Linfox has learnt some valuable lessons in risk management after executing a multimillion-dollar systems integration project following its recent acquisition of Mayne Logistics.
After the $250 million purchase of contract logistics conglomerate Mayne in February last year, the big technology hurdle was to recreate and transplant the systems and services from Mayne to Linfox with minimal downtime.
The key goal was to extricate Mayne from a shared services environment to Linfox's logistics group which runs 5000 fleet vehicles, more than 750 armoured trucks and manages some one million square metres of warehousing space across the Asia-Pacific region.
The mammoth task required Linfox to relocate Mayne Contracts' outsourced Melbourne data centre to a new site in Sydney and the amalgamation of 200 sites in the region and an estimated 200 application systems.
Application systems ranged from networks and infrastructure, finance, HR, payroll and e-mail systems and a further 15 historical in-house systems for logistics, warehousing, supply chain and inventory processes.
Linfox executive general manager of IT, Dean Matthews, said the company took control of Mayne in February 2003 completing the integration exercise in September 2003.
"So far we've moved all of Mayne's financial and back-office applications over to our own SAP environment, as well as more than 7000 people from Mayne to our own local operation which has 9000," Matthews said.
"This project also involved moving more than 50 servers and 200 networks over to Linfox."
Linfox inherited about 50 IT staff from Mayne but the company would not comment on the number of its own IT personnel.
According to Matthews, the integration of those systems, networks and servers effectively supports about $7 million dollars worth of business activity within Mayne. The risk of not consolidating those components of the IT environment properly was high as they support "major" EDI connections and gateways with customers' business systems.
System downtime of even 24 or 48 hours was not an option for the company because of the strictly scheduled logistical needs of customers.
During the integration, Matthews said, there was minimal disruption to the organisation, with only four hours downtime. This was achieved by creating "mirror images of the systems and switching to these identical systems" while relocating some of the IT equipment.
Materially, this did not cost the business as Linfox and Mayne communicated their integration plans to customers a few weeks in advance.
Linfox engaged an existing IT outsourcing partner KAZ Group for the data integration work, as well as IBM Business Consulting Services and CSC for consulting work.
Matthews said the key to pulling off a project of this magnitude was in dividing it into small, manageable chunks over the course of eight months.
He said good project management also comes down to establishing a project office to coordinate and manage the integration processes from an early stage.
"Big IT projects are always under resourced. We had 70 IT people from both organisations involved. There was a two months planning phase and six weeks of implementation, so it was exciting and stressful. But we had Linfox IT managers to oversee and govern the progress and delivery of the entire project."
The longer-term aim of the integration exercise is to reduce costs, improve quality of service and find synergies by co-locating the new entity's IT services in one location.
Linfox expects to fully bed down its IT integration with Mayne within two years.