If you love a good tale of multi-tasking on major projects, Whirlpool CIO Michael Heim has a great story for you. He is overhauling an aging ERP system to improve operational efficiencies across the appliance maker’s global regions and embracing the Internet of Things to improve the quality and longevity of the company's appliances.
If that sounds familiar to your global CIOs out there it’s because such diverse projects – sometimes conducted under the banner of bimodal IT – are core ingredients of digital transformations CEOs are asking their IT leaders to shepherd through the pipeline.
Heim’s ERP project is a business software overhaul with which many global companies are familiar, but the IoT system is uncharted territory. Designed to analyze sensor data streaming from washers, dryers and other household appliances, the software could help Whirlpool design hardier machines. Heim says capturing the real-time state of products is "where the future is headed."
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Even if the evolution of smart, Internet-connected home appliances seems almost assured, its timeline remains less certain. In the meantime, Whirlpool's U.S. appliance business is booming, as new home construction and existing home sales fuel strong consumer demands for appliances. However, some markets in Europe, Latin America and Asia-Pacific remain more challenged. Whirlpool, which competes with Sweden's Electrolux and China’s Qingdao Haier, must be able to match consumer demand with crisp operational execution.
Why Whirlpool is opting for a younger model of SAP
Heim is swapping regional versions of SAP business software for SAP's newer HANA platform, running in a hybrid cloud hosted by IBM. Heim says the more global platform will enable Whirlpool to operate in a more nimble fashion, simplifying business processes and driving out complexity. That will yield an operational backbone for the next decade. Heim says the ERP is table stakes for the stability of the business. "It’s like breathing," Heim says. "Everybody gets up the morning and doesn't worry about our SAP environments running until they don’t, and as soon as you can’t breathe, its gets 100 percent of your attention."
But the ERP upgrade constitutes its own exercise in master data management. Years of cumulative customizations to allow for new regions, products and SKUs have resulted in complex data schemas. "Business process complexity embedded in your software is like cholesterol in your organization," Heim says. "Unlike wine [ERP systems] don't get better with age." His team is working to clean up duplicate and inaccurate data, a tough challenge at a time when most organizations are struggling with data-quality issues.
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One key technical advantage HANA affords Whirlpool over other systems is that its hybrid architecture enables IT to process transactions and analytics, rather than extracting data from the ERP and dumping it into a reporting database. Combining both jobs in-memory allows IT to analyze transactions in real time. This will enable Whirlpool to conduct integrated demand planning from the market all of the way back to the manufacturing facilities.
This multi-year ERP project is well underway in Europe and Latin America -- where Whirlpool took HANA live earlier this month -- and will extend to the U.S. by 2017. He says it's too soon to say what sort of insights the company is getting from HANA. "Until you get to critical mass, the analytics are going to be less important," Heim says.
Even as Whirlpool's global ERP overhaul is well down its path, Heim is also trying to derive value from the gradual, yet highly anticipated rise of connected machines. To that end, he is working closely with IBM on a predictive analytics platform that uses machine learning algorithms to optimize the performance and longevity of its appliances.
Connected appliances promise improved products
The software, which IBM hosts, pulls data from sensors built into the machines, informing Whirlpool in real-time about the state of machines in the field and consumers' usage patterns. In lab tests, Whirlpool has learned that colors fade and fabrics grow coarser for certain high-end garments in as few as five washes. Such information can help Whirlpool improve product quality, create custom wash cycles for each user and extend clothing life.
Sensor data, logging how many times a refrigerator door has been opened, can help Whirlpool learn when the hinges weaken to the point of breaking. Whirlpool may then use the information to strengthen the part in the manufacturing process. "You want to reduce maintenance and warranty costs, but most importantly you create a higher quality product and you have a happier consumer," Heim says.
Whirlpool has a lot of company in the market for using IoT to predict machine failure and enhance products or services. Some four billion connected things will be in use in the consumer sector in 2016, with the number potentially topping 13.5 billion by 2020, according to Gartner.
Yet Heim admits the adoption of connected appliance remains low, as Whirlpool and its rivals have yet to put many products in the market. For one thing, some people are reluctant to embrace new technologies in their household appliances, preferring to stick to with traditional machines. And those machines tend to last several years. "It's a long tough slog to get those connected products in the marketplace," Heim says.