Unilever's long-running relationship with SAP to extend into the cloud

SAP 'integral' to Unilever's focus on mobility and digital, even as it moves to the cloud, says outgoing CIO Willem Eelman

Unilever, the fast-moving consumer goods manufacturer, whose brands include Dove soaps, Vaseline and Slim-Fast, has had a long-standing relationship with enterprise software provider SAP. So long, in fact, that its CIO, Willem Eelman, can't give an exact date as to when the relationship began.

"I can't tell you when, because Unilever was a highly fragmented organisation with very independent operating companies right through the 50s, 60s and 70s. It was only in the 80s and 90s that we started consolidating," he told the media at a roundtable discussion that took place at SAP's Sapphire user conference in Orlando, Florida.

Hence, Unilever is probably one of SAP's first major clients.

The scale of a company such as Unilever, with half-a-billion invoice lines to its customers on an annual basis, 400 million sales order lines and 100 million purchase order lines, means that it needs extremely reliable business software and partners to ensure that everything runs smoothly.

"Internally, we use the metric of ‘compulsive uptime'; we demand 99.8 or 99.9 per cent uptime all of the time, and for that, SAP is critical because if the systems are down, factory lines stop and we can't invoice, we can't ship, business comes to a standstill, that's why SAP is so important," said Eelman.

He claimed that Unilever had undergone another consolidation programme over the past five to 10 years, and that its business is now divided into four main territories, or "landscapes": Americas, Europe, Asia and Africa, and the Indian subcontinent.

Eelman, who has been global CIO of the company for more than four years and is set to be replaced by Thomson Reuters CIO Jane Moran this month but remain at Unilever, said that the company is focusing on three areas: cloud, mobility and digital.

He added that mobility wasn't just about the company's own employees but also about providing mobility solutions to its own distributors.

"For example, in India we operate to 2,500 distributors who serve roughly four million shops on a bi-weekly basis. Over there, we have 65,000 people with mobility solutions that we provide - and these are not Unilever employees," he said.

The solutions incorporate functions such as stock taking and inventory control, and are also used by distributors in Latin America, Asia and Africa.

Ensuring SAP won't let you down

SAP is one of Unilever's "key partners" in the mobility space, said Eelman, who had said that there was an "Achilles' heel" with SAP when he started his role as CIO.

"It was a fantastically engineered product but its user interface hadn't kept up with modern trends and the demands that younger people were putting on the UI," he said.

He said that he was very vocal about this to SAP, urging the firm to embrace "design thinking", and improve the UI of its core products.

"We wanted to expand usage and adoption of SAP within the company, but we felt at times that it was an inhibitor of usage and adoption and this resulted in high costs for training and retraining because we had employee churn.

"The argument [from SAP] was that users love those screens, and perhaps this was true of someone who had worked five to 10 years with the same application and knew how and where to find everything," Eelman said.

Unilever has since worked with SAP to improve its UI in design workshops, being one of the first brands to trial SAP tools such as Fiori and UI5.

"We have significantly overhauled the UI together with SAP to make the product much more appealing and make it easier for our users, particularly in R&D and customer management," said Eelman.

And he is keen to ensure that Unilever has a similar impact to Apple, which also used SAP's technology to underpin its App Store.

"Apple has fused the SAP product with a significantly improved UI, and if you can do that then you're in the sweet spot of driving adoption in your business," he said.

"Apple has done a brilliant job and I hope we can get to that level as well. We strive to create really appealing apps that people would like to use for three reasons: because they work, make them more efficient and because they're easy to use," he added.

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Unilever's long-running relationship with SAP to extend into the cloud

SAP 'integral' to Unilever's focus on mobility and digital, even as it moves to the cloud, says outgoing CIO Willem Eelman

I can't believe it's not.. a transformational tool

Unilever has been involved with SAP HANA since its inception seven years ago, and was the first in its industry to test the in-memory database.

"When [SAP co-founder] Hasso [Plattner] started talking about it, he had enlisted support of a few large SAP customers because he needed the data sets to prove that HANA could work, so we made the data available to him, and saw how it worked in development. We've been really lucky," Eelman said.

He suggested that Plattner's vision was about releasing virtually unlimited computing power using memory, rather than disk, which would transform the way organisations carry out processes.

"For example, in a sales and operations process where historically we would need an overnight batch of windows just to extract data and re-tune data - this would eliminate that need," he said.

But SAP's strategy has not always aligned with Unilever's. Eelman suggested that three to four years ago HANA focused more on business intelligence, and that Unilever had to keep reminding SAP that the German company's original promise was that HANA would be a transformational tool used to redesign core business processes.

An example that Eelman alluded to in terms of redefining work processes was the use of SAP CO-PA Accelerator, which runs on SAP HANA. This helped the company to reduce its month-end financial close to within one day. As all of Unilever's financial data is replicated, it can run its ERP and profitability analysis in near real-time, said Eelman.

"Because of that, as a company, we published our full financial results this year at the earliest point in our history on 20 January, which would have been unthinkable only a few years ago. That was the transformation of processes, not just accelerating what we do, and doing things faster," he said.

But Unilever hasn't yet put all four of its business landscapes onto the in-memory database.

"It's no longer a theoretical concept. We know that it works because we've done a proof of concept where we've put one of our landscapes on a complete HANA instance already so we know it scales," Eelman said.

The first landscape has been given the go-ahead in what is a 12 to 18 month project, because it needed to be upgraded, with the others to follow.

"It is the Holy Grail to have our core landscapes in a single HANA logical database... the opportunities that become available once I have the lowest level of granular data to run processes very differently is massive as they will be speeded up. We've done it with finance, and now we want to do it with logistics and supply chain processes," he said.

He said that this wasn't something that was available with SAP just yet, but that Unilever is partnering with the software company to achieve this.

"If I had more real-time information and I can improve my demand plans accuracy by 10 per cent, I can either reduce stock levels or avoid having 'out of stock' situations with our customers, which will help with my on-shelf presence and boost my top line, or will reduce my working capital... These are very tangible benefits that we think can be unlocked through HANA," he said.

But while he acknowledged the "significant costs" associated with such a move, he said Unilever was cautious because of any potential disruption that could be caused from a "fundamental database upgrade and data migration effort".

Slimming down costs with the cloud

The company is now working on a hybrid cloud solution because it wants to maintain some footprint on-premise.

"We will go public cloud where it makes sense, for HR we are already a big user of Amazon Web Services, on core ERP we will be more careful and go hybrid," Eelman said.

"In my dream scenario, SAP solutions are managed by the experts and I'm kept up-to-date all of the time, in an environment that is well-managed or secure - I don't need to own that.

"But if I go to my board, to the audit committee and say I don't know where my data is that runs our business, and if it goes wrong we will be bankrupt, I don't think many audit committees or boards will sign-off on that today - but it's different for some of the other applications," he added.

On running SAP HANA Cloud rather than on-premise, Eelman said that he would expect a 20 to 40 per cent reduction in total cost of ownership. But this was not the reason why they ought to go ahead with moving to the cloud.

"The real business case wants to create a seamless supply chain, to eliminate wastage and drive value in the form of top-line growth. I'm really careful not to sell it internally as a cost-reduction opportunity because then I'm underselling the potential," he said.