Case Study: United States Sugar Corporation
As a commodity business, United States Sugar Corporation is used to operating at the whim of Mother Nature. While they might not be able to fool her, new tools and techniques have helped executives at U.S. Sugar's Clewiston, Fla., headquarters -- as well as farmers in the fields -- plan and respond to the vagaries of a highly unpredictable operating environment.
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As the nation's largest sugar producer (with an estimated annual revenue of approximately $500 million), U.S. Sugar has grown into a complex conglomerate of agribusiness companies that manages more than 194,000 acres in Florida, including the annual production of 800,000 tons of raw sugar and 120 million gallons of orange juice (from 15 million orange trees), as well as sugar by-products (such as molasses for animal feed) and other commodities.
The farming business is notoriously slow at adopting new technologies. Even though U.S. Sugar provides 10 percent of the nation's sugar, our infrastructure frankly has not kept up with the times. One of our two sugar mills dates back before 1928, and the "new" mill was built in 1959. And while it's true that the technology of grinding cane hasn't changed much over the last century, the dissemination of production data certainly has.
In the late 1990s, in anticipation of Y2K, the U.S. Sugar management team decided to seek out new technologies to modernize the gathering and dissemination of production information. Bringing U.S. Sugar into the 21st century wasn't going to be easy. Technologically speaking, we were contending with a slew of disconnected legacy systems built 30 years before, and most of the production data coming out of the mills was collected manually. The rest of it resided in the collective heads of generations of farmers so attuned to the rhythms of the earth that decisions on when to plant or harvest were as natural as, well, the weather. As a commodity business with little control over most things other businesses take for granted (for example, the government sets the price and the amount of sugar we can sell), we felt it imperative to find a better way to control costs. Historically, the nature of our business has caused us to react to -- rather than anticipate -- events that we can't control, and we needed to find a way to rectify that.
BPM Beginnings
In the summer of 2000, a new CEO and CFO -- neither of whom had extensive experience in the sugar industry -- joined U.S. Sugar at a time when the industry was being challenged by historically low sugar prices due to a surplus of subsidized foreign imports. As a result, sugar-processing plants across the country were closing. New management could afford to rely only on hard-and-fast data and analysis, not on anecdotes. This was a major culture change for the company, and it resulted in an inordinately high volume of financial information requests.
Although we, as a company, like to talk about "working smarter, not harder," the accounting staff ended up working harder, not smarter. Not only did we experience volume overload, we were constantly plagued with clerical errors from rekeying data, conflicting data from disparate databases, and inconsistent definitions of the same term across departmental lines. With at least three different ways to measure a ton of raw sugar, we would have different results for the same metric depending on who performed the calculation. As with a lot of ERP systems, we had a lot of transactional data but no good tool with which to turn the data into information. We spent a huge amount of time and resources on data gathering and reconciliation, which left little time for the actual analysis.
U.S. Sugar happened on the doorstep of business performance management (BPM) by accident. Several finance and IT staff members had been attending various industry and professional conferences, and all came back talking about software solutions that could marry data from different databases to better enable us to plan, report, analyze, and manage performance. Struggling to resolve various versions of the corporate truth and meet management's pressing information and analytical needs, my team and I strongly advocated investment in a BPM solution (although the software didn't yet go by the name "BPM").
Our primary goal was to provide both the executive and operating management teams with information they needed to run the business. The information had to be timely, accurate, and clearly defined. It needed to be at their fingertips instead of down in the bowels of accounting. A new solution had to be able to report our results from a single database where everyone could easily access the same information to draw accurate pictures of business performance. Such a solution -- if it could be implemented affordably -- had everyone's support.
The Evaluation Process Begins
One of our first priorities was to achieve departmental buy-in across the enterprise before the software selection process began. Taking a cross-functional approach from the project's infancy, finance invited all departments -- IT, agriculture, facilities, equipment maintenance, purchasing, sugar processing, citrus operations, and refinery -- to respond to two basic questions: "What are your needs?" and "What kind of relief are you looking for?" Based on group input, we came up with selection criteria that centered on application functionality, technical platform, data security and integrity, flexibility and user-friendliness, price, and the financial viability of the BPM vendor. Secondary to specifics was the need to internally drive home the fact that the chosen solution would not be exclusively an accounting tool. In fact, the chosen solution had to clearly demonstrate that we didn't need dollar signs in front of the data in order to provide value to the organization.
Ultimately, we needed a solution that would bridge disparate databases, required little or no IT intervention for developing reports, fit our current IT infrastructure, and was affordable.
