MOD Pizza on the Risk and Rewards of Being an Early Adopter of SAP S/4HANA Cloud

When you hear the word “mod,” what comes to mind? The British Ministry of Defence? Maybe the 1960s modern art and fashion subculture that defined cool, as popularized by London’s Carnaby Street and super model and pop culture icon Twiggy?

What about pizza — as in fresh, artisan-style, super-fast, one-price-no-matter-how-many-toppings, made-on-demand, exactly-as-you want pizza?

What if the place making your pizza used pizza as a platform to also do good in the communities they serve? That’s what MOD Pizza is all about: putting people first, starting with their employees, so they’ll take care of you, and the business will take care of itself. The company calls it “Spreading MODness.”

Founded in 2008, this Seattle-based family-friendly restaurant now boasts more than 460 locations in 28 states across the U.S., locations in the United Kingdom, and more hubs to follow. What distinguishes MOD Pizza is the fact that it is also an early adopter of SAP S/4HANA Cloud, having gone live in 2017.

During a recent webinar, Stable and Profitable Growth at MOD Pizza with SAP S/4HANA Cloud, Richard Strattner, head of Product Marketing for SAP S/4HANA, had a lively conversation* with MOD Pizza Senior Enterprise Systems Analyst Ryan Muller about the benefits and pitfalls of being an early adopter.

Richard Strattner: Why SAP S/4HANA Cloud?

Ryan Muller: Before implementing SAP S/4HANA Cloud, MOD Pizza had a fair amount of decentralized systems. We were fairly siloed. All our invoices were hand coded or sent to Accounts Payable to enter manually into the system. And our store information was largely decentralized. So there really wasn’t a whole lot of central points where everything came together.

For example, on our month end period close process where we’re trying to bring all of these data sources together to try and do the financials, it was a mess. It took a lot of time to close the books and there wasn’t visibility throughout the process on how everything was connected.

We needed SAP S/4HANA Cloud to bring those things together so that we weren’t depending on a Tim or a Sally to do all of the AP invoices by a certain date. We were opening two new stores a week, so that becomes unsustainable at some point with the amount of invoices that we would be dealing with and the processing times required. SAP S/4HANA Cloud gave us a way to pull data in and aggregate all that data to connect.

RS: And what happened after you went live?

RM: We started getting the tools that allowed us to upload invoices and put them into the system faster. We got direct hooks for our revenues through APIs connecting out into our point of sale system. We started getting better visibility into what our business was doing on a day to day basis. Basically, it pivoted how our organization was structured and what the day to day activities of individuals would be from data entry to data analysis in some way.

I’m not going to lie. We still do a fair amount of manual processing. But getting out of that slope and onto that plateau of productivity is how we continue to work with SAP. Whereas we were previously scrambling to get stuff done, we’re now looking for further opportunities to optimize our business. SAP S/4HANA Cloud has given us a stable foundation in now we can build up.

We’ve added about 200 stores since the time we went live with SAP S/4HANA Cloud — an increase of 40 percent — and the system doesn’t run any slower than it did when we implemented two years ago. In fact, I’d say it’s faster.

RS:  Can you elaborate more about your SAP S/4HANA Cloud experience as an early adopter?

RM: So, we went live in September 2017, and I think we were one of the first in North America to be productive. To be blunt, the SAP S/4HANA Cloud system looks completely different in a lot of ways today than it did two years ago, which is a cool thing.

I’d say we took our lumps for going live early. But at the same time, we got to bend SAP’s ear a little and help build out the product. So, there are things that I can point at today that exist in the system that you can say that is because of us. That’s because we raised it to SAP and they built it out into the products and made a better product out of it. That’s a really powerful story for MOD.

If I were implementing SAP S/4HANA Cloud today, the amount of tools and things that are there to support you and the capability of the system itself, you’re in a way better position. That’s our experience.

RS: Now, where there are a lot more tools and elements of functionality being added to SAP S/4HANA Cloud, has there been a downside to that for MOD Pizza as an early adopter?

RM: From a system stability standpoint, the actual system being up and running, it is our most stable system by far. We’ve had very few down times and they’ve been very small. As for the product itself, it is in a mature place where it isn’t disruptive during any changes from quarter to quarter.

But, there are still areas within the product where SAP is really trying to add a lot more features. You’ll get additional bells and whistles which can make it easier for a user to do something, and you can see that process jump over the four quarterly releases as the functionality first gets delivered and then it gets enhanced every single release from there.

So, from a user standpoint, it sometimes is a little frustrating to be that first release and you have to be willing to sit in for the release cycle and understand, okay, I’m, getting this functionality and they’re just going to make it better from there. I think that’s something that our users have had to adapt to a little bit because everybody wants an easy button. Everybody wants that full functionality now. So, having to get an appreciation of cloud release is, yes, it takes a different skill. It takes a little bit of adaptation.

RS: What’s your understanding behind the rationale for MOD Pizza to be an early adopter?

RM: The economics were right for what we wanted to accomplish. We like partnering with SAP. We wanted to be a part of any new product that is being developed. I think a lot of the decision making to go live as an early adopter is based on how much risk you’re willing to accept. We’re also willing to be more innovative; we know we’re going to take some lumps, but I think in this situation, we thought the payout from a partnership standpoint and being able to get more help, get more product, say, being in the gate earlier would be beneficial for us in the long run. And it has been, and we can see it in the product that exists today.

RS: The luxury that we have, to a certain extent, on the SAP side is because of people like you. We’re moving out of that early adopter phase for SAP S/4HANA Cloud now. With the scope of customers that have come onboard, that hurdle has been overcome by companies like MOD Pizza. So thank you for being bold!

*Portions of the interview text have been edited for brevity and clarity.