Consumer goods group Henkel recently agreed on the next level of its strategic partnership with SAP to accelerate its digital transformation.
Michael Nilles, chief digital and information officer (CDIO) of Henkel, and Juergen Mueller, CTO and member of the Executive Board of SAP SE, explain what the partnership involves and why the two companies are a perfect match.
Q: Henkel’s success story spans more than 145 years. Its brands, innovations, and technologies have made Henkel a leader in both the industrial and consumer goods markets. What do you hope to gain from your new alliance with SAP?
Nilles: Alongside of innovation and sustainability, digital transformation is one of the key levers on our agenda for purposeful growth. Software and technology are the driving forces of innovation. I like to quote Marc Andreessen: “Software is eating the world” — and this holds true for our industry in particular. To drive innovation effectively across the company, we need strong partnerships like this transformative strategic alliance with SAP, which will help us set the right course and ensure that we navigate in the right direction. We are therefore excited to be taking our long-standing partnership with SAP to the next level.
Q: Why does the collaboration between SAP and Henkel need a new framework?
Mueller: Henkel already runs many business-critical applications on SAP software in the cloud. It has been using SAP Business Technology Platform (SAP BTP) for a long time to build tailored solutions. The largest of the business-critical applications it runs on SAP BTP is Sales Promotions and Revenue Cloud (SPARC), a solution that massively simplifies the management of all trade promotions and is currently being rolled out globally. Then there’s RAQN, Henkel’s digital business platform for marketing and commerce, which helps Henkel to expand its e-commerce activities and create new digital business opportunities as well. Though working with Henkel is not new territory for us, this alliance is much more far reaching. It will see Henkel leverage RISE with SAP to replace its existing ERP applications with SAP S/4HANA and migrate them from its on-premise data centers to the cloud. It’s a mammoth project: Henkel wants to move to SAP S/4HANA and the in-memory database SAP HANA and migrate all its core processes to the cloud at the same time.
Nilles: That’s why the strategic partnership is so important. It goes far beyond just buying software and technology. It’s much more about collaborating on innovations and developing solutions that are tailored to Henkel’s specific business challenges. A paradigm shift of this magnitude can only be achieved by working closely together.
Q: What do you hope to gain from migrating the company’s entire digital backbone to the cloud?
Nilles: A key focus is to accelerate our growth through driving our sustainability agenda, expanding our digital channels, innovating faster, shortening time to market, and building digital business models. Increasing productivity through simplification of our business processes is top of our agenda as well.
We will also leverage the power of data and artificial intelligence (AI) and together with SAP co-innovate to infuse our business processes with these capabilities along the entire value chain. This is what our industry means by becoming “data-driven.” Added to this is the power of generative AI, which is not hype but will revolutionize every business.
Last but not least, this will play a central role in re-architecting our entire tech stack where, for example, SAP BTP is a key component for innovation.
Mueller: Yes, exactly. Henkel is already using SAP BTP as an integration and development platform. And, actually, it is now one of the biggest users of SAP BTP in Europe. Migrating to SAP S/4HANA is therefore the logical next step toward it achieving full “cloudification.”
Nilles: Especially because the homogeneous deployment model makes it considerably easier for SAP S/4HANA and SAP Business Technology Platform to interact — and for us to develop and implement innovative solutions for our industry and the ecosystem. At Henkel, we refer to this perfect symbiosis between cloud ERP and development platform as SAP “Business Technology Cloud.”
Q: How will the strategic partnership change the relationship between Henkel and SAP?
Mueller: Our relationship with Henkel has evolved rapidly over the past 18 months and is now much deeper on various levels. We want to continue on this path by working even more closely together in our strategic partnership.
Nilles: Instead of a customer-supplier relationship, which we have had until now, we will join forces for data- and software-driven co-innovation specific to Henkel’s business. Having a true partnership also allows both of us to focus our efforts on joint outcomes, rather than lengthy negotiations about individual tickets. This is vital if we want a mammoth project like this to succeed.
Q: And how does SAP benefit from this partnership?
Mueller: The strategic partnership with Henkel represents a milestone in our mission to help transform companies into intelligent enterprises. Henkel and SAP both believe that technology and innovation are the key to successful and sustainable business.
In Henkel, we see a pioneer that shares our vision of driving strategic growth and business models of the future. Because we are now working even more closely together and are transforming the organization as equal partners, SAP is gaining deep insights into Henkel’s specific needs and those of its industry. That way, we can more closely tailor our products to make it easier for the sector to adopt digital innovations.
The plan is also for Henkel to serve as a model for many other companies that are perhaps not quite so far into their transformation journey.
Q: What’s next, now that all the formalities have been completed?
Nilles: The road map has been defined and will be detailed out. However, our first priority is to ramp-up and mobilize a joint team — we call it the “Macintosh approach” — comprising the best people from SAP, from the Henkel Business and Digital unit, and from our partners.
Mueller: It’s an ambitious schedule. But given that we share the same values, have a long-standing relationship built on trust, and know each other well, I’m sure that the innovation journey with Henkel will be both exciting and successful.