Fonterra to merge systems

Fonterra, formerly Global Co, says it is moving towards a single system for its IT infrastructure, though for now it will base its systems on those of its constituent companies.

Fonterra, formerly Global Co, says it is moving towards a single system for its IT infrastructure, though for now it will base its systems on those of its constituent companies.

The $11 billion, 20,000-employee dairy giant has completed “a thorough review” of its IT infrastructure as part of an overall assessment of benefits accruing from the merger, using consultants KPMG, whose assessment is being extended further.

Apparently comprising over 10 binders of material, the KPMG report summarises the IT systems of the three entities in the merger, Kiwi Co-op Dairies, New Zealand Dairy Group and the Dairy Board. It found, as expected, that the companies have “fairly elaborate systems”, dairy IT consultant Doug Wilson told Computerworld in April, with some similarities between the board and Dairy Group.

IT integration project manager Marcel Van den Assum says the firm has two IT integration projects teams in place. One is looking at the technical aspects of IT integration, the other at the longer term direction of the business.

“Fonterra is looking to create value from the merger and this will include merging our systems. In the short term, we are focused on implementing the optimal solution from our existing infrastructure,” says Van den Assum. However, Fonterra says it is still too early to provide specific details and no decisions have been made concerning the purchase of software and hardware.

The Dairy Board and NZ Dairy Group are heavy users of Oracle and Compaq, while Kiwi runs on Jade and Compaq, using some Oracle databases.

In April GlobalCo’s own business case estimated one-off implementation costs of at $100 million, including redundancy payments, systems integration, investment in new IT platforms, rebranding and associated fees. This was to be broadly matched by annual cost savings of $120 million from the same catagories and others, and including $33 million saved on supply chain efficiencies and $48 million saved from staff overheads in areas including IT. Cost savings and added benefits reach a total of $310 million a year. Van den Assum says no business decisions have yet been made on any merger between the RD1 and Fencepost.com e-commerce websites.

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