A massive ERP consolidation will drive Fletcher Building's ambitions to become a much more digital business
New Zealand’s largest building and construction company is laying the foundations for digital transformation through centralisation and standardisation.
You name it, Fletcher Building’s got it – and we’re not just talking building materials and products.
Under the hood, the New Zealand and Australia-listed conglomerate until recently ran 72 (or maybe 73) instances of ERP software encompassing all the big enterprise software brands and a bunch of smaller ones.
Since 2014, however, that has been changing as Fletchers backs up a centralisation of IT services with a drive to standardise core business software processes and reduce the number of ERP instances to single figures.
While the benefits of such integration are obvious in terms of functions such as supply chain management, financial reporting, inventory control and payroll, there is another end-game in sight: creating a transformed, web enabled, mobile enabled, digital business.
Fletcher Building CIO John Bell, a former Deloitte alumnus, points to the organisation’s heritage as a portfolio corporation comprised of up to 50 individual companies.
“Historically all IT has been really driven within those individual companies,” Bell said. “So they had their own HR payroll systems their own email systems, managed their own infrastructure, have their only ERP system and so on.
“Everyone had really done their own thing in accordance with what they believe was the business need of their particular business unit."
Over the last few years, particularly under former CEO Mark Adamson, a decision was made to drive a more centralised approach to functions, including technology, to increase consistency and to develop standards.
In that cause, Fletchers also had a choice to make: in-house versus outsourced.
“We've gone through a process that determined, actually, instead of saving money it was going to cost a lot more to outsource,” Bell said. “That was probably a bit of a testament to just how complex the world was.”
The decision made to transform internally, three major initiatives ensued.
First, there was the transformation of Group Technology and the underlying infrastructure it supports. That included the migration of 21 IT teams into a single global team. It also included moving to a single global network, a single group email system and deploying tools such as software asset management.
For the first time, Fletcher Building had a good sense of what the company was actually using across the group.
Second was a strategic initiative to rationalise platforms across all domains. In addition to email and networks, payroll was standardised and human resources is now run on SaaS-based Workday.
The third area was all about driving a digital agenda. An innovation lab has been responsible for taking business initiatives and building digital, customer-facing solutions.
"There have been some 26-odd specific applications that we've built that are really around helping Fletcher Building grow,” Bell added. “They have been all focused on producing EBIT."
A typical project is making engineering or design specifications available in a software application and then putting that tool into the hands of both staff in Fletcher business units and those of customers.
At the base of such efforts are the typical IT foundations built of databases and ERP systems. And having 72 ERP instances across the group was far from ideal.
Bell pointed out that 50 of the 72 instances belong to the PlaceMakers chain because there is an ERP instance in each branch.
The 72 instances are a legacy covering a who’s who of ERP players from the majors (Oracle. SAP and Infor) but also Ace, Great Plains (now Microsoft Dynamics), ASW, IBS and First among others.
