As Europe’s largest economy, and as a world leader in manufacturing, Germany is an important market for Johnson Controls. To succeed in Germany, Johnson Controls has set about transforming its business processes and technology. Head of IT Alexander Schell is leading the technology change.
Germany has set itself the target of becoming greenhouse gas neutral by 2045, and its Climate Action Act has set a binding undertaking to reduce greenhouse gas emissions by 55% by 2030. A big task for a country where manufacturing accounts for 26% of gross domestic product (GDP). That target is a market opportunity for Johnson Controls, whose technologies and services are already helping thousands of organizations reduce their carbon footprint and energy usage through smart buildings, increase automation and manage renewable energy. Schell says:
Johnson Controls is very well known in the US with a strong market share. Germany on the other hand is a key growth market, and there is a great deal of potential.
Globally, Johnson Controls is pursuing a digital transformation strategy as all markets see an increased demand for smart buildings and sustainability. One element of the digital transformation is the global adoption of the Oracle Fusion Cloud enterprise resource planning (ERP) platform, which Schell and his team will be implementing for Germany. This will consolidate the German business into a single ERP. Schell says there are a number of legacy ERP and Oracle applications across the business which will be harmonized.
Johnson Controls’ roots date back to 1883 when Warren Johnson patented an electric building temperature control device in Wisconsin, USA. Two years later, the company developed steam valves, pressure reduction valves and hydraulic compressors. The company went on to provide air conditioning for the United Nations headquarters in New York and developed the first computer for controlling the systems of a building in 1972. Along the way, the company became a leader in battery technology and, for a time, was also a manufacturer of car seats. Today, it is solely dedicated to smart buildings and has over 100,000 employees in 150 countries.
Schell says of the company:
We make buildings better places for people to live and work, and that can be in companies, schools, hospitals and even stadiums.
A modernization programme is increasing the use of automation, modern field service management tools, electronic customer processes and data. Schell says:
The company has grown through mergers and acquisitions, so we have a diverse landscape that we are now harmonizing.
ServiceMax has been implemented to improve the scheduling of maintenance teams and the time and attendance of staff. This moves the German operations off self-developed legacy applications. At the same time, together with an external supplier, e-invoicing has been introduced to comply with EU regulations that demand that public sector organizations receive electronic invoices. But this initiative also helped to increase internal efficiency and to generate operational cost savings. Schell says:
We are digitizing various paper-based processes as some parts of the business still have a lot of printing and scanning for multi-level processes. We have moved those processes onto SharePoints including electronic signature functionality for approval.
We are also looking at robotic process automation (RPA) to move time-consuming processes to some bots that will free up our employees to focus on value-adding activities.
His team is also investigating how engineering and other business tools that are in use at Johnson Controls can be harmonized across the entire company. All of this is part of what the global CIO, Diane Schwarz, calls becoming ‘digital to the core’.
To enable smart and optimized business processes, Schell is also about to modernize the technologies used by Johnson Controls. He says:
We are migrating all major services and infrastructure to the cloud to have a scalable and secure IT environment.
Alongside the decision to migrate to the cloud-based Oracle Fusion ERP, Johnson Controls has also opted for cloud solutions and providers in many other key business areas. Schell says these changes will make IT become a true business enabler.
Schell joined Johnson Controls Germany in 2021 to lead the digital transformation of the business unit and to bring his history of change programmes to the Ratingen-headquartered organization. Prior to joining Johnson Controls, Schell had led the IT transformation of apparel maker Triumph International, a Swiss headquartered firm founded in Germany and best known as the maker of bras. Schell says of the role:
We formed one global IT function out of various legacy units which needed to be transformed. We have mainly done this to position IT as a business enabler, e.g. through supporting a new go-to-market model with the appropriate IT environment, but also to provide efficient and easy to use IT services while reducing costs at the same time.
The family-owned business pursued major outsourcing for business processes, human resources (HR) and finance. Schell spent four years with Triumph, a business he joined from UK bank Lloyds Banking Group. In London, he oversaw the technology split of the divestment of the Lloyds International Financial Services division. He says:
We had to transform IT to support the implementation of a new business model. We have built a flexible, standardized IT platform to be able to administer the existing insurance portfolios very cost-effectively and to allow for an easy and quick integration of newly acquired portfolios.
So, as a business technology leader brought in to oversee major change projects, what tools does he think are most valuable?
To listen to and to onboard all major stakeholders is key for the success of every major project. If this is not the case, these large projects will not succeed.
He learned this from an early career experience at a global automotive firm. He witnessed the global outsourcing of the entire desