Otto Group: Enabling a retail giant's multichannel transformation with SAP cloud modernization
About Otto Group
The Otto Group is a globally active group of retailers and retail-related service providers with around 50,000 employees and sales of 15.6 billion euros. Through 30 major company groups, it has a presence in more than 30 countries in Europe, North and South America, and Asia. With online sales of 9.9 billion euros, the Otto Group is one of the world’s largest online retailers.
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Contact usOtto Group slashed deployment times from weeks to hours, hit near-zero network latency, and enhanced its green aims by migrating SAP systems to Google Cloud.
Google Cloud results
- Boosts global competitive edge by halving SAP cloud migration time from three years to 18 months
- Supports multichannel retail strategy by enabling flexible scaling leveraging SAP-certified VMs providing 12 TB memory
- Streamlines operations and improves user experience by cutting network latency to eight milliseconds from 42
- Migration to the cloud and the associated automation options were the basis for back-sourcing system operations
- Advances sustainability mission with 100% renewable energy data center in Netherlands and optimized utilization of resources
Total cost of ownership (TCO) falls about 20% compared to previous on-premises setup
In 1949, Werner Otto launched a mail order company in Hamburg with 28 pairs of shoes sold from hand-bound catalogs. From these modest beginnings, the firm grew into global retail giant Otto Group, which includes global household names Crate & Barrel and Bon Prix. Otto Group puts its success down to always being at the forefront of innovation.
Embracing tomorrow's technologies drove Otto Group to become one of the world's biggest online retailers. It operates in more than 30 countries with ecommerce revenues of nearly 10 billion euros, and is also active outside of retail; parcel services provider Hermes is part of its operations. Now Otto Group is again reinventing itself and preparing to go to the next level in the digital transformation of the retail business. This includes online-offline shopping experiences, global ecosystem integration, and personalized consumer engagement.
"Our mission today is to become a global multichannel marketplace. To create individualized shopping experiences anywhere in the world, there's a lot of backend work nobody sees that makes it possible. Google Cloud instantly transformed our business processes with its scalability, flexibility, and seamless automation for our critical SAP systems."
—Nils Knieling, Technical Lead, Otto GroupExperience has taught Otto Group that an appealing storefront (especially a virtual one) depends on a stellar back office. To support Otto Group's multichannel transformation, its backend architecture had to offer flexibility, speed, scalability, and security for business processes. Two years ago, this meant migrating Otto Group's SAP infrastructure, the backbone of the group's internal operations, from a hosted bare-metal environment to the cloud.
After considering all major cloud providers, the company chose Google Cloud to unleash scalable, real-time business process optimization to support its ambitions for the future of global online commerce.
"Our mission today is to become a global multichannel marketplace," says Nils Knieling, Technical Lead at Otto Group. "To create individualized shopping experiences anywhere in the world, there's a lot of backend work nobody sees that makes it possible. Google Cloud instantly transformed our business processes with its scalability, flexibility, and seamless automation for our critical SAP systems."
Modernizing mission-critical processes to enable global transformation
For years, Otto Group's SAP systems lived on bare metal at a German data center. In planning its multichannel reboot, Otto Group knew its provider's physical servers were no longer sufficient to handle the massive surge in load anticipated from its fast-moving global business strategy.
Otto Group relies on SAP for everything from inventory to payroll, logistics, and business intelligence, a behind-the-scenes ecosystem that keeps the internal and end consumer happy and engaged. A hosted server failure bringing down any of these systems would have knock-on effects across operations and eventually hit the customer with delays and poorer service.
As part of its digital overhaul, Otto Group also needed to migrate its legacy SAP enterprise resource planning (ERP) system to a modernized SAP HANA database, now the gold standard ERP for large corporations. Here, the challenge was to find a cloud provider that could offer virtual machines (VMs) certified by SAP to support SAP HANA.
Otto Group asked Google Cloud and a rival cloud provider for proof of concept to migrate and upgrade SAP systems to the public cloud. Google Cloud became the outright winner when the team learned that only the Google Cloud Netherlands data center could offer virtualized certified SAP HANA instances with such scalability.
Before then, other cloud providers could only offer SAP HANA-certified instances as bare metal, leaving systems vulnerable to server failure. Google Cloud, by contrast, offered up to 12 terabytes of memory on scalable SAP HANA-certified VMs, providing critical resilience in the middle of a complex business transformation.
"In choosing Google Cloud, the clincher was superior computing power offered for SAP HANA instances," says Knieling. "The scalability of Compute Engine for VMs combined with the SAP-ready Netherlands data center to provide exactly the resilience and agility we needed to succeed in our mission."
