Henkel steps up investment in digital business and IT

Henkel chief executive officer Carsten Knobel recently said it will be stepping up its growth investments in advertising, digital and IT by €350 million in 2020 compared to the base year 2018. This equals a year-over-year increase of about €200 million.
Henkel digital transformation
IT services company Atos is Henkel’s partner for managing their servers for applications as well as management and support for Oracle and SAP databases, Storage & Backup, Operations for Application Data, as well as Active Directory, File- and Print servers in remote locations.

Henkel will invest in digital talent, especially data scientists and engineers with capabilities and deep technological industry expertise. It has established a new CDIO position at the end of the last year, which will combine the digital and the IT teams across Henkel.

Michael Nilles joined Henkel as chief digital and information officer (CDIO) on October 1, 2019 — responsible for the combined activities in Integrated Business Solutions (IBS) and digital technologies.

Rahmyn Kress, the earlier chief digital officer, focuses on the growth and expansion of the Henkel X platform. Joachim Jaeckle recently retired as the CIO of Henkel.

Michael Nilles (46) has experience in digital transformations for global corporations. He has transformed core industrial businesses and developed new digital business models. Prior to joining Henkel, he was chief digital officer and chief information officer for Schindler Group and CEO of Schindler Digital Business AG.

Henkel’s digital business

Henkel’s digital business will have two pillars. Business technology will drive efficiency across value chain through optimizing business processes and IT systems. Henkel digital will accelerate through hubs in Berlin, Silicon Valley in Asia, digital innovation hotspots with the access to digital talent pools.

Digital will be a core competence with strengthened internal capabilities in software, in data and in analytics, dedicated efforts into new business building ideas for additional revenue streams, with digital ecosystem with strategic partnerships on top.

Henkel expects to spend €700 million to €800 million towards Capex. The ratio of Capex to sales ratio will be 3-4 percent.

“We see a big potential in digital, we have a good foundation, we can build on our ERP harmonization, we have a chat service organization, and we have strong progress made in Industry 4.0 activities. However, our digital function is not lined up to be a real strategic differentiator yet. We have to transform here further,” Carsten Knobel said.

“We must leverage data and analytics capability to opening up new growth opportunities. We have to drive a holistic approach with adequate digital in-house expertise to respond to new market realities, and we have to seek new digital business models. We have to increase efficiency to manage the digital cost trap,” Carsten Knobel said.

Henkel aims to transform digital into a customer and consumer value creator. “We need to shift from digital as a function to digital as an integral business driver. We are overhauling our digital setup, our key priorities to leverage digital, to boost revenue streams, to drive end-to-end customer-centric digitalization in industrial, to generate new business and to drive efficiency and speed,” Carsten Knobel said.

Henkel will scale up IoT projects and step up direct-to-consumer channels. Henkel acquired the majority stake in a personalized hair color B2C platform called eSalon, which gives insights on portfolio and media.

Schwarzkopf CRM allows Henkel to engage with consumers, build relationship and provide tailored content and hair solutions.

Henkel started to step up e-innovations and recently launched a pilot with Persil Power Bars sold via online marketplace. A dedicated agility team launched the Super Compact product with a new plastic free packaging solution in less than 6 months from idea to shelf.

End-to-end customer-centric digitalization industrial will further enhance customer value creation strategy. Henkel aspires to digitize customer experience across all touch points. It started the rollout of a fully integrated CRM with a new user-friendly web presence in more than 50 countries and launched data-driven marketplaces for specific verticals.

Henkel said it will further pursue end-to-end data integration. This will enable Henkel, for instance, to create artificial intelligence driven, innovative and especially customized solutions and significantly strengthen competitive advantage.

Rajani Baburajan

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