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One of the most exciting things happening on SDN lately is the The Power, Agility, and Speed of a Community initiative. This was mainly driven by Dan and Ed from Colgate-Palmolive. When I heard that Ed Toben their CIO would present their experiences with SAP at Labs I had to check it out.  image Colgate (I think they should drop the Palmolive no one can pronounce it anyway 🙂 has implemented SAP R/3 throughout their company 10 years ago end to end. They are also always the first ones to try out new SAP developments.   SAP is core to their improvements of their margins. Their Gross Profit Margin is now 55%, 5% over the industry average.   Not only that, but he said that SAP is frequently named in their quarterly report. That was something that I haven’t heard before, so I searched for it and here a paragraph from their annual shareholder letter from 2003:

Q. How is Colgate benefiting from its use of advanced technology such as SAP? A. Bill Shanahan: New technology, such as SAP, has given Colgate a competitive advantage. We have been a leader in using SAP software to drive business efficiency and to make more information-based decisions in real time. Now we are starting to achieve savings from a second generation of applications that capitalize on SAP’s capabilities outside the supply chain, in areas such as marketing, customer service, demand forecasting, human resources and others.

Their IT infrastructure is growing 25% year over year. They focus on being leading edge, but at the same time low cost in IT.   He said that he is checking the SAP quarterly report to see whether the R&D expense has risen, because we are his extended R&D. Same thing when he is visiting any of the SAP Labs, he wants to know whether there are more employees or not. Thanks Ed, please continue to do that especially when coming to Palo Alto. Little boost to job security is always welcomed 😉  He said that SAP is the most important partnership of Colgate. It is a very good one that just had it’s 10 year anniversary. One of the reasons why it is so good is the consistency of the players. The management team is more or less the same on both sides.   In the last 4 years Colgate has done reference calls with over 1000 SAP prospects. I was wondering why, but the reason is that he wants SAP to succeed. Although I never saw it from that perspective, it makes sens that you want your most strategic partner to be a winner. Our success is part of their future success.   Some suggestions from him to us at Labs, and I think that should be general guiding principles for developers:    If you have the choice between additional functionality or simplicity, choose simplicity.   Be release dependable, in timing as well as functionality. Example if they are going live in January they have worldwide training lined up also to sell the release to their constituency. If the date slips, it just doesn’t look good.   Ease of use needs to get to the level of Google. They are planning to dramatically increase in utilization of our products and usability is key to success.   Be willing to take risks, the business accepts some bumps in the road for the advantage of being ahead of the pack.   Two more things were striking to me. The power and benefits of an SAP solution really comes to shine once you have it implemented end to end. It takes some time, but I remember form my consulting days how great it was once all the pieces were in place and you had transparency to do product costing and run the actual results against it, some with profitability on a product or even batch level. Ed said that BW is giving them a daily sales report. Your ability to fine-tune your approach with that kind of transparency is amazing.   He also said that all the CIOs of consumer product corporations know each other and they talk and two years ago Pepsico joined as the last one of them now also running SAP. Wow.   Thank you Ed for taking time out to address us developers at Labs. 

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