Davey Tree Flipbooks

117 116 Growth Rings In fact, the new software was already responsible for more than $6 million in losses, according to the 1999 annual report. ose losses included Residential/Commercial work that had been performed but never entered into the new software system and, therefore, never billed. Troubles continued the following year, as glitches in the new software cut into utility profits. rough the first quarter of 2000 the software proved unable to accurately capture direct labor hours. In all Davey operations, but particularly utility, pricing and bids were constructed on a per-hour basis using cost per-hour and production per-hour assumptions. Revenues suffered yet again, and Utility services reported its first loss year in modern history. At Davey, reporting financial losses in the annual SEC filings was simply unacceptable and unheard of. By the second quarter of 2000, all critical information systems were functioning, and most sales, labor and hours data were being reported accurately and timely. But the damage had been done to the company's two core service lines. Although impossi- ble to say with certainty, these issues were quite possibly inevitable, as Davey's former processing system was largely paper-based with little automation and a patchwork of software programs. It would have been incapable of handling the exponential growth the company was experiencing. e software conversion debacle coincided with the election of Karl Warnke to president and chief operating officer by the Davey board of directors in 1999. In his new role, Warnke was responsible for all the company's operations and support services, including safety, equipment, and the technical resources. Warnke reported to chairman and CEO Doug Cowan. "It was painful to watch the company slip backwards when you know that all business fundamentals were still intact," Warnke recalled in a 2003 interview. "Operations were solid as concerned sales, production, cost management and, impor- tantly, leadership." Warnke noted that support services such as equipment, safety, purchasing, human resources, billing, accounting, and financial reporting all were staffed with competent people who, just weeks prior, had been performing normally. However, "the software wasn't ready to handle a service-oriented organization, as it had previously been applied primarily in the manufacturing world," Warnke said. "Ultimately, we made a wise decision not to go public and remain employee-owned. Had Davey been publicly traded at that time, in all probability, our stock price would have tumbled rapidly, setting off a chain of events that could have really crippled the company." In the 1999 and 2000 annual reports, company management credited Davey employees with seeing the company through the disastrous software rollout. When the software failed to function properly, employees briefly returned to pencils, paper, and other rudimentary methods to track and calculate billing, payroll and other crit- ical financial operations. In residential operations in particular, ingrained practices of retaining paper copies of billing statements – the kind of redundancy the new software was designed to eliminate – ironically served to help bail the company out, as these paper copies would correct some of the billing problems. e residential services group, including Patti Shanley, with assistance from Nicholas Succic and Davey's treasury team, conducted an exhaustive audit and were able to recover nearly $1 million of what otherwise would have been lost revenue. "Our people have now mastered [the software's] complexity and rigidity and are now beginning to exploit its true potential. It should be a wonderful resource for the Davey Company in the future, but the tragedy of this experience is that it has taken us nearly two years to get to the point that we thought we would be at the day we converted," Cowan wrote. "[e years] 1999 and 2000 are now behind us and this will be […] the last time we attribute poor performance to a 'metal box.'" e conversion issues, ultimately, boiled down to administrative processes hampered greatly by the complex, state-of-the-art software that required more train- ing and pretesting than the system architects, third-party implementation team, or the company ever realized. Dave Adante, then executive vice president, CFO and secretary-treasurer, was determined to right the ship and minimize the damage. "If the company was going to step up to greater levels of growth, we had to overhaul our entire information technology department," Adante said. Executive management developed a strategy to correct the many problems and normalize the company's costly new initiative. Part of that strategy included the newly created Systems and Process team, which served as an intermediary for the company and the information technology team working to get the SAP software operating properly. Management challenged the team to take the old business processes and make them work with the new software. In 2000, Pat Covey took over management of the Systems and Process team. Covey had worked as part of the original SAP software project team, which was learning the new system and relying on past methods to prop it up until it could be fully put into place. "A lot of people in the field stepped up to make SAP work," Covey recalled in a 2018 interview. "It took a lot of dedicated people. Strong friendships evolved out of that project. When you work together through challenging times it tends to unite people. e mindset was that, if we could survive this, we could survive anything." Covey said one of the important lessons learned from the SAP implementation was that the company needed to incorporate feedback from all levels of employees involved with installing and using any new software or technology. He would spend the next few years smoothing out the wrinkles in the SAP conversion before being promoted to vice president of southern utility operations in 2003. Chapter 7 In 2000, Davey introduced a new piece of equipment, the scissors aerial, into operations. e specially designed unit improved crew efficiency with its ability to lift crews 75 feet into the air. Previously, typical aerial units offered roughly 55 feet of elevation. e unit was introduced at Davey on the Duke Energy account. Here, a crew employs the new apparatus in Greenville, South Carolina.

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