Diageo mixes with SAP and IBM on a five-year global IT modernisation

SAP and Diageo – the drinks company that makes Guinness, Smirnoff and Johnnie Walker – have announced a five-year deal that includes IBM in a bid to fundamentally change the drinks maker’s business.

The initiative is said to represent Diageo’s most significant investment ever in technology and services, and it aims to redesign and improve Diageo’s processes across 180 countries. The deal seems to mark a final burial of the hatchet between Diageo and SAP.

In February 2017, The High Court in London ruled in favour of SAP and against Diageo in an indirect licensing case concerning the drinks maker’s use of mySAP enterprise resource planning (ERP) software on a Salesforce platform.

SAP, Diageo and IBM announced the news at the same time as the European edition of SAP’s customer and partner conference, Sapphire, in Barcelona. The US version of the conference took place in Orlando last week.

In his opening keynote, SAP CEO Christian Klein (pictured above) said that SAP is changing to be more aligned to the business outcomes of its customers, as opposed to only selling them its business software.

“If we are in this together as a team, we will conquer the mountain. Being in this together with you, our customers, means for us at SAP to have deep understanding of your business in combination with our technology to boost the performance of your enterprise,” he said. 

“And this is why our vision is focused on your needs to become an intelligent and agile enterprise to build resilient supply chains, and to build a sustainable business.”

The programme involves a move to Rise with SAP S/4Hana Cloud, with the support of IBM Consulting. Rise is SAP’s name for what is billed as a business transformation-as-a-service package that puts managed cloud infrastructure and managed services into one contract.

Lavanya Chandrashekar, chief financial officer of Diageo, said in a statement: “This partnership with IBM and SAP demonstrates our continued investment in digital transformation. It will enable greater agility in how we respond to our global consumer and customer needs.

“It will provide us with world-class actionable insights and enhanced data capabilities to support growth whilst allowing us to be more efficient in our day-to-day operations.”

SAP’s Ryan Poggi, managing director of SAP UK & Ireland, said: “In today’s disruptive consumer goods industry, success lies in navigating unpredictable supply chains, managing ongoing macro-economic volatility and staying one step ahead of ever-shifting customer demands.

“Through our continued partnership with Diageo, one of the world’s leading brand builders, we’re proud to support them in building a more resilient business that is enhancing the customer experience and can adapt to rapidly changing market pressures, realising its vision to revolutionise the consumer goods industry.”

IBM Consulting, which is leading the project, is said to have experience in supporting migrations to the SAP S/4Hana Cloud. 

Rahul Kalia, managing partner of IBM Consulting, UK & Ireland, said: “The consumer goods industry is striving to address the challenges posed by inflationary pressures and supply chain disruptions, while staying focused on delivering exceptional products and services for its customers and consumers.

“IBM is proud to partner with Diageo and SAP to bring our global business and digital transformation experience on this exciting journey.”

The five-year programme is focused on four areas, with advanced workflow solutions said to allow orders to be tracked in real-time on a global scale and facilitate more effective customer engagement and better customer service; a simplification of Diageo’s technology support model and IT landscape; performance reporting capabilities; and the digitisation of controls and compliance aimed at making Diageo more robust, resilient and adaptable to changing market conditions.