a huge supporter of IT,” Russo said of Byrne’s appointment.

Speaking with ZDNet at Oracle Cloud World in Sydney last week, Russo said she had the approval — and AU$400 million in spending money — for her transformation plans in March last year.

“Toll’s performance had been declining over a period of time and it had also grown from being a series of acquisitions that had been made over the last 10 years, but not really integrated … still being managed as a series of small acquisitions,” she explained.

“The tipping point was to drive performance up, contemporise ourselves as a modern logistics company, provide the right kind of service to our customer expectations, and move from a series of small, medium, and large companies to a single enterprise.”

With the acquisitions Toll and its parent company Japan Post had made over the years, Toll had about 550-600 different IT systems, Russo said.

“IT reported, for many years, directly into the business and business would make their own choices about what IT they wanted to buy and so literally anyone anywhere could stand up an IT system, choose which ones they wanted, and set it up,” she told ZDNet.

Russo said this was also true at the infrastructure layer, with 18 datacentres across the world in use, ranging from large, proper datacentres through to a server room somewhere, each with different suppliers.

“We’re moving to enterprise and IT, to be honest, is a scale business, the more you can standardise, the more you can use the common, the better the value you get out of it, so we’re on that journey right now and we’re about a third of the way in,” the CIO continued.

When Russo joined, Toll was revaluating its ERP strategy and after trying to implement SAP for “some time” the program was on pause. The company headed back out to the market with a clear directive on what it wanted to achieve from its ERP overhaul and landed with a single Oracle on-premises cloud ERP solution.

“With tech changing so quickly, I’m not sure we’ll ever get to nirvana, but we had the approval from the board to invest around AU$400 million in a very significant IT transformation over the next 2.5 years, so we’re hoping to make some really good inroads through that process into actually upgrading our core systems as well as investing in some future capability, of which ERP is one,” Russo explained.

According to Russo, it’s important for the board and non-IT executives to appreciate the need for digital transformation.

“I’m not sure technology transformation of this scale can be successful if you don’t have really strong sponsorship from the very senior positions within the organisation — Michael is very supportive, he talks about IT being the most strategic thing he will do at Toll, that’s unusual and I’m very fortunate,” she added.

“What’s been challenging for us is the pace; trying to do as many transformation activities as we’re trying to do in — three years sounds like a long time, it really isn’t for a big corporate transformation; AU$400 million sounds like a lot, it also isn’t.

“For what we’re trying to do, the breadth and the scale, and the fact we’re doing so much in parallel, the pace has been really challenging.

“My vision would be, once we’ve got past the foundation levels and the building blocks that we’ve put in place, is to allow IT to take its place as a significant contributor to offering value to the organisation … including innovations for customers.”

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