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Pandora embarks on SAP S/4HANA Cloud digital transformation

When its ERP system became outdated, Pandora chose S/4HANA Cloud for its business process transformation. The new system is expected to unify data and improve customer experience.

Jewelry manufacturer and retailer Pandora is planning to improve its customer experience by using an SAP S/4HANA Cloud digital transformation.

SAP S/4HANA Cloud will serve as the digital core of Pandora's revamped ERP system, which will enable the redesign of the company's business processes to be standardized, simpler to manage and more connected.

Founded in Copenhagen, Denmark, in 1982, Pandora has grown from a single store to one of the world's largest jewelry brands. The company employs 32,000 people and operates manufacturing facilities in Thailand and retail stores around the world, as well as an e-commerce channel.

Pandora runs the business on a fragmented ERP landscape of five systems, mostly Microsoft Dynamics AX, which has become antiquated and was unsupported as of July 2022, according to Suzan van Dijk, senior vice president of global business services at Pandora.

To meet modern requirements for system capacity and evolving business requirements, a new ERP system was needed, and Pandora selected SAP S/4HANA Cloud.

"We saw the choice of S/HANA Cloud not only as a badly needed technical upgrade from the ERP landscape we were on, but it's also a great opportunity to simplify our business -- to look at our processes, to make sure that we take best practices from out of the box, and use the processes to simplify how we work and be more efficient in the behind-the-scenes," she said.

Pandora is primarily focused on delivering an omnichannel experience for its consumers, where they have up-to-date inventory information and connections between e-commerce and retail platforms, van Dijk said. This is difficult with the company's current ERP systems, a mix of on-premises and cloud, because data about the inventory is not easily connected to a consumer-facing UI. The Pandora team wanted to move to a fully cloud-based system.

The company is intent on forging personalized relationships with its customers.

"This means that our store managers and staff need to have the right tools to be able to locate a product or spend their time on [serving] consumers, not on things like [system] administration," she said.

In 2021, Pandora considered ERP products from SAP, Oracle and Microsoft, and SAP's S/4HANA Cloud emerged as the best system to realize its business process transformation goals, van Dijk said.

Pandora, working with Accenture for selection and implementation, chose Rise with SAP -- a then-new initiative to foster SAP S/4HANA Cloud implementations -- to get to the cloud. Rise with SAP offers S/4HANA in a private cloud, or in a public cloud where customers can select either Microsoft Azure, AWS or Google Cloud Platform as the underlying hyperscaler. The program also offers options for other SAP platforms including SAP Business Technology Platform, SAP Business Network and SAP Signavio, a business process mining tool.

Pandora is using Rise with SAP S/4HANA Cloud private edition.

Process redesign plans

The implementation project began with a blueprint design process to examine current business processes and determine how they will be redesigned or eliminated to take advantage of S/4HANA Cloud's standard modules and capabilities, van Dijk said.

In the design phase, we are looking at what our pain points are, what S/4HANA offers and how that matches up with our pain points.
Suzan van DijkSenior vice president of global business services, Pandora

The blueprint is organized based on end-to-end processes such as order-to-invoice, invoice-to-cash, plan-to-produce, procure-to-pay and record-to-report, and making sure any organizational silos are eliminated.

"In the design phase, we are looking at what our pain points are, what S/4HANA offers and how that matches up with our pain points," van Dijk said. "It's about how we can best utilize S/4HANA to deliver on the standardization of the processes whilst delivering our requirements, because we need to produce and sell as well."

The implementation team has worked with Accenture to map as-is processes and is planning to use SAP Signavio to document and analyze all business processes, she said. They are looking to find where there's connectivity between systems and how these processes can be simplified through S/4HANA Cloud's standard processes.

"We struggle at the moment with the integrations between systems and what is or isn't possible within AX, both capacity-wise and capability-wise," van Dijk said. "It's about making sure that the processes are simple and they're mostly automated. And we were looking to make sure that we have the right level of controls embedded in the system, because otherwise you end up doing a lot of manual controlling, which always has the propensity for mistakes."

Focus on customer experience

Pandora is also looking to implement new processes that enable better customer experiences, she explained. This means including better data and analytics that show up-to-date inventory levels and locations.

If customers want to buy online and pick up in a store, the data has to be accurate or you risk having dissatisfied customers, van Dijk said.

That data currently exists in Pandora's ERP systems, she said, but the connections between ERP and the point-of-sale systems can require manual instructions.

"There's a lot of manual work that needs to happen now, and therefore it might happen that a customer looks online and sees that a product is in a store -- and that might not be correct," van Dijk said. "That's an experience we absolutely do not want to give our customers. The backbone of our digital transformation is all geared toward making that much smoother."

The blueprinting process is coming to an end, which will then lead into the heart of the project, including templating, building and testing, according to van Dijk. This is expected to begin in the second quarter of 2023, after which Pandora will launch three pilots -- for sales and finance, distribution, and manufacturing -- scheduled for the first quarter of 2024.

"In our business, Q4 is very important from a revenue and profitability perspective, with Black Friday and Christmas," she said. "We can't really interfere with the business at those times, so we're using that quarter to do everything we can to prepare for a pilot to go live in Q1 of 2024."

Benefits and challenges of Pandora's move to SAP S/4HANA Cloud.

Data, change and budget are challenges

There are a few challenges that face the implementation project -- data migration, change management and budget-busting feature creep.

Data migration is a challenge for Pandora because it's currently using various systems. There must be a proper data migration strategy to make sure the data is clean and the right data gets migrated, van Dijk said.

Pandora is not alone in this, as data migration issues have frustrated many S/4HANA migration projects.

The project is expected to be long, so keeping momentum will be difficult, as will sequencing the pilots and rollout among the various areas, she said. As the company moves from old ERP systems to S/4HANA Cloud, users will be operating on both systems -- and will need to be kept motivated and happy for the migration to be successful.

"We'll have to make sure that people can work with all the systems, and that those who are working with the new spiffy system and those who are working with not-so-nice systems are kept equally motivated to work with their systems and continue to see the light at the end of the tunnel to a different future," van Dijk said.

The biggest challenge, however, might be keeping the project's budget from spiraling upward.

"[It can be hard] when you start looking in the candy store and there's always more exciting stuff to get," she said. "For example, there may be modules that we may not have initially agreed to buy or something else that we need to do or we can bolt on, so staying to scope will be tough as well."

Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.

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