As investment plans go, the one embarked on by Purolator Courier Ltd. in 2005 was a doozey. In essence, the five-year plan was one of those ‘bet the company’ initiatives, entailing the building of the firm’s first two automated hubs (in Montreal and Vancouver), the overhauling of its data warehousing strategy, and the jettisoning of much of its technology infrastructure, including its time-management system and its Web-based and customer shipping systems.
As Senior Vice President and CIO Jim McDade modestly put it, “It’s been a busy three years.” The need for the big overhaul was indisputable. Hampered by legacy systems that in some cases were nearly a couple of decades old, Purolator found that it couldn’t bring new products into the marketplace. The company was being outmanoeuvred by its competitors, who had the ability to price services fairly precisely between two points, while Purolator was saddled with zone pricing.
Strategy and the CIO
The objective of the five-year plan was to build a new Purolator for the company’s customers – one quite different from the original and one that would give customers a new way of doing business with the firm.
“We changed how we bill for our services, we changed the definition of our services, and we changed what services are available at what postal codes. Fundamentally, we rethought all that,” said McDade. “And one of the guidelines throughout the initiative was that we couldn’t lose a single customer because of this new system.” That meant coming up with equitable pricing between the old and the new Purolator, and getting customers to sign off on the new pricing.
PUTTING THE RIGHT TEAM IN PLACE
A great deal of thought was put into the initiative from the outset.
“I’m a firm believer that eighty per cent of the value of a project comes within the first twenty per cent of its timeframe,” said McDade. “And so we did a lot of hard slogging to envision how we wanted to run our company and get the business onside as to what that change would be, and how they would change to support it.”
Once this future had been envisioned, executives from the business as well as a cross-functional team of employees were invited to join the project and help build that future. Though the building of a new ERP system was a heavily IT-based project, the company handed the reins of the design phase to VP of Marketing John Cooper. Along with three of his direct reports, Cooper worked hand in glove with the IT specialists to come up with an appropriate solution.
“There were two big challenges we faced,” said Cooper. “The first was ensuring that we had thought big enough in the design phase so as to enable us to deliver flexible solutions to our customers, while at the same time focusing enough to provide clear direction to the build teams to execute against.
The second was to gain endorsement from a representation of key internal and external stakeholders, creating an opportunity for them to review the design principles and framework, endorse the direction, and prepare themselves for the deployment activities to come.” At its peak there were over 300 people on the project, including staff from Innovapost, CGI, Microsoft, Kewill, SAP, Accenture and Avanade. There wasn’t a pre-built solution for the things Purolator was doing, so the team had to work through and think through how to make the changes effectively.
About 40 of Purolator’s core business staff, including Cooper and key members of the Marketing department, were assigned to the project and relocated to a floor of one of CGI’s development centres, about ten minutes from Purolator’s head office.
This, of course, created some anxiety for the affected staff, who naturally voiced many of the concerns heard frequently on such projects: Why me? What if this doesn’t go well? What if someone comes in and does a great job in my role?
“We knew that this was an issue and we worked hard with everyone to make things very transparent. We didn’t want people worrying about their future here, so we spent a lot of time with them, explaining that they had been hand-picked because they’re among our leaders and we want to invest in them,” said McDade.
“Just because someone started on the project didn’t mean that they ended on it,” he added. “And if they left it, it didn’t mean that there was any kind of a problem with that person. It just meant that we were entering a different phase and we needed different skills.”
THE CIO AS PRIME CONTRACTOR
While Cooper led the design phase out of the offsite facility, McDade worked with his peers at head office, ensuring that the company got the design right, tackling such issues as how best to do point-to-point pricing, what should the shipping channels look like, and how should the business intelligence layer be done. In essence, he became the prime contractor for the project.
When he joined the company in September 2005, most of the project work at Purolator was done on a fixed-price basis. But McDade wasn’t a believer in fixed-price contracts, so he took a different approach, opting to avoid customization and go the time-and-materials route.
“My thought was if we go fixed price and we get into a problem, it’s probably going to be because I didn’t make a decision on time or I did something that took the IS folks in the wrong direction,” he said. “So why should I pay a premium to have them cover themselves when it’s my fault anyway?”
McDade said that his biggest challenge in the prime contractor role was working with the tough timeline and budget on the project.
“There are some very nervous and exciting times when you’re burning through probably a half a million dollars in expenses every couple of days at peak,” he said. “You’re really trying to ferret out where you are and whether or not you’re making the progress you expected to make. Are we moving the ball down the road? Are the numbers in line with the budgets, and are they correct? Because in projects like these, there are always surprises. So how do you handle those surprises?”
MORE CHANGES AT THE TOP
When the build phase kicked in, McDade assumed responsibility for the project. He now spent two days a week at the CGI location, while Cooper returned to head office to help prepare the business for the incipient changes.
Though McDade’s duties didn’t change a great deal, there was an important symbolic significance to the leadership change.
“We wanted to make sure people knew we weren’t going to be in continuous scope creep. So my taking that lead role was, as