Yak hair, feathers, rubber ducks and enough buttons that if they were stacked on top of each other they would be higher than the Empire State Building in New York: Not your average annual corporate procurement list, but then the costume designers, artists, musicians and performers at Montreal’s Cirque du Soleil are in the business of delivering the extraordinary every day.
Founded in 1984 by what Charles Décarie, Cirque du Soleil’s chief operating officer, calls, “a ragtag bunch of hippies and street performers,” the company has reinvented the concept of a circus and grown into a global business with almost $1bn in annual revenues and more than 4,000 employees including about 1,300 performers.
Décarie insists that the secret to Cirque du Soleil’s success is about its relationship with the more than 12 million people who buy tickets to its shows each year.
“We decided to connect with our audience at an emotional level and try to move them,” he says, but quickly adds, “there has to be a sound management and operational foundation firmly in place if the creativity is to have any chance to grow and flourish.”
Sixteen years ago while he was a consultant at Deloitte, Décarie was asked by one of Cirque du Soleil’s early investors to evaluate SAP software and decide whether it would be a good fit for the company. “My answer was neither ‘yes’ nor ‘no’,” he says. “My answer was ‘yes’ if you want to grow.”
Cirque du Soleil acted on his recommendation and shortly after hired Décarie to oversee a company-wide rollout of SAP business suite applications.
“At that time we migrated from a wide variety of unsophisticated PC- based apps, zillions of Excel spreadsheets and three financial systems,” says Décarie, “you can imagine the fun we had integrating all of that…”
Since then he says, “SAP has reinvented the way we manage complex businesses. SAP may not be on stage everyday with our artists, but it plays an indispensable role in putting them there. It makes sense of our structure and divisions down to the last details.”
“We are in the entertainment business, not in the software business,” says Décarie, “so for that we turned to SAP for enterprise resource planning, Ariba (for procurement), SuccessFactors (for HR) and Concur for travel management, (now all SAP companies).”
Like most other companies of its size, managing complexity is a big challenge for Cirque du Soleil.
“Imagine the complexity of selling 12 million tickets each year, managing seven plus legal entities, 27 bank accounts in 26 countries, 19 currencies, $450 million in foreign exchange and $63 million in royalty payments,” Décarie says.
“Unlike traditional manufacturing, where the majority of procurements are processed through a Material Requirements Planning (MRP) system, Cirque du Soleil’s employees make requests for materials, costumes and props on an ad hoc basis, often last-minute before a show,” says Nadia Malek who is in charge of procurement at the company.
Her job involves managing about 16,000 active suppliers across the globe, many supplying elements of the 18,000 costumes and items produced by Cirque du Soleil for the performers each year at the company’s Montreal facility.
“As you can imagine, what we buy is very unique, from yak hair to feathers to rubber ducks,” she says. “You name it, we buy it.”
(FYI, the Yak hair is used on boots in the Zarkana show.)
Cirque du Soleil purchased Ariba software to help Malek manage the procurement process two years ago, but currently operates a private supplier network.
“We found that SAP and Ariba help us collaborate and manage this spend centrally even though we are extremely decentralized,” she says. “Before Ariba, we used to get emails, calls and texts about requests to buy different items, but now we are able to manage our business and respond in a more organized and timely fashion.”
This year Cirque du Soleil plans to migrate to Ariba’s Business Network comprising over 1.6 billion suppliers which it hopes will cut costs and speed up the procurement process.
Marie-Josée Guilbault, Senior Vice-President, Organization and Culture, is hoping the implementation of SuccessFactors’ cloud-based HR software a few months ago will provide similar benefits in her operations.
“We have the most complex HR structures, global challenges, and I couldn’t do my job without SuccessFactors,” she says while noting that it is still on its early days.
Aside from helping Cirque du Soleil “Run Simple,” Charles Décarie says the company could not have continued to innovate without having the foundational support of SAP. “Grow is synonymous with innovation,” he says.
That may never have been as important as it is now. In recent years, Cirque du Soleil has struggled to maintain its momentum and is looking to cloud technology to help regain its mojo.
“Now we are using leading-edge software…along the way we have learned what a business process is,” says Décarie. “I can say without any doubt that SAP has been instrumental in this transformation and I am convinced that it will continue to bring us to another level with a cloud based system.”