Unilever puts SAP at the captain’s table

Case study

Unilever puts SAP at the captain’s table

Unilever, the Anglo-Dutch consumer goods company, works hand in glove with SAP in “speeding up its growth”, according to senior executives at the two firms.

Unilever is one of 25 global customers with which SAP works on a “co-innovation” partnership basis, says Franck Cohen, president EMEA at SAP.

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Unilever’s [now former] CIO Willem Eelman, who transitioned from the finance function to the chief information role he held for four years, says the company has been a “long-term customer of SAP, but it had been a fragmented presence [until recent years]”.

Eelman and Cohen were speaking together at a roundtable discussion during the supplier’s recent Sapphire conference in Orlando, Florida. Eeelman is now reported to be seeking a new role that combines finance and technology.

Eeelman says the fact that there is an embedded, global and end-to-end SAP team working within Unilever with his [former] team “has been a massive positive for us”.

He adds: “It has taken away the ambiguity of who we need to talk to at SAP. It is a massive simplification. Not every key supplier is doing this.”

Unilever has 174,000 employees, is active in 190 countries, and the constituent companies that came together to form the Anglo-Dutch venture in 1929 have histories stretching back to the 19th century. “Some 57% of revenues now come from developing and emerging markets,” says Eelman. “That sets us apart, and also, 60% of our IT organisation is in India.

“We have been a long-term customer of SAP, but I couldn’t tell you since when because we were a highly fragmented organisation. Only since the late 1980s and 1990s have we become first more regional, then more global.

“We have a massive supply chain and logistics business. We estimate that two billion consumers use our products on a daily basis. We have half a billion invoice lines to our customers on an annual basis, 400 million sales order lines, 100 million purchase order lines. We need extremely reliable business software for all that. An internal metric is 'composite uptime' of 99.89% and for that, SAP is critical.”

In recent years, Unilever has consolidated its enterprise IT into four landscapes: the Americas, Europe, large parts of Asia and Africa, and the Indian sub-continent.

“Cloud, mobility and digital are all big for us, and SAP is one key partner for those,” says Eelman.

As an example of mobility, he cites India, which has 2,500 Unilever distributors serving four million shops on a bi-weekly basis, with 65,000 individuals using Unilever-provided mobile systems to perform stock-taking and other tasks.

Eelman also confirms that Unilever is exploring the use of SAP’s in-memory database and platform Hana, and has been involved with the technology for seven years.

“Hasso’s vision was always about doing things that you could not do before, operationally, with the speed offered by Hana,” he says. “Initially, Hana went more into the business intelligence side, but we kept reminding SAP about the original idea of redesigning your core business processes.

“For example, we have Hana implemented in all four of our landscapes in an augmented mode so that it replicates the primary database [a combination of Oracle and IBM] for all our financial data. In near real time, we can run our P&L [profit and loss] and it has been a big component of Unilever being able to close its books at management level in one or two days. That’s not just accelerative, but transformational.”

Eelman confirms that Unilever is to investigate running Business Suite on Hana. “We have been careful up till now because size is so massive in our industry,” he says.

Describing the fundamental business case for the Unilever board to tolerate the level of disruption that moving one of the company’s ERP landscapes onto Hana would entail, Eelman says: “The reduced cost of running SAP is part of it. But the real value lies in better and faster information, the ability to redesign core business processes so that we can take stocks out of our supply chain, have even better order fulfilment, and so on.”

Cloud computing

Cloud computing is another area Unilever is looking at. “But truly multi-tenanted, public cloud is quite a long way off for core ERP,” says Eelman. “It’s not like HR. For our core ERP, we need to know where our data is. I can’t go to a board [like Unilever’s] and say 'I don’t know where the data that runs our business is'.

“Unilever will go to public cloud where it makes sense and is doing that today with HR, and it is a big user of Amazon Web Services for marketing.”

Eelman adds: “My dream scenario is one where my SAP solutions are managed by experts and kept up to date all the time in a hosted environment, which is well managed and secure.”

Franck Cohen, who is on the SAP side of this long-term partnership, says it is one of a number of such partnerships. Ericsson, BMW, Mercedes, Nestlé and Danone have similar long-term relationships with SAP in which both parties endeavour to “co-innovate”, and where SAP has a seat at the captain’s table when a company is thrashing out its strategy.

“I believe most companies realise that to address new technology challenges and opportunities, such as cloud or big data, they need a strong partner,” says Cohen. “So they are more willing to do that in a co-innovative, partnership way because they do not have all the elements, and neither do we. We have the technology, but not the same understanding of their business issues. So they are willing to take a less tactical, more strategic approach, at least with some of their suppliers.

“If you ask [such large customers] if they think Hana will be a major part of their IT landscape, the vast majority say ‘yes’. They are not questioning the value of Hana, it is a question of timing. It is a matter of time.”


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This was first published in June 2014

 

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