When Parag Agrawal joined Chobani in 2014, the company was outgrowing its technical ecosystem.
Founded in 2005, Chobani went from zero to $1.1 billion in sales within seven years. Throughout, the Greek yogurt company continued to use legacy technology as a way to limit spending — a strategy that could only work for so long.
“When I joined in 2014, there were some issues going on, but again, the idea was, ‘let’s not go crazy, let’s not spend too much money right now and let’s do whatever we can with the existing technology,’” said Agrawal, Chobani’s CIO.
Chobani wanted to grow, but it couldn’t do so without the right systems and technology in place. Agrawal had to adequately communicate the value of investing in digital transformation to senior leadership and ensure a smooth technology rollout that could support workloads and enable growth.
As a leading company in its space, Chobani controls more than one-fifth of the yogurt market. Aligning technology and business can have strong financial upsides for companies, yielding market valuations two times higher than non-aligned counterparts, Deloitte research found.
But it can be difficult to strike a balance. If IT projects go over budget, CIOs can face scrutiny, which might overshadow any added value. Fail to innovate and CIOs risk the business falling behind competitors or losing the ability to support workloads.
“As we started growing up, we started feeling like we needed to have the right people to enable the right processes enabled by the right technology,” Agrawal said.
Changing the game plan
Agrawal met with senior leadership in 2018 to detail the transformation journey with existing technologies and where he wanted the project to go next.
“We were just 10% to 15% digital and then when we started doing a lot of transformation with existing technology, we got up to 45% digital at that point,” Agrawal said. “I presented it to everybody in senior leadership that, ‘hey, this is where we are, and if we want to go beyond that then we need to go through a big business transformation project.”
The distinction between a digital transformation project and a business transformation project is mostly semantics, but Agrawal said it represents Chobani’s culture. A project’s value rests on what it adds to the business as a whole.
In order to create a clear hierarchy of projects, Agrawal, along with senior leadership, created a capability matrix aligning technologies with the capabilities they needed. As a seller and a manufacturer, Chobani decided to start with the basics and analyze the supply chain.
The team defined the supply chain in six verticals: planning, sourcing, manufacturing, delivering, data and finance — the latter of which cuts across all the other verticals. From there, Agrawal said, the company compared its tech stack to the different kinds of capabilities it wanted.
Chobani’s tech stack at the time could only deliver less than half of the capabilities the team needed, emphasizing the need for a larger transformation process.
“At that point, we decided that we needed to go through a big, big business transformation process, where we will relook at all of the business processes at Chobani,” Agrawal said.
In a phased approach, the company tapped SAP and Microsoft, running SAP’s front-end services on Azure.
“We created a roadmap from there,” Agrawal said. “We said, ‘we cannot boil the ocean in one day, so let’s talk about building the basics.”
Chobani's major tech overhaul included implementing a new ERP system, analytics dashboard, different selling options, digitized financial reports and warehouse digital management capabilities. Agrawal’s team also implemented an HR management system.
Throughout the transformation process, the company made it a point to only customize a process or tool when it offered a competitive advantage.
“We are in the middle of implementing a supplier relationship management tool, which is [SAP’s] Ariba,” Agrawal said. Chobani is also deploying an integrated business planning capability to support its supply chain planning process, a priority that Agrawal said came from the pandemic.
At the height of COVID-19, Chobani was able to meet its orders on time using its in-house supply chain and gained market share as competitors struggled with supply chain disruptions and worker absences. Chobani’s revenue increased 5.2%, reaching $1.4 billion in 2020, according to an SEC filing.
While previous plans to go public were put on hold, it recently surpassed $2 billion in sales and is growing 20% to 25% year over year, CEO Hamdi Ulukaya said in a May CNN interview.
Measuring success and acing change management
To measure the success of projects, Agrawal looks at KPIs related to digitization levels and productivity. Because most of the projects were related to core systems, simply tracking ROI wasn’t sufficient.
Instead, the teams took note of changes that led to more efficiency and tracked when processes went from hours to minutes.
“Technology works, but all this business transformation, it’s all about bringing everybody along with you on the journey,” Agrawal said. “Change management is one thing which makes or breaks the project.”
Because Agrawal had illustrated the need of the project with the capability matrix, senior leadership was already on board. The CFO and chief supply chain officer served as the key sponsors, which paired with support from an extended team of stakeholders, involving VPs of all other business functions.
“We made sure as we were doing the core projects that there were people who were involved in the project full time from the business side,” Agrawal said. “Our strategy was very clear, three in the box: IT, business and the system implemented.”
For CIOs, illustrating how IT projects fit into the larger business landscape is critical to reaching widespread adoption, Agrawal said.
“We made sure right from day one that the business was involved as much as it can be,” Agrawal said. “On top of that, we believed in telling the whole organization the big picture, and not just a siloed view of it.”
