Published on the 14/07/2022 | Written by Heather Wright
Ambitious project to define future of Zespri…
New Zealand kiwifruit co-op Zespri has opened the books on its Horizon program – including investment of $72.6 million in the program to 31 March 2022 and a ‘restatement’ of $42.3 million of SaaS spend.
The $160 million Horizon digital transformation program is Zespri’s ‘largest-ever digital transformation, modernising legacy systems set up long ago for a much smaller industry’, Zespri chairman Bruce Cameron says.
“It is a significant investment, but one which we have had to tackle after years of under-investment in our digital infrastructure.”
“The Horizon Programme is an essential investment in modernising the foundations of our processes and systems. It aims to reduce operational risk, create consistency, ensure our systems can be scaled up as we grow and are more integrated, resilient and efficient.”
Talking about the project back in 2020, Cameron said it was a project that ‘will define the future of Zespri and it will have a considerable impact on both the industry, and the New Zealand economy’.
Zespri’s annual report for 2021/22 reveals 889 ‘new system build items’ are part of the program, designed to make Zespri more efficient in delivering kiwifruit to customers.
In 2020 the organisation inked a deal with Deloitte to lead a Kiwi-based consortium including Zag and Sysdoc. Zag of course is now part of Accenture – a key Deloitte competitor. (The report doesn’t detail how the partnership between the two competitors is going!)
The programme sees Zespri migrating form a SAP environment on Microsoft Azure public cloud, to the SAP S/4HANA private cloud edition, prioritising the core supply chain and finance systems in the first instance.
SAP Analytics Cloud (SAC), which combines business intelligence, analytics and planning, is also being deployed for data visualisations, analytics and insights to enable Zespri to ‘turn data into intelligence that will help us gain a business advantage, make better decisions, improve business performance and mitigate risk’. New applications will see operational reporting generated real time at the point of transaction capture, Zespri says.
Deloitte is the design and implementation partner for the ambitious program, the first tranche of which was due to have gone live next month but has now been pushed out to 01 November.
In his May 2022 chairman’s update, Cameron said while it was disappointing to see dates move out, the deferral creates ‘the time needed to execute this final, crucial phase well’.
Zespri says tranche one solutions to be introduced this year ‘stretch across the value chain’.
“They include creating a consistent approach to purchasing across Zespri and better visibility of spend and costs.
“It will streamline and strengthen our ability to plan, budget and forecast, which are critical to helping deliver on our financial, sales and operational goals.
“Having one place to access all financial and planning data will enable a consistent, global way of working and more collaborative planning and proactive decision making.”
The upshot, Zespri says will be improved ability to get more accurate and timely reports, improved planned versus actual costs visibility and the creation of better cash balance management globally.
“We’re also minimising risk by reducing manual processes.”
Improvements in order to cash process are also being introduced, which the co-op expects will enable it to more efficiently deliver kiwifruit ‘with robust, transparent and reliable process, from the receipt of a sales order through to payments for product’.
“This will be globally consistent, supported by streamlined master data, improved inventory control, centralised transportation data and reduced manual work.”
New quality management processes will ensure a consistent quality experience, with more automation to make it more efficient.
The report notes Zespri is ‘unpicking old systems and building new ones to deliver better data management and faster, more intuitive digital systems and processes’ as part of Horizon.
“It is a significant investment, but one which we have had to tackle after years of under-investment in our digital infrastructure.
“The Horizon Programme will provide faster, more reliable systems with more functionality and consistency to our supply chain teams.”
It will also develop ‘intuitive’ tools, reliable data, information and other support services in the coming three years.
Zespri has already begun work to extend the programme beyond tranche one, with research into grower experiences and opportunities for improvement as part of a ‘grower enablement’ initiative. Solutions for extended supply chain and quality management, integrated business planning and sales are also included in tranche two.
The $42.3 million write off, meanwhile, resulted from a change in accounting standards in April 2021, with the spend previously viewed as an intangible asset and now classed as an operating cost.
Zespri, whose global revenue topped $4 billion for the first time in the year ending March 2022, with global operating revenue of $4.3 billion, had previously recorded expenditure of $56.6 million on computer software projects, most notably Horizon investment. New accounting guidance led to the restatement of the $42.3 million.