As co-ops merge they often bring together agribusiness, petroleum and even retail convenience store operations under a single banner. In doing so, each co-op not only brings with it assets, inventory and staff, but also existing enterprise software that is often proprietary, sometimes aging, and designed to meet the specific needs of a smaller, simpler organization. Typically, this means that management must decide to move forward using one of the existing co-ops’ software systems — one that may be outdated and limited — or to transition to new, more comprehensive software that can unify all the disparate elements of a larger organization.
Ideally, if existing software options will not meet the needs of the new, larger entity, it should be changed prior to a merge. In doing so, the new co-op can facilitate and reduce the cost of the transition, hit the ground running on the new platform and start the return on investment right away.
Town & Country Co-op, Inc., Ashland, OH, took such an approach when it put all six companies onto Summit Software (now under its new brandname iRely). Town & Country Co-op resulted from the 2003 merger of four agricultural co-ops and two grain elevator LLCs co-owned by three of the co-ops. The four organizations served different customers in the same general area, which led to inefficiencies and higher costs.
“We were competing for the same customers and had overlapping facilities,” says Brian Amstutz, the company’s chief financial officer. “Some of the co-ops weren’t paying any patronage.”
The six merging co-ops were utilizing one of two different software packages. While all users were loyal to their current vendors, neither of the existing software packages met the expanded needs of the operation. One of them, for example, could only run on expensive proprietary hardware.
One of the biggest challenges involved with merging co-ops is that they have all been keeping data — account information, GL codes, member information and product codes — in a wide variety of generally incompatible formats. To avoid the nightmare of having to manually re-enter all data in order to achieve a common format for the unified system, iRely has developed a toolbox of utilities to automate the conversion process.
In this case, the iRely software was installed on a single server at the new headquarters for the combined co-op. One-by-one, the co-ops began the process of converting their systems over, which spanned several months. iRely sent personnel to train staff both at headquarters and at each co-op and to assist with the migration.
“The conversion and deployment process went well,” says Amstutz. “We avoided any major snafus that could have occurred if we tried to convert all six companies in one day.”
Following the successful combination of all systems and the creation of the new organization, Town & Country now has about 200 employees in seven divisions at 18 locations and close to $200 million in annual sales. The co-ops are now paying regular patronage, growing from $165,000 in 2004 to $3.53 million from operations in 2010.
Amstutz attributes part of the increase to the greater buying power of the combined membership as well as the money saved by closing redundant facilities. But there are also the efficiencies gained by using the new systems to automate formerly manual tasks such as retail inventories and grain scale operations, as well as improving customer service by accepting electronic payments and allowing customers to view their account information on line.
Amstutz believes the biggest factor in merger success was proper planning which included a thorough evaluation of software needs and then putting in place the right package before merging operations. That created a platform which could support the new, more streamlined organizational structure.
“We wanted to get the co-op off to a smooth start and changing software isn’t easy,” says Amstutz. “By getting all the conversions done in advance, working out all the bugs and getting everyone familiar with the software, there was one less thing that members or customers could blame on a merger.”