BERLIN — German car giant Daimler AG is embarking on a global mission to harmonize its entire supply chain, ERP, and financial systems around SAP in an effort to cut costs, remove complexity, and drive its transition to an enterprise services-oriented architecture (SOA).
In a deal announced today at SAP’s Sapphire event in Berlin, the €99 billion ($154 billion) European automaker, which separated from Chrysler last year, has signed a five-year, global enterprise agreement (GEA) with SAP that covers all software, software maintenance, strategic software development, consulting services, and support under SAP’s Maximum Attention program.
The deal is specifically designed to support Daimler’s global IT standardization and harmonization strategy and accelerate the rollout of end-to-end SAP enterprise software based on the NetWeaver technology platform.
"This agreement," said Daimler CIO Michael Gorriz, "is important to the success of our harmonization strategy and frees us to concentrate on our core business."
The GEA announcement also cites cost reduction, increased efficiency, process stability, and flexibility in production and key processes as payoffs.
"The agreement extends across the whole enterprise, from executive dashboards downwards," said SAP Global Account Director for Daimler Peter Grendel. "Basically, we end where the robots start."
Currently, Daimler has more than 120 locations around the world connected via its Daimler corporate network, with more than 4,000 different software applications supporting business processes at all stages of the value chain. Each day, the company processes more than 1.5 million e-mails and approximately 20 million Internet accesses.
Right now, there are 65,000 Daimler employees using SAP systems. The new agreement will extend the user base to 100,000.
SAP’s Grendel said the new relationship will allow Daimler more flexibility. "They do not have to look after licenses or count users. We are also setting up a dedicated SAP development team to support the whole contract, and that’s pretty unique for us."
Daimler and SAP have a long history together. An SAP customer since 1986, Daimler since 2002 has worked closely with the German software company as part of a special automotive industry software development partnership. "A lot of our developments on standardization for the auto industry have come from that," Grendel said.
This is the first GEA that SAP has signed in the automobile sector. The other 10 SAP GEAs have been predominantly in the oil and gas and consumer product fields.
The deal comes after a year of high-octane activity for Daimler’s technology division. Because the joint DaimlerChrysler entity had IT integrated worldwide, the 2007 transfer of a majority interest in the U.S. Chrysler company forced extensive changes. IT separation activities were not completed at the end of 2007, and, in some cases, Daimler decided against setting up duplicate IT systems and instead arranged long-term service agreements between Daimler and Chrysler.
On top of this, Daimler was also embarking on groundbreaking digital factory initiatives with its new Mercedes C-Class car. For the first time last year, a digital prototype of the new model logged 1 million test kilometers on computer systems.
Against this operational IT backdrop and with the split with Chrysler now in the past, Daimler CIO Gorriz is focusing on developing global stability across the entire IT infrastructure and expects the new partnership to "extend [SAP’s] importance for our IT strategy as we journey toward standardization and harmonization and also into enterprise SOA," he said.
So how much will all this cost?
SAP was reluctant to discuss the details. Fielding questions at the Sapphire event in Berlin, SAP Co-CEO Léo Apotheker would say only, "The deal is indeed huge."