"In the past, we were sometimes faced with a tedious and lengthy process when building new systems with many parties involved: inquiry, offer, offer acceptance, procurement, hardware setup, and installation of the system. With Google Cloud everything happens highly automated with the click of a few buttons."
—Stefan Bartschat , Senior Expert Digitalization & Tech Projects, Otto GroupTaking operational speed to the next level in a competitive global retail market
Otto Group has thrived for more than 70 years on the principle that to win in global retail, speed is of the essence. In today's ecommerce universe, that’s never been more true, with clashing titans and energetic startups hungry to disrupt the sector.
Knieling says that Google Cloud has been instrumental in boosting Otto Group's ability to optimize operational speed, starting with the execution of the retail giant's SAP cloud migration.
Otto Group originally slated three years for migration of its SAP architecture to Google Cloud. It's on track to complete the migration in 18 months, half the scheduled time frame. Otto Group puts this down to a combination of proactive support from the Google team, intuitive Google Cloud interfaces, and easy-to-follow documentation. It has already migrated nine mission-critical SAP systems to Google Cloud.
Another major speed advantage to Google Cloud is near-zero latency in ERP processes, which must be synchronized in real time around the globe. Alongside lightning-fast connections, Google Cloud also has a Dedicated Interconnect partnership with SAP, which gives SAP data centers a direct physical link to the Google network, minimizing latency.
"From network traffic of 42 milliseconds on our old hosted data center provider, Google Cloud brought latency down to eight milliseconds, thanks to its dedicated interconnect with SAP," says Stefan Bartschat, Senior Expert, Digitalization and Tech Projects, at Otto Group. "That's been a game changer. It delivers dramatic improvements in user experience for our stakeholders throughout the global ecosystem."
The Google Cloud support team showed Otto Group how to automatically set up SAP systems nearly out of the box. This ties in perfectly with Otto Group's mission to achieve greater agility through automated processes in system deployments.
The results have been significant. Otto Group can now deploy new SAP systems in any group, department, or subsidiary in hours, compared to eight to 12 weeks with its original hosted data center provider.
"In the past,” says Bartschat, “we were sometimes faced with a tedious and lengthy process when building new systems with many parties involved: inquiry, offer, offer acceptance, procurement, hardware setup, and installation of the system. With Google Cloud everything happens highly automated with the click of a few buttons."
“One of the greatest speed advantages has been winning control over SAP deployments and upgrades on Google Cloud,” says Knieling. With Otto Group's bare-metal provider, the team had to request support whenever it wanted to implement an operational change or update.
“Now it can carry out any change at the push of a button,” Knieling continues. “If an Otto Group subsidiary, department or partner has a specific request, the technical team carries it out instantly. That shrinks the time needed to launch a new SAP project from weeks to hours.”
Specific Google Cloud solutions also boost Otto Group's operational agility. Cloud Storage, for example, automatically backs up Otto Group's SAP HANA databases, yielding faster, cheaper, more resilient backups of mission-critical data. Meanwhile, the Google Cloud operations suite’s monitoring and logging solutions provides Otto Group’s real-time system hygiene, with zero configurations.
“The high degree of automation, standardization and automated scalability of running our SAP systems on Google Cloud has seen a total cost of ownership (TCO) reduction of about 20% based on 3Y-commitments for the computing resources. Google Cloud provides us with high-available SAP operations for our customers and good scalability for peak seasons.”
—Alexander Peters, VP Group IT, Otto GroupPartnering on a green vision of the future for global retail
“One of Otto Group’s priorities is to go climate neutral by 2030. And, its partnership with Google Cloud has been an ideal match of like-minded players working towards a more sustainable future,” says Knieling.
Learning that the Google data center in the Netherlands was the first to be powered 100% by renewable energy, in an overall climate neutral policy, was a key selling point in Otto Group's SAP migration to Google Cloud.
"When our leadership asked tech leaders across the global group to carry out the transition to reduce our CO² footprint," says Knieling, with a smile, "we were able to turn to them and say it’s already done."
It’s been a win-win all round. “The high degree of automation, standardization, and automated scalability of running our SAP systems on Google Cloud has seen a total cost of ownership (TCO) reduction of about 20% based on 3Y-commitments for the computing resources,” says Alexander Peters, VP Group IT at Otto Group. “Google Cloud provides us with high-available SAP operations for our customers and good scalability for peak seasons.”
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About Otto Group
The Otto Group is a globally active group of retailers and retail-related service providers with around 50,000 employees and sales of 15.6 billion euros. Through 30 major company groups, it has a presence in more than 30 countries in Europe, North and South America, and Asia. With online sales of 9.9 billion euros, the Otto Group is one of the world’s largest online retailers.