Customer Spotlight: McKee Foods – Traditional Companies Embrace Innovation

There’s a bit of age discrimination going on with enterprise software, and it’s based on the assumption that older, tradition-bound companies view SaaS with a gimlet eye. Older companies, with all their legacy and cultural issues—the assumption goes—have left the SaaS party up to the young companies selling this newfangled stuff to other young companies with little or no established IT infrastructure.

But it just ain’t so. Consider Workday, a provider of software-as-a-service for human resources, financials, and other business functions, which celebrated its 5^th birthday this year. Workday is still a young company, but many of its best customers—those that have been with Workday since the beginning—are traditional companies that came to realize the old way isn’t always the best way.

Workday customer No. 7, McKee Foods, is as traditional as they get. Tennessee-based McKee Foods is best known for its Little Debbie snack cakes—those boxes of Nutty Bars, Honey Buns, and Oatmeal Creme Pies bearing the company logo of a sweet pixie-faced cowgirl.

Founder O.D. McKee began selling baked goods out of his truck in the ’30s, created the Little Debbie brand using his granddaughter’s image in the ’60s, and made sure his $1 billion-a-year company stayed under family management before he passed away in 1995. Why, even granddaughter Debbie grew up to become an executive VP with the company.

Private, family-owned, steeped in 76 years of Americana. How can a company be more traditional, more rooted in its own culture?  Yet in 2006, McKee Foods became one of the first companies to choose Workday HCM, and also worked closely with Workday to develop a payroll offering to be valued by companies both young and old. A little over a year ago, McKee Foods went live with Workday HCM and Payroll for nearly 6,500 employees in several plants across the U.S.

Why?  Because McKee Foods believed the status quo for dealing with an aging ERP system—which is to install new, onsite HR and payroll software—was not the best answer.

Mark Newsome, McKee Foods’ senior corporate HR manager, says it’s been a “fun and exciting ride” with Workday these past several years, while also providing “tremendous ROI” for the company. McKee Foods had finally jumped off the merry-go-round of patching, fixing, and upgrading a 14-year-old HR and payroll system that, while once state-of-the-art, had become a raggedy and cumbersome problem, “modernized” through the years with the addition of paper-based processes and occasional bolt-ons of code.

To solve this problem, McKee Foods’ IT and HR departments reflected on the company’s business philosophy, proudly displayed at its Web site. In addition to things like “personal responsibility” and “business integrity,” McKee Foods considers “innovation” as one of its five key principles.

McKee Foods’ focus on innovation, particularly in technology, has helped it retain leadership in the snack cake industry for decades, says Newsome. Automating more and more processes, in both production and IT, is a constant goal, he adds.

Indeed, other companies of a certain age might benefit from shaking up their corporate cultures with new approaches to business technology. Eric Berridge, CEO of Blue Ridge, a services firm specializing in SaaS, emphasized this point in a recent interview with SaaS blogger Phil Wainewright. Berridge told Wainwright his firm sees “a lot of what I’ll call old-school organizations using SaaS as the catalyst to actually promote organizational change in their own companies. So we see manufacturers that will all of a sudden use SaaS to leapfrog their competition from a cultural perspective, because it promotes this notion of experimentation, and it promotes this notion of what we call agile business transformation,” Berridge said.

As for McKee Foods, it has learned some new tricks through its relationship with Workday. McKee Foods spent months testing interfaces that integrated Workday with other onsite applications. In the process, its IT staff had to learn XML technology from scratch to do those integrations. That learned knowledge, of course, will pay off for future Web-based integrations.

Learning about data security in the cloud also proved valuable. McKee Foods conducted a “rigorous review” of Workday and its data centers, which included asking specific questions about Workday’s own staffing procedures for developers, how Workday tests its systems and does patches, and who has the keys for encrypted data. It reviewed Workday’s SAS 70 certification, now a widely accepted standard for determining whether a SaaS vendor has the controls in place to properly manage sensitive data.  And, it took a deep dive into understanding Workday’s own technology infrastructure.

“We came away with the realization that Workday can host the data in a more secure way than we can internally, primarily because their entire data structure is encrypted,” says Floyd Walterhouse, McKee Foods’ group manager of HR information systems.

The food company has also dived into some of the new business intelligence capabilities of the recently released Workday 10. Within five days of going live on the update, Newsome called his HR Business Systems Manager with a request for an analysis of compensation across various branches. It took about five minutes to create the report. “That would’ve been difficult to do in another system, or in Workday previous to update 10,” says Walterhouse.  Newsome says his mind is now alive with other HR trends he can study across the organization.

BI in HR? That’s not old-school thinking. So let’s just say no to age discrimination in the world of enterprise software. Old companies can learn new tricks—especially if they count “innovation” as one of their guiding principles.