InformationWeek

That's why Nestle this month inked a contract with SAP for more than $200 million, the largest software sale in the ERP vendor's history. During the first three years of the deal, Nestle may spend an additional $80 million on consulting, maintenance, and software upgrades. Jean Claude Dispaux, Nestle's senior VP of group information systems, says that under the agreement, Nestlé will deploy mySAP.com ERP applications and enterprise portals to each of its 230,000 employees in 500 facilities in 80 countries. Rollout to the largest facilities will take about three years, with others to follow.

Top executives of the world's largest food-service company realized that to compete in E-commerce, the company had to standardize its business processes. Dispaux says the company's worldwide operations--which currently let each factory conduct business according to rules that fit the local business culture--are costly and inefficient. For example, Nestlé can't leverage its worldwide buying power for the raw materials used in its products, even though each factory uses the same global suppliers. That's because each facility negotiates its own deals and its own prices.

After the deployment, each Nestle employee will work from a browser-based start page customized to his or her job function. The links to mySAP .com applications on each employee's start page will mandate that employees do their jobs according to "best practices" defined by SAP for each given role. SAP has designed more than 300 such roles, ranging from clerical to executive. The roles mandate precise steps for executing a business process that must be followed in order every time. For example, an invoice for an order can't be referred to accounts payable until the system shows the order was received.

Dispaux says SAP's software has already cut down on theft in operations running the vendor's R/3 ERP system. Some employees in those divisions had been submitting invoices for materials that were never received. Now, he expects those benefits to multiply: "With mySAP.com, you can't go on to the next step until you complete the current step. It's an exceptionally simple way to make sure that everyone does the same job the same way."

Roles are also used to manage system security, ensuring that only employees with specific roles can access specific information. For example, sales and marketing reports might be generated only for executives and automatically displayed on only their start pages.

Dispaux calls Nestle's current technology a "mishmash": Nearly 900 IBM AS/400 computers, 15 mainframes, and 200 Unix systems run operations around the world. Many of the 100,000 PCs on employees' desktops still use Windows 3.1. About a dozen locations use versions of R/3, although some use only a few modules of the larger system. There's no corporate data center, and none of the systems is integrated with the company's main R/3 business system in Vevey, Switzerland, which aggregates production and sales figures from the company's worldwide operations. Data communication between facilities and headquarters is often handled by electronic data interchange or dial-up connections.

To make sense of the chaos, Nestle plans to create as many as five data centers around the world. Each facility will install mySAP.com financials, accounts-payable and -receivable, planning, production management, procurement, direct procurement, supply-chain, demand planning, fulfillment, and business-intelligence capabilities.

One quick benefit will be that "sales information from retailers will let us see on a global basis for the first time how effective our promotional activity is, and will enable us to decrease overstocking and spoilage caused by having products sitting around on grocery shelves," Dispaux says.

To help employees make the transition, Nestle plans to provide individualized training--one-to-one training for some, classroom training for others, and computer-based training for casual users. But while representatives from facilities in each country were involved in the decision to standardize on mySAP.com, Dispaux expects deploying the software and moving to role-based best practices will result in significant culture shock. "It won't be a nice project," he says. "But it's necessary, and we believe our leadership and our employees around the world understand that."