Office Depot lays a foundation for sales channel integration

Office Depot is a leading global provider of office supplies and services, with more than 1,600 retail stores, a contract sales business, and successful catalogue and online channels under brands including officedepot.com and Viking Direct. The company achieves annual sales of approximately US $11.6 billion, and employs around 40,000 people worldwide.

In Europe, the company has grown both organically and through corporate acquisitions – most notably the acquisition of Guilbert, S.A. in 2003. The company’s largest and most developed European markets are the UK, France, Germany and the Benelux region (Belgium, the Netherlands and Luxembourg). It operates contract and direct sales channels in all of these markets, and also has a number of retail stores in France.

Accelerating the integration of sales and marketing channels

“Until recently, we managed all these channels and markets quite independently in our systems,” explains Peter De Coninck, Senior Program Director at Office Depot. “As a result, each market had different sets of customer records for its contract, direct and retail businesses, held in different systems. Three years ago, we decided to embark on an initiative called ‘Accelerate’, which would integrate all the selling channels and help us market and sell to customers via whichever channels are most appropriate. This would also give us a 360-degree view of our customers and their behaviour, ultimately helping us optimise our business processes and increase sales.”

Selecting SAP as a target landscape

To make the Accelerate initiative possible, Office Depot needed to build a standardised system landscape that could support all three channels. After a close evaluation of the options, the company decided that SAP ERP was the ideal platform.

“We had inherited a number of SAP systems from the Guilbert merger, which were still being used to manage some of our contract sales businesses,” explains Peter De Coninck. “One instance was supporting the UK, and another handled France and Benelux. However, neither of these environments had been in active development for several years, and they were running a version of SAP ERP that was reaching the end of its extended maintenance contract.

“If we wanted to make SAP our target platform for the future, the first step was to get these systems up to date.”

Finding the right partner

To support the SAP upgrade initiative, Office Depot consulted IBM Global Business Services.

“We received proposals from a number of IT consulting companies, but IBM had already been working with Office Depot in the US for some years, and there is a good history between us,” says Peter De Coninck. “IBM Global Business Services had recently done some work on a major US project for Office Depot that had been very successful, so we were confident that they would be the right partner for this European project too.”

Building a project plan

The IBM Global Business Services team helped Office Depot assess the current state of the existing SAP environments, gain an understanding of the dependencies between systems, and plan the best method for the upgrade.

“Our priority was to get the systems up to date quickly and create a solid foundation for future development,” comments Peter De Coninck. “IBM listened to our needs and recommended focusing on a strictly technical upgrade from version 4.7 to version 6.0. This would help to streamline the project and avoid possible delays caused by functional issues.”

Making the business case

With the project plan in place, the Office Depot team was able to build a strong business case, based primarily on the need to bring the SAP systems back into compliance with industry standards. The outdated versions were already on expensive extended maintenance contracts, and would soon be out of support – creating a significant business risk. Effectively, the only options were to upgrade the systems or replace them; and since SAP had been chosen as the target platform for the Accelerate initiative, the projected future benefits easily justified the investment in the upgrade project.

Harnessing synergies in project management

The combined project team from Office Depot and IBM Global Business Services decided to run the UK and France/Benelux projects in close succession with a significant overlap: the UK upgrade would begin in November 2010 and run until May 2011, while the France/Benelux upgrade would begin in January 2011 and end in June.

“The huge advantage of this approach was that the lessons we learned and the assets we developed during the UK project could be redeployed in the France/Benelux project,” explains Peter De Coninck. “There was also a significant overlap between the personnel on the two project teams, so it was easy to share knowledge and expertise. This enabled very significant cost savings on the second project.”

Working with the experts

Another advantage of working with Global Business Services was the ability to harness IBM’s SAP Upgrade Factory – a centre of competence based in India that focuses entirely on performing SAP upgrades.

“The SAP Upgrade Factory was a very valuable asset for us, because it gave us access to professionals whose entire career is built on performing SAP upgrades and developing best-practice methodologies,” says Peter De Coninck. “The delivery model is excellent – we had people from their team on-site with us in the UK, and then the rest of the team in India would work remotely. Because of the time-zone difference, it meant that people were working on the project almost 24/7, so it really drove us forward.”

Completing the project on time and under budget

Both upgrades were completed on schedule, taking a total of eight months. Downtime was limited to weekends, and both go-lives were completely successful.

“We had no critical issues at all, and the few non-critical issues we identified were all fixed within 24 hours,” says Peter De Coninck. “There really weren’t any hiccups at all. In terms of the smoothness of the delivery and the quality of the deliverable, it was one of the best projects I have ever been involved with.

“From a cost perspective, we actually completed both upgrades for less than we had budgeted, which was a great achievement. Moreover, we have moved our SAP environments from extended maintenance back to a standard maintenance contract, which will reduce our ongoing IT costs considerably.”

Looking to the future

He concludes: “Most importantly, the success of these upgrades has really put SAP back on the map at Office Depot, and we’re starting to get a lot of buy-in from the business for the next phases of the Accelerate initiative. Now we have the platform ready, we are in a great position to start integrating our customer records across all our different markets and channels. Ultimately, this should help us provide our customers with a more coherent and satisfying experience, while also enabling us to optimise our sales and marketing efforts to drive revenues and profits.”