Nestlé consolidates in $500m deal

Nestlé has signed a $500m (£330m) contract with IBM as part of a plan to consolidate its global IT systems into five regional...

Nestlé has signed a $500m (£330m) contract with IBM as part of a plan to consolidate its global IT systems into five regional datacentres. The company is looking for savings of $1.8bn over the next five years.

The reworking of Nestlé's IT hardware infrastructure will provide the underpinning for a common software and business process environment globally, based on mySAP.

The deal is indicative of a trend for multinational companies to bring together disparate IT systems into one whole, with common procedures and shared infrastructure, a move which provides cost savings.

Companies such as Royal Dutch Shell, Unilever and Cadbury Schweppes are among those which have announced projects to consolidate formerly disparate IT systems in the past year.

Nestlé's common IT platform will be built on a mySAP portal interface. This will give employees access to information according to their role in the organisation.

IBM is to supply servers, storage equipment and database software for the five datacentres - two in Switzerland and one each in Australia, Germany and the US.

As part of the project all product, supplier and customer data will be harmonised, with sections made available to business partners via a private exchange to facilitate real time e-procurement activity.

Nestlé has 460 factories in 84 countries and has traditionally allowed local business units independence in decision-making. It intends to retain this culture while making operational savings through the elimination of duplication in purchasing and maintenance of the common IT environment.

Manufacturing IT analyst Simon Bragg of ARC Consulting, said the move suited Nestlé's business structure. "Broadly the IT trends reflect different business strategies. If the enterprise is composed of multiple business units, which don't share common customers, suppliers or competencies, then it is best to leave business units alone, and have them make their own decisions about IT," he said.

"But if your enterprise business units share common customers and suppliers, like Nestlé, then it makes sense to integrate processes across plants.

"Such an approach probably appeals to Swiss culture - a country where everything that is not compulsory is forbidden," Bragg added.

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