Splitting a giant corporation — and the myriad systems that make it tick — calls for strategy and intention.
Kellogg is dividing into two separate companies: WK Kellogg Co, a cereal-focused company, primarily targeting North America; and Kellanova, which will market snacks and plant-based items globally.
Leading the charge on the IT components of the upcoming split is Lesley Salmon, global CIO at Kellogg, who will help guide the 117-year-old corporation through a unique set of IT challenges.
"If you're gonna force me to pick one biggest challenge, it's the sheer volume of change that we're embarking on," said Salmon, who has been at the company for nearly a decade and will become global CIO at Kellanova after the split.
Change is the overarching theme in the IT shifts associated with Kellogg's corporate structure makeover, as the technology drives complex processes from manufacturing to supply chain and finance. Making systems operate smoothly through the transition also allows the company to reflect on the relevancy and scope of systems.
Kellogg expects to finish the structural shift by the end of the year. The majority of IT changes will take place ahead of that timeline, closer to the middle of the year unless they make sense not to deliver until the end of 2023, Salmon said.
The process was largely shaped by big, early decisions around migration strategy and critical vendors, Salmon said. Essentially, WK Kellogg Co will spin out of Kellogg, while Kellanova continues to run on the systems that are left behind.
"We've got a lot of common backends that we've got to split into two," Salmon said. "We've got to create a future for WK Kellogg Co and their technology landscape, and do the same for Kellanova, keep Kellanova intact."
With EY as a migration partner, Kellogg identified Microsoft and SAP as the two vendors to rely on for major applications and processes; the company was already using solutions from the two companies.
"With those two big decisions made, it was a great framework," said Salmon. The question then became "if SAP can deliver something or Microsoft can deliver something, why is it we're not going to use one of those two solutions? That's really liberating."
Before it can reap expected growth benefits from the split, Kellogg will have to cover some associated costs.
The company expects to incur in roughly $300 million in costs associated with the corporate move, a combination of consulting, advisors, fees and “some capital expenditure to realign the supply chain to get IT systems up and running for the new cereal company,” Kellogg CFO Amit Banati said in February during the company's Q4 2022 earnings call.
And while large modernization projects can deliver big potential upside, disruption is part of the deal.
Kellogg operates predominantly in the cloud today, which will bring synergies and challenges as the spinoff unfolds, according to Salmon. "Our advantage is part of the challenge because we're a very integrated global company," she said.
The company is also planning for the unexpected as it embarks on the corporate transformation. Salmon met with the company's global IT leadership in the U.S. last month and intently looked for disruption blindspots.
"We did a little bit of a risk brainstorm: let's think of everything that could possibly go wrong. Have we already thought about it? How can we mitigate it?" she said.
