Founded in Lausanne, Switzerland, in 1866, as the Anglo-Swiss Condensed Milk Company, today Nestlé is the world’s largest consumer packaged goods and retail multinational, employing more than 275,000 people. From originally providing milk and infant food products, the company now has more than 2,000 brands in 188 countries. Nestlé products include frozen and prepared foods, beverages, sweets, supplements, and pet foods.
“Nestlé has chosen Dynamics 365 as the preferred platform for agile and speedy business system requests for M&A activities.”
Denis Kapetanovic, Head of IT, Nestlé M&A
Challenges drive innovation
Maintaining the optimal mix of brands and markets is important as Nestlé strives to create value and healthy outcomes for both consumers and shareholders. Investing in the right business systems to support its goals is equally essential to the company’s success. Seeking just the right balance, the company routinely engages in mergers and acquisitions (M&A) activities.
Nestlé faced a significant challenge in selecting business applications that would provide flexibility to adapt to different business models across geographies while allowing the creation of solution configurations that could be reused multiple times. The company needed rich out-of-the box features that could be extended with low-code/no-code capabilities. While these types of extensions aren’t uncommon, the Nestlé team used them in a unique and innovative way in three types of key projects: divestitures, involving the sale of a Nestlé business or company; acquisitions, or purchasing a company or brand; and standalone buybacks, in which a Nestlé company or franchise is brought back under brand management.
The M&A and Enterprise Integrations teams regularly work on short-term projects that, while unique to one another, tend to follow predictable steps and processes. One of their strategies for successful, profitable outcomes is speed—speed to offer, speed to implement, and speed to close.
In Q3 2021, Nestlé began strategizing with its technology partner, KPMG, to develop a framework. Called “Seed”—like a seed that is planted and grows—the framework defined an approach and a technological solution for each type of transaction, which could be used in subsequent similar M&A projects.
Initial conversations centered on whether to expand the company’s Tier 1 technology landscape or create one from scratch. Since Nestlé is a power user of Microsoft products and services, Dynamics 365 was the natural choice. Its agile implementation capabilities and flexible, modular design made possible both seamless adaptation to a variety of business needs and rapid deployment. “Nestlé has chosen Dynamics 365 as the preferred platform for agile and speedy business system requests for M&A activities,” says Denis Kapetanovic, Head of IT, Nestlé M&A.
It would be ideal for the M&A and Enterprise Integrations teams’ next project: Buying back Nespresso distribution rights in the Kingdom of Saudi Arabia (KSA). Nespresso sells specialty coffee pods and machines online by subscription and in more than 700 boutiques and kiosks around the world. The buyback in KSA involved 21 retail outlets, B2B customers, e-commerce, and a call center operated by a third-party provider. The company determined that bringing this Nespresso business under brand ownership would allow the implementation of Nestlé company strategy, enhancing customer experience, driving faster growth and profitability, and generating more value over time.
The right solution was built in
The team needed to create a plan that, along with organizational changes, ensured a smooth transition of operations and business systems and limited disruption to employees and customers. Moreover, the new Dynamics 365 solution had to be compliant, secure, and respect data privacy regulations set by the regulatory administration of Saudi Arabia.
Nestlé worked with KPMG to create a strategy and blueprint for migrating business data and operations from the existing on-premises system to Dynamics 365 Finance, Supply Chain Management, and Commerce. The implementation plan included, among many other tasks, training users, installing new point-of-sale (POS) systems, and migrating data. Since speed to market is a Nestlé value and would ensure a positive experience for all parties, the project team aimed to have all systems set up, tested, and ready for production in just four months. The team also intended to retain the third-party providers for warehousing, logistics, order fulfillment, inventory replenishment, and after-sales service, and would need to integrate the systems to support these workflows.
“Nestlé faced a two-fold challenge,” says Jordi Rua Gonzalez, Senior Business Program Manager at Microsoft. “On the one hand, it had to manage the Nespresso KSA acquisition, which would allow them to serve customers directly and build relationships without compromising quality during the transition. On the other hand, there was the need to create reusable M&A playbooks that would enable faster and more efficient future acquisitions and divestitures using IT as an enabler of value.”
Under the Microsoft Unified Support agreement, Nestlé had access to a designated Customer Success Account Manager (CSAM) and Cloud Solution Architects (CSAs). CSAs specialize in Dynamics 365 customer engagement, finance, and operations apps. The CSAM provided comprehensive support throughout the implementation project, tackling technical impediments, addressing governance challenges, and serving as the primary point of contact and trusted advisors for the technology.
