Vegetable Soup(ed) Up
- 08 June, 2004 12:34
Meet Moraitis - a fruit and vegetable giant grappling with the challenges and opportunities of the information age. Beverley Head finds out how a greengrocer takes a greenfield site and grows its IT network.
CIO to take on a job because he felt sorry for the owners of the business. He is probably one of the first to admit publicly to it.
Certainly from the outside Nick, Stephen and Paul Moraitis didn't seem to merit much in the way of sympathy. Their eponymous business Moraitis Fresh is one of the largest suppliers of fruit and vegetables in the country, shipping thousands of tonnes each week to clients including Coles, Woolworths, Franklins and Bi-Lo. Moraitis also has a food services division supplying a range of well-known fast food chains. Add to this the legendary turf circuit status of patriarch Nick Moraitis (not least as the owner of Might and Power) and sympathy might seem superfluous.
But internally it was a different story. The company wasn't backing winners in the IT stakes, nor had it for some time. What had elicited Colovos's sympathy was the fact that the family was hopelessly out of its depth when it came to identifying information systems that would support the business, help them make more effective and efficient decisions, and fulfil the information requirements of their customers and suppliers. The Moraitis family knew their business, they just did not know what information systems they needed to run it more efficiently.
Fate stepped in for the family when Stephen Moraitis realized that his daughter's school friend had a computer consultant for a father. An informal approach saw Con Colovos, who was at the time consulting with Com Tech (now Dimension Data), accept the invitation to take a look at Moraitis's computer system and advise the family on what it needed to do next.
Working long hours, six days a week for two months, Colovos studied Moraitis. His mission: Identify what computer systems the company needed to support its present business with an eye to future requirements. However his lengthy audit of the company's existing systems revealed some disturbing news. There was a yawning chasm between the computer systems in place and what was needed to support the business immediately. The idea of these systems supporting future growth was so far-fetched, it wasn't even an issue.
Colovos recommended that the company quickly bring in a consulting company to fix the problem. It was a route that the Moraitis family had followed before but with little joy. They had installed a computer system based on advice from consultants, and now it was sadly lacking. After seeing Colovos's style for two months they felt they could trust him and wanted him to take on the job for them.
"I liked them, I felt sorry for them, and I started in March 2001," Colovos says.
No Rose-Coloured Glasses
Colovos knew what he was facing; his two-month stint had left him with no illusions about the pitiful state of Moraitis's computer and information infrastructure. In this case the word infrastructure was overkill - there really wasn't any.
A couple of years before Colovos appeared on the scene, senior management had asked one of the company accountants to find and install a computer system. The managers wanted reports to help them understand how the business was travelling and help them make decisions. The accountant, who had no IT experience, brought in consultants who recommended and installed the TIMS system on a Sun server.
It worked just fine as an accounting system, but did not provide management with the hoped for information and was deemed a qualified failure. "The reason for the failure was the lack of consultation with the business, understanding its wants and desires and transposing them into deliverables that could sustain and grow the business through technology," Colovos says.
When it came to end-user technology, everyone in the organization used stand-alone 486 PCs (and remember this is 2001) to do word processing, and VT250 terminals to access the TIMS ERP. There was no local area network. Instead, the company relied on the Adidas-net: copy a disk and walk it over to another employee. If information needed to be shared with the Brisbane or Melbourne offices, it was printed out and mailed or faxed.
The company's Internet access consisted of two dial-up e-mail accounts, one in the head office at Homebush, in south-west Sydney and another in the manufacturing plant just down the road. There was one e-mail address for the entire company. There was a Web site, but that was hosted externally, rarely updated and was effectively a company brochure with no additional functionality. Colovos spares no one blushes. "At that time," he says, "there was a lack of understanding or appreciation of technology in any form throughout the firm."
In addition, there was a deep scepticism about technology promises.
"Nick Moraitis and his sons Stephen and Paul had implemented TIMS a year before I came," says Colovos. "They were informed it would deliver reports and information to better manage their business. But the reports never came. There had been no analysis or review of the business and the system was implemented in its vanilla form. It did not suit or complement the business and it had cost $1 million."
From day one Colovos knew what the problem was, and it was straightforward. "No one was looking after IT," he says. "There was an accountant given the responsibility for IT, but he was an accountant with limited IT experience. He had no strategic understanding of IT." Without that knowledge, the accountant was unable to communicate how IT could underpin business processes and give the company's managers their much sought after information regarding their business.
Colovos's report to the Moraitis family was blunt. Their system did not work, they had inadequate resources, no computer training, no support staff, no infrastructure to speak of and no blueprint for the future. In short, they were stuffed.
But rather than shoot the messenger, the Moraitis family hired the messenger. Colovos - who had been on a contract that was due to expire, and replaced with one requiring him to move interstate - was prepared to accept the challenge of turning a stuff-up into a silk purse. It wasn't a situation Colovos was unfamiliar with.
