The Demise of Target in Canada: A case study in IT Business Management
Chief Operating Officer and Managing Partner
This weekend, I read an article from Canadian Business on the Last Days of Target in Canada.
I expected it to be an account of a large American enterprise that didn’t understand the Canadian market and made fundamental mistakes that led to its demise.
What I read instead, and I don’t think this was the reporter’s intent, was a case study about the impact of not understanding the IT information requirements needed to support Target’s business objective of launching 133 stores in Canada in two years.
Regardless of scale, 133 new stores in a different country or 1 new application internal to headquarters, the requirement to understand the information needed to meet business objectives is fundamental to success. Target failed.
The article is long and worth the read. To motivate you to invest the time, here are a few sound bites:
Target was …seeking to do the impossible: It was going to set up and run SAP in roughly two years.
… Target believed the problems other retailers faced were due to errors in data conversion. Target, on the other hand, was starting fresh. There was no data to convert, only new information to input.
…Strange things started happening in 2012, once ordering began for the pending launch. The data contained within the company’s supply chain software was riddled with flaws. The system requires correct data to function properly.
“There was never any talk about accuracy,” says a former employee. …Worse, the company hadn’t built a safety net into SAP at this point; the system couldn’t notify users about data entry errors. The investigative team estimated information in the system was accurate about 30% of the time. In the U.S., it’s between 98% and 99%. (Accenture, which Target hired as a consultant on SAP, said in a statement: “Accenture completed a successful SAP implementation for Target in Canada. The project was reviewed independently and such review concluded that there is no Accenture connection with the issues you refer to.”)
I am sure Accenture did precisely what they were contracted to do. Stand up SAP and configure it as per the agreed upon definition as signed off by the customer.
The problem? Target (specifically those in charge of the Canadian implementation) did not understand three things (at least):
- The difference between standing up SAP out of the box and an implementation specific to the information requirements of Target Canada
- Mapping business objectives to information/data requirements and SAP capabilities
- The effort and complexity of implementing in scope information/data requirements into a production SAP environment in time to meet business requirements
At RAPA, we call this the grey zone between business and technical IT and it is where businesses win or lose. Losses can be on a small scale (i.e. an operational project fails), medium scale (i.e. an internal change plan fails) or as big as they get… a business fails, as Target did in Canada after spending $7 billion dollars in less than 5 years.
This failure cost 17,500 people their jobs and it could have been avoided. Yes, it was due to inexperienced leadership not being able to recognize this IT information mistake, amongst other mistakes. Sadly it is a case study because it is far too often the reason why IT projects fail and the impact of that failure can be catastrophic.
We would love to talk to you if you are facing the challenge of lacking clarity of the information and data requirements related to your IT business requirements.