That's what allegedly happened to Tri Valley Growers, the farm co-op behind such well-known brands as Redpack tomatoes and Libby's fruits, which had $US8.8 billion in revenues in 1999. In 1996, the co-op's business and technology leaders wanted to buy a fully integrated ERP system to run the entire business, from the vine to the grocery shelves. Impressed by Lead CPG Salesman George Van Ness, Tri Valley's business leadership quickly bought in to Oracle's vision.
At a meeting with Tri Valley in late 1996, Van Ness "acknowledged that there were integration issues to be worked out, but he kept assuring our executives that the problems would be solved and that [Oracle] would support us, no matter what", says a CPG project participant at Tri Valley who did not want to be identified.
That assurance was enough for Tri Valley's business leaders, says the source. "There was some good personal chemistry between their management and ours." That led Tri Valley to purchase the full Oracle CPG suite for $US3.1 million in April 1997.
The evolving difficulty of the CPG integration at Tri Valley was reflected in Oracle's estimates for the consulting costs on the project. In November 1996, Oracle's estimate was $US300,000 to install the software. In May 1997, when the final consulting contract was signed, that figure had ballooned to $US2.7 million, according to court documents obtained by CIO from a lawsuit that is still in progress.
It wasn't long before the relationship between Oracle and Tri Valley began to sour. Tri Valley's technology project team complained repeatedly that the CPG software that Oracle's project leaders had said was finished was really not, and that the pieces Oracle did provide did not work when loaded into Tri Valley's computer systems. Tri Valley says Oracle kept promising to fix the problems with new releases of the CPG software but that Oracle continually missed its deadlines for completion of those releases. Tri Valley dropped its CPG project in 1998 and replaced it with Oracle arch-rival SAP's R/3 system at an additional cost of $US1.2 million, according to court documents.
But the last-minute switch couldn't save the co-op. Tri Valley declared Chapter 11 bankruptcy last year and has since sold off its brands. What little remains of Tri Valley - mostly lawyers and accountants - is suing Oracle for $20 million for its failed CPG installation. Though the company does not go so far as to blame CPG for the collapse of the company, its lawsuit claims that the co-op would have saved more than $5 million per year if the software had worked. An Oracle spokesperson said the company has denied Tri Valley's allegations in court, but said she could not comment while litigation is pending.
The lesson of Tri Valley's experience is clear to one IT manager who worked on the project. "The nontechnology executive management has to take the technical details seriously and not consider them something that the geeks will work out amongst themselves," he says. "Those technology difficulties are, in fact, serious business risks."
By 1999, even Larry Ellison, Oracle's CEO, was publicly acknowledging problems with CPG. But he blamed others for its woes. At a press conference following an Oracle users' group meeting in April 1999, Ellison said about CPG: "[It] sounded great, but the trouble is we can't control our [CPG] partners. We're going to be very careful going forward not to take responsibility for something someone else has to do. That was a huge mistake, and we will never do it again." At Oracle's user group meeting in Hawaii in October 2000, Ellison flatly told customers that they should turn their back on CPG and upgrade to Oracle's new software package, 11i.
By then, Shreiner had left Kellogg after more than three years of trying to make CPG work. To his credit, he never hid the fact that the software was incomplete, sources say. "[He] was consistent with the underlying tone that CPG needed to be worked out and that there were issues," says one former IT manager at Tri Valley. Referring to Shreiner's exit in early 2000, another source close to the project says: "There were people whose careers depended on getting CPG up and running." Shreiner was one of them. (Responding to our letter requesting an interview, Shreiner wrote: "I do not feel it would be appropriate to comment or contribute to this story.") His successor, Rajan Nagarajan, announced in May that Kellogg in the United States would begin the process of converting over to SAP's ERP software, which it acquired when Kellogg bought biscuit and snack-maker Keebler. The new system will eventually erase whatever traces of CPG remain at Kellogg worldwide, according to a source close to Kellogg. Nagarajan declined to be interviewed for this story.
George Ryerson, director of IT for WestFarm Foods, a Seattle-based dairy cooperative, managed to hang on to his job despite being a CPG customer. He had an advantage. He came to CPG relatively late in the game, beginning his implementation in February 1999. By then the myth of true CPG integration had been dispelled. WestFarm Foods bought interface connections between select pieces of software from the original CPG portfolio. Throughout the six-month installation, Ryerson minimised the changes he made to the three pieces of CPG software that WestFarm bought.
He also rode herd on the two CPG software vendors, Oracle and IMI, that installed software at WestFarm. He developed a "black book" on the two vendors and gave a copy of it to all users of the system. "It's a customer service guide based on the problem type, the vendor, the primary contacts at each vendor and how to [get the vendor's immediate attention] if the system is down," he says.
Because Ryerson made very few modifications to the CPG software, it was easier to get Oracle and its partners to accept responsibility for bugs. "That saved our bacon," he says. Even with minimal modifications to CPG, however, the installation was still a challenge, though Ryerson won't elaborate. "I'm not going to tell you how many [official CPG bugs] there were," he says. If other CPG installations are any indication, there were many.
Oracle stopped selling CPG in late 1999 and Klaiss says the software is being incorporated into Oracle's new suite. So Ryerson is now faced with a choice: either upgrade to 11i, as all CPG customers are being encouraged to do, or start from scratch with another ERP vendor.
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