"The first thing that I did was to spend a month talking to managers, to staff, and holding meetings. I explained who I was and what I was here for and where we were headed with the technology. I told them the benefits that were in it for them - and also what was expected from them," he says. "All the projects I've worked on in the last five or six years have required someone to come in and fix issues up in troublesome IT environments."
Taking the TIMS by the Throat
First up for Colovos was to grip the TIMS system by the throat and squeeze from it whatever was possible because the system was the only game in town - at least for the immediate future. TIMS was going to have to provide the information reports for the business until a better solution could be implemented. Colovos hired the only person on Morgan & Banks's books at that time with TIMS ERP experience and a system administrator to assist with the implementation of the new infrastructure.
Two months after joining, Colovos presented his infrastructure report to the company, which detailed the systems and networks needed at the key locations in Sydney, Melbourne, Brisbane, Gembrook in country Victoria, Townsville in northern Queensland and on its South Australian farm at Nildottie. He and his system administrator went out to each of the locations and installed the networks themselves. They also developed the training manuals in-house, dropping any unnecessary computer jargon and tailoring them precisely to the needs and understanding of individual operators. The two-man team also stayed on at the locations and trained staff until they felt comfortable using the computers.
It was not work for the faint-hearted. During the first 12 months Colovos burned his way through six systems administrators who said that the job was "too hard and left". The seventh stayed and remains on the team still.
Perhaps stinging from their $1 million TIMS project, which if not a white elephant was certainly a white mouse, the Moraitis family kept exceptionally tight reins on Colovos's chequebook. His initial budget was a scant $500,000 for the basic infrastructure of networks, five servers, routers and 60 PCs. "They put a lot of pressure on me in the beginning," he says. "That is the type of business this is and the type of people they are and it was a good approach. It gave them a better insight of what was involved in putting together something of that calibre."
As far as Colovos was concerned, one of the keys was ensuring that the infrastructure was robust - "bullet-proof" in his words. "If you get your infrastructure right then your applications will work properly," he says.
And that was the task Colovos and his team set about doing.
Today the IT landscape at Moraitis is significantly different than it was back in 2001. Moreover, the company has narrowed that yawning IT chasm: existing systems meet current requirements and can scale to meet future needs, although there's still much to be done. The directors' homes now have high-speed ADSL links. The IT team can remotely take control of computers at distant locations, which means for the past six months no one has had to travel to the interstate headquarters in Brisbane and Melbourne to tackle computer matters - a nice bottom-line benefit. This has been supplemented with the installation of a videoconferencing system so that face-to-face buying meetings can be held remotely.
"The benefit of having nothing to start with - no legacy to work with - is that you can do it properly from day one. So, for example, we have a fibre-optic connection, and Windows 2000 servers, which gives us a platform to grow and flexibility," Colovos says. "The downside is that there has been a lot of work on my behalf with limited budgets. We also had to get the people to accept the change."
Because the benefits of the new systems were sold directly to the workers, Colovos has not had to tackle union issues regarding the new work practices. In fact, he says, the "people on the floor wanted this more than the office workers".
The Dollars Cometh
After the first $500,000 outlay the purse strings loosened somewhat and another $1 million has since been invested in the information systems. The next big step - which includes a bigger price tag - is an entirely new ERP system.
Colovos believes that the company is willing to spend more money on computer systems because IT has proved itself at the bottom line. His own key performance indicators are also importantly being met. He is now obliged to provide regular updates to the board, deliver specific project milestones, and with each submission of a new business case for computer applications, define the costs, the deliverables and the impact on resources. Having identified these targets he then must meet them.
"The business has grown 30 per cent since I came, but resourcing has stayed the same," he says. That he believes is because he has a good grip on what resources are needed to run the business, and how computer systems can help with the job. "I'm out on the floor with the general manager of production. I talk to the forklift drivers. I'm talking to the business on a weekly basis and long term I'm developing a strategy and understanding of what the business and the users need."
In addition Colovos meets with his now eight-strong IT team each Tuesday at 11.00am for an update session, giving him 360-degree vision of the information systems. "Over the last 12 months the board have been very encouraging about the development of the IT function. Led by Paul Moraitis, they are saying: 'What can we do next? They are looking at RFID and barcoding and ERP."
The ERP project, codenamed Everest, has a budget of $3 million with the first stage of the rollout scheduled to be completed by February 2005. The shortlist of suppliers includes Microsoft's Navision, SAP, ASW from European supplier IBS and Microsoft Axapta. Stage one will include implementation across the group, including wireless capability to allow tablets and barcode readers to input inventory data from the factory floor.