In September 2022, just four short months after the project kicked off, Nestlé went live with Dynamics 365 Finance, Supply Chain Management, and Commerce in KSA.
Sharing success is the best strategy
Nestlé was convinced of the capabilities of the Microsoft Cloud and Dynamics 365. With the successful buyback in KSA under its belt, the team turned to enhancing the company’s customer experience and relationship management capabilities. During the first half of 2023, with strong implementation support from KPMG, Nestlé deployed Dynamics 365 Customer Service, Field Service, real-time Marketing, enterprise contract automation with Power Platform and Dynamics 365 Sales, and advanced analytics from Power BI and Azure Data Lake.
Nespresso KSA impacts and benefits
The company realized several benefits from its first venture into building a cloud-based M&A solution on Dynamics 365:
- Leaders enjoy better accounting and supply chain reporting and insights than were possible in the past.
- Sending, sharing, and tracking products between boutiques is easier.
- All locations are now in compliance with local data privacy regulations.
- Improvements in Nespresso employee training and product knowledge have helped increase sales.
- Faster, simpler POS transactions in stores allow retail employees to focus on customers.
- Native language speakers in the customer service center resolve cases faster and generate incremental sales.
- New email marketing campaigns build brand affinity with customers.
"Thanks to built-in automations and functionalities in Dynamics 365, productivity increased in both boutiques, call center, and after-sales activities, drastically removing paperwork and allowing employees to spend more time on value-added tasks, which improved both customer service and profitability,” says Manuel Sancho, Global Acquisitions & Business Development Manager, Nespresso.
While these benefits are all important, the most noteworthy takeaway from this first project was that it provided a blueprint that could be repurposed. The team did just that. In July 2023, a similar buyback transaction in the Republic of South Africa (RSA) went live with 16 Nespresso boutiques. With engagement from KPMG and as-needed help from Microsoft Unified Support, the project reused 80 percent of the Seed framework. “Throughout the implementation of the solution in KSA and RSA, the Microsoft customer success team collaborated closely with KPMG, resulting in a highly successful project and significantly strengthened trust among Nestlé, KPMG, and Microsoft,” says Volker Breitkopf, Senior R&D Solution Architect at Microsoft.
Nestlé solutions ready-made for opportunities
Now Nestlé has proven frameworks for acquisition and divestiture projects. Like the example in Saudi Arabia, each type of business transaction has elements built into its framework that facilitate speedy and successful implementations.
For example, the Dynamics 365 “carve out” methodology will be ideal for the future sale of a business. In the case of a divestiture, the buyer is typically responsible for researching, testing, and purchasing back-end software, followed by implementation, integration, and data migration to get the newly acquired company up and running. This process can be expensive and take months to accomplish. The new Nestlé strategy involves carving out a ready-to-use instance of Dynamics 365 to run the business and transferring it, along with a specified number of licenses, to the new owner. This attractive solution means the buyer can integrate the technology into existing systems with minimal effort. It’s a value-add for Nestlé, potentially increasing the price of the deal, and a benefit for the new owner, who can begin being productive almost immediately.
"Seed is not only about deploying a new solution; it is an overall approach and mindset focusing on bringing added values to the business," says Roni Friedman, Product Group Manager—Nestlé Enterprise Transactional Template and Project Management, Nestlé IT M&A.
Nestlé expects its Seed frameworks to provide repeatable blueprints with predictable benefits for its overall business, with attractive terms, faster transactions, increased capacity, improved profitability, and enhanced brand perception.
Looking ahead for new ways to add value
The success of the RSA buyback and the integration of the existing warehouse management system have given Nestlé leaders confidence that future buyback opportunities will be as painlessly successful. They plan to add integrations between Dynamics 365 Customer Engagement and Commerce for processing marketing promotions and other store-centric activities. They also look forward to exploring innovative ways to integrate AI support from Dynamics 365 Copilot to improve productivity, gain insights, and identify new opportunities.
“Thanks to built-in automations and functionalities in Dynamics 365, productivity increased in both boutiques, call center, and after-sales activities, drastically removing paperwork and allowing employees to spend more time on value-added tasks, which improved both customer service and profitability.”
Manuel Sancho, Global Acquisitions & Business Development Manager, Nespresso
Nestle
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