What Heineken’s CIO is brewing for better connectivity

As a 159-year-old family business, Dutch brewing company Heineken owes its longevity to a steady stream of innovation. Founded by entrepreneur Gerard Adriaan Heineken in 1864, who sought to renovate an old brewery in the center of Amsterdam, the beer company that would later bear his name has become synonymous with Dutch beer, readily recognizable from its green bottle with red star label.

Heineken owns its piece of history, too, from becoming the first brewer to introduce quality control laboratories to the first legally sold beer in the US after prohibition was revoked in 1933. Today, it owns over 300 brands, and is sold in more than 190 countries.

Yet in 2023, the brewer faces new constraints, such as an expected recession, rising barley and energy prices, and aluminum supply chain shortages. The firm must also attract younger customers amid growing competition from microbreweries, higher market prices and new attitudes to alcohol consumption.

For Heineken’s global CIO Ing Yan Ong, the journey to keep a historic beer brand relevant starts with simplifying ERP, adopting agile methodologies and rethinking customer and supplier relationships in an age of digital analytics and personalized communications.

Heineken’s ambition to become best in class with connectivity

Heineken has historically excelled at building strong connections with consumers, customers, suppliers and employees, but there’s an understanding that relationships are changing where physical and digital experiences intersect.

As part of Heineken’s 2021 EverGreen strategy to commit to future-proof the organization, adapt to market dynamics, and emerge stronger from the pandemic, there’s the objective to digitally transform the business and its relations with stakeholders. It’s this intention to become the “best-connected brewer” that’s a priority in Heineken’s digital and technology (D&T) organization, and with Ing Yan.

“Becoming the best connected brewer is making sure we strengthen the relationships with our customers, consumers, suppliers and employees in a context that’s fully digital,” he says, who reports into the CDO and was previously senior director for global information services.

Historically, the firm’s route to the consumer was sales representatives going from bar to bar selling orders through paper-based forms. Digital technologies have improved this process, allowing for online and predictive ordering, which would, in turn, offer bars insights and recommendations on what drinks were popular with customers and what other local outlets were ordering.

Such is the proliferation of digital technologies that Heineken sees it as a business in its own right, and is targeting at least €10 billion (USD$10.7 billion) of business through digital channels over the next three years. As of its Q3 2022 trading update, the company achieved €4.3 billion in digital sales value, more than two-and-a-half times against the comparable period the previous year.

Ing Yan says that platforms like SAP, Salesforce and Microsoft are powering such growth, but adds that Heineken has also tapped emerging technologies to derive better insights.

The firm’s connected brewery IoT platform, for instance, is being used for data ingestion and edge computing in breweries, enabling local teams to analyze, adjust, test and optimize production processes, with this in-turn allowing operations to leverage real-time and historical data to support the workers on the shop floor.

Meanwhile, the new AI platform AIDDA (artificial intelligence, data driven advisor, dynamic advisor) gives sales representatives better insight on pricing, stock and promotions. Ing Yan says it’s already helped detect and resolve customer churn, and improve sustainability by reducing sales travel by 30% through optimal routing. Separately, it’s been reported that Heineken has also used AI technologies to optimize the color of the beer to Heineken gold.

“It’s really shifting from a more traditional way of doing business engaging, to making sure we’re now steering the conversation [with customers] and in that way, actually helping the outlets,” says Ing Yan. “Our role is to make sure the outlets are successful, and that works back to our success as well.”

Agility in a federated organization, plus ERP modernisation

Heineken’s size presents opportunity and challenge in equal measure for a digital and technology function tasked with everything from supporting designing new smart fridges, to workshopping with the robotics team and modernising some 45 ERPs and 3,500 applications across 85 operating companies.

Agility has become critical, top-down and bottom-up. Strategically, Ing Yan says there’s board alignment with the launch of a new digital strategy, and close collaboration with his CDO, who sits on the board.

There’s also a growing emphasis on improving team performance. Heineken has embraced flexible working in teams, adopting agile methodologies and introducing two products teams for more than 80 experimentations where people can learn to apply scrum and agile ways of working.

Now proclaiming to be an agile organization, Heineken’s next endeavor is ERP harmonisation, which represents an opportunity to bring together a fragmented IT estate.

This new digital backbone consists of a lean SAP S/4HANA Core with a set of cloud-based business platforms, replacing the existing wall-to-wall ERPs across 80 of Heineken’s operating companies. This backbone, says Ing Yan, will allow the operating companies to provide seamless customer experiences, drive efficient end-to-end processes, and ensure scalability across markets.

“It will allow us to deploy new capabilities across Heineken at speed and maximize the value of data within and across the operating companies,” says Ing Yan. “In 2022, we finished the design and build phase and will pilot the digital backbone in selected [operating companies] this year, and we’ll start industrial deployment in 2024 with the intent to complete the roll-out in the next six years.”

Upskilling teams and balancing the future

Heineken’s growth does, however, require new skills and a change in business ethos. Ing Yan talks about the power of taking people on a journey, and making sure they’re future-fit for the digital age.

The Digifit learning platform, available to D&T teams and external parties, has played an important role to help colleagues understand Heineken’s new direction. Ing Yan says 28,000 training modules were completed in 2022, varying from basic principles of digital to more complex topics.

“Our role is to upskill Heineken on what digital is going to bring,” says Ing Yan. “Digifit is a basic understanding of what digital is, some of the terminology, what it’s going to be and some of the consequences. We also do multiple sessions with the upper management teams, or even regional management teams, to take them on board about how the world is going to be different. I think it helps get the support [for IT] as well.”

The future, he adds, is about balance. On the one hand, Heineken must implement the digital backbone, and navigate the considerable integration and orchestration work. But on the other, it’s approaching a complicated talent market.

“From a technology point of view, getting [the digital backbone] to work is one achievement, but then implementing it in our operating company, changing the ways of working, and changing the task and roles around it to make sure it’s fully operated—that’s huge,” he says. “The focus for me over the next 12 months is to make sure we get live with our first pilot adopters and capture learnings, because we’ll scale this across 85 markets in the next six years.”