Lessons Learned from Metcash’s Digital Transformation Journey

In early 2022, when Doug Jones took the helm as CEO of Metcash, he encountered a digital transformation initiative that fell short of its promises. The ambitious project, dubbed Project Horizon, aimed to overhaul Metcash’s IT infrastructure, consolidating nine disparate systems into a single platform powered by Microsoft. However, what seemed like a dream quickly turned into a nightmare as costs skyrocketed and objectives seemed out of reach.

Former CEO Jeff Adams had envisioned a seamless transition to Microsoft’s suite of products, expecting significant cost savings and operational efficiencies. However, within 18 months of implementation, costs nearly doubled to a staggering $190 million. Shareholders were blindsided by the ballooning expenses, which eventually reached $290 million.

Jones wasted no time taking ownership of the project and launching an investigation to uncover the root causes of its failures. With the board’s support, led by Chairman Peter Birtles, Jones delved deep into the governance structure and execution of Project Horizon. The findings were alarming, revealing flaws in project oversight and unrealistic objectives.

One glaring issue was the lack of alignment across Metcash’s core businesses – retail, liquor, and hardware. Each operated differently and had unique requirements, making a one-size-fits-all approach unfeasible. Jones recognised the need for a strategic shift, decoupling hardware from the program and adopting a more flexible, best-of-breed approach within the Microsoft ecosystem.

Despite the setbacks, Jones remained committed to the project’s core objectives: de-risking systems, simplifying processes, and enhancing customer experiences. Partnerships with Microsoft and KPMG remained strong, with progress evident in key areas such as finance and inventory management.

Recognising the need for a comprehensive assessment, Metcash enlisted the expertise of industry veteran Bob McKinnon. His insights underscored the missteps and highlighted areas for improvement, including closer alignment between business units and the project team.

In hindsight, Project Horizon serves as a valuable lesson in the complexities of digital transformation. While the journey may have been fraught with challenges, Metcash remains determined to leverage technology for future growth and innovation.

Through transparency, collaboration, and a willingness to adapt, Metcash is poised to emerge stronger from its digital transformation journey, armed with valuable insights and a renewed focus on delivering value to customers and shareholders alike.

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