Dive Brief:
- The Hershey Company will "selectively pause" aspects of its enterprise resource planning (ERP) implementation, President and CEO Michele Buck said during the company's Q1 2020 earnings call Thursday. "We will continue to advance the finance and data work stream efforts of our ERP project, while we delay supply chain and order-to-cash efforts," said Buck.
- The shift in priorities — a move Buck described as a "prudent approach" — means overall implementation of Hershey's ERP system will be delayed by approximately one year. In 2018, Hershey outsourced implementation of SAP's S/4/HANA solution to Accenture.
- As a result of the deferment, the company projects its capital spending for the year to stay in the $400 million to $450 million range, according to SVP and CFO Steve Voskuil. This marks a decrease from the $500 million in capital spending Hershey had estimated in January.
Dive Insight:
Hershey's implementation delay is supporting evidence for the theme of companies delaying or canceling IT investments due to the impact of the novel coronavirus pandemic. Leaders are also looking at facilities spend for areas to cut, as stay-at-home orders remain in place throughout much of the country.
For some companies, ERP implementation in pandemic times will pause as revenues fall. Others, in fields such as government or healthcare, might need to up ERP investments as they manage increased demand.
In the case of Hershey, leaders are taking a mixed approach, prioritizing some of its ERP efforts while halting others. Hershey, a food manufacturer, hasn't seen demand fall drastically in the U.S. due to the pandemic. During the first quarter, it reported net sales increased 1% year-over-year.
Companies should push forward with tech upgrades in a recessionary period, as a slowdown in business helps offset disruptions, experts recommend.
A similar reshaping of priorities is also happening at almost half of small to midsized businesses, with 46% of owners planning to defer or reduce their projected software spend.