Although ERP is currently in the box seat, Colovos is aware of the revolution that RFID will spell for the retail business and its supply chain. He is involved with the EAN transport guidelines development group and also the ITOL Grocery Supply Chain Project established by EAN and the now defunct National Office for the Information Economy. This involvement with standards setting leaves Colovos mindful that as the ERP solution is rolled out, it needs to be implemented so that in the future it can accept information harvested from RFID readers.
He accepts that until stage one of the ERP is rolled out completely, all he will have achieved is automating what employees have been doing by other methods. His three- to five-year plans, however, take him to stage two of ERP rollout, which he believes will give the company much finer control of the reporting and analysis of the business. During the stage two rollout the ERP system will link into all Moraitis's suppliers, customers and partners, including CHEP pallets, and packaging companies VISY and Marinucci.
"As an example, say a company has been buying from us for three years. Well, if they don't buy anything for three weeks for some reason an alarm will go off for the sales manager. We will be able to track our sales and spot buying pattern variations," he says.
The goal is to deliver a more sophisticated and integrated management tool than the stopgap measure that is currently implemented, which is a Corvu business intelligence system that sits on top of the TIMS system. While it provides management with some reports at present, in time it will be replaced with an eye to delivering a more streamlined and timely set of reports.
Joining the Chain Gang
With much of the donkey work of installing infrastructure behind him, Colovos still sees his role largely as one of a change agent. "I have very much positioned myself as a part of the business," he says, adding that his regular visits to the factory floor mean that he understands how the business works and where technology can help. But he is mindful that there are people on the factory floor who were there a decade ago doing the same job using manual ledgers, and for these people it has been important to demonstrate that the technology is not a hindrance but a help.
Colovos knows you cannot impose new technology on people and expect it to be successful - they have to want to use the technology. That said, he cannot afford to take things too slowly because customers such as Coles and Woolworths want better stock and inventory control on the part of their suppliers in order to reduce waste and improve quality. They also want portal access to their suppliers' information systems so that they can do more B2B online.
"And that goes from the grower right up to Woolworths," he says. "I've met the major growers and they've said: 'Tell us what you need and we will be there.' I've been in touch with the smaller growers and informed them of our business strategy and our IT strategy."
Growers big and small are part of the supply chain that is increasingly moving online as everyone along the chain looks for economies and advantages. In the past, smaller growers have been able to rely on the fax machine for their orders and invoicing. But Colovos believes that in the future everyone will be forced online if they want to stay in the major supply chains.
And the Climb Begins . . . As CIO magazine went to press, Colovos and other Moraitis executives made their product decision regarding the company's ERP project. Navision crossed the finish line first. In the next instalment of this moving fruit and veg tale, CIO magazine goes behind the ERP selection process and follows the rollout.
SIDEBAR: A Matter of Course
The career of Moraitis CIO Con Colovos is an exercise in serendipity
Con Colovos certainly did not expect to end up where he is now. A flair for networking - both electronic and personal - is largely responsible for his elevation to the CIO role.
After leaving school, Colovos began an economics undergraduate degree at the ANU. That did not work out for him, so he transferred to TAFE and studied for an accounting certificate. That took him as far as Alexandria in inner industrial Sydney where he was taken on by communications giant STC as a trainee accountant.
At that stage he viewed computers as a tool and nothing else but in 1988, after reading an article in a magazine about information technology, he developed an interest in computing and started voraciously reading PC magazines. He then spent $3000 on a PC and started tinkering.
From his reading he had worked out there was a race on in the corporate sector to install networks - mostly Novell networks - and Colovos decided to take some of his economics training and put it to work in the field of supply and demand: if the market was demanding Novell skills and paying highly for them, then Colovos would supply them.
A friend was installing Novell networks at Telstra and for six months he spent each weekend by his friend's side as an unpaid apprentice, learning what he could. He felt a greater affinity for the networks than he did for the accounts books and so took his first IT job as a systems administrator in an engineering firm. It was something of a gamble given his lack of formal qualifications in IT and with a young family also to support - but the bet paid off.
After the initial stint and some experience under his belt, Colovos moved to Qantas where he was a Novell administrator, before the same networking skills took him to St George Bank. In 1993 his networking skills and the people networks that permeate the IT community led him to his first IT management role at the NSW Attorney-General's Department where he had an annual IT budget of $3 million and 800 users to accommodate. In 1997 he moved to the Commonwealth Bank as technical services manager with 35 staff and 9000 users to keep happy - just before the role was outsourced to EDS. Colovos moved across to EDS for some months, working on various contracts including steering Pepsi Cola Australia's search for a new ERP.
In 1999 Colovos plunged into the dotcom pond joining Shopfast.com.au in its first week of operations, and stayed until the dotcoms went bust.
So it was back to contracts - this time with Com Tech, which is where he was when his daughter's school friend's father came calling.