What Transformation Leads Can Learn From Revlon’s Failed SAP Integration

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Learn about the major missteps that contributed to Revlon's failed SAP integration and how other companies can learn from their mistakes.
July 30, 2024
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At Hakkoda, we talk a lot about the analytics and forecasting capabilities that become possible when enterprises take the right approach to ERP modernization and unify their data ecosystems in Snowflake. We also love to highlight the returns our clients have seen on their SAP investments with success stories that tie these integrated analytics directly to downstream business outcomes.

But the harmful effects of the wrong approach can be just as informative to enterprises as they weigh the risk and the reward of migration and modernization projects. To that end, the Revlon shareholder revolt is perhaps the best-known example of the potential consequences of inadequate ERP system integration.

In this blog, we’ll walk through what went wrong for Revlon’s leadership and how Hakkoda’s approach to SAP migration and modernization projects

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The Downstream Impact of a Poor SAP Integration

In 2018, Revlon intended to modernize its operations with an SAP integration. Unfortunately, the results of their poorly managed transformation project were of another order entirely—ranging from operational disruptions, to devalued stocks, to legal embroilments and lasting reputational damage for the company’s executive leadership.

A survey of the fallout at Revlon underlines several critical aspects of SAP integration:

  • Operational Disruption: As the new ERP system went live, Revlon encountered immediate problems with its supply chain analytics. The inability to integrate historical data effectively with the new system meant that Revlon struggled to track inventory accurately. This lack of visibility led to a misalignment between material needs and production schedules. Orders could not be filled, leading to product shortages and unmet customer demands.
  • Financial Repercussions: The operational disruptions had direct financial implications. Revlon reported a significant loss in sales due to the inability to fulfill orders promptly. This situation was further exacerbated by the expenses incurred in trying to rectify the issues, including additional costs related to overtime work and expedited shipping to try and meet customer needs.
  • A Decline in Stock Value: The operational challenges and financial losses did not go unnoticed by the market. As the extent of the problems became apparent, Revlon’s stock price suffered. The decline in stock value was a direct reflection of eroded investor confidence in the company’s ability to manage its operations efficiently and profitably.
  • Damage to Brand Reputation: Beyond the immediate financial and operational impacts, Revlon’s ERP challenges damaged its reputation. Customers faced with product shortages and delays might turn to competitors, leading to a potential long-term loss of market share.
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What the Revlon Story Teaches Us About ERP Modernization

For Revlon, these preventable missteps were an expensive lesson in how not to approach an analytics integration project. For other companies contemplating ERP system upgrades such as SAP S/4HANA, the Revlon story looks more like a cautionary tale. Several key lessons can be drawn from their experience:

  • Thorough Planning and Testing: It is crucial for companies to invest adequate time in planning and testing new ERP systems before going live. This includes ensuring that data from old systems can be effectively integrated into the new system without loss of functionality or integrity.
  • Stakeholder Involvement: Successful ERP integrations require the involvement of stakeholders from various parts of the organization. Input from these stakeholders can help identify potential problem areas early in the analytics.
  • Change Management: Effective change management strategies are critical to helping staff transition to new systems. Training and support can mitigate the transition’s impact, ensuring that employees are capable and confident in using the new system.
  • Contingency Planning: Finally, having a robust contingency plan in place is essential. This plan should outline steps to be taken in case significant issues arise during the integration, including how to maintain operations with minimal disruption.


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Rethinking SAP Integration with Hakkōda

While calamities on the scale of what happened at Revlon are mostly few and far between, they offer enterprises still on the brink of ERP modernization an opportunity to plan for the worst. The Revlon story speaks, of course, to the importance of robust system testing and contingency planning, but it also underscores the importance of bringing in stakeholders from across the organization and beyond to minimize disruptions and foster a culture of transparency, confidence, and trust.

Hakkoda’s SAP offering was built with that blend of meticulousness and culture at its center. Our practice leadership comes from decades of ERP transformation experience as both outcome-minded stakeholders in the customer chair and innovation-driven consultants across from them. We then build on this deep expertise with data talent certified across the modern data stack, with the sole objective of helping organizations like yours leverage the best strategies and tooling while getting more out of your SAP investments in Snowflake.

Ready to unlock more powerful forecasting and enterprise-wide analytics in Snowflake? Talk to one of our SAP modernization experts today.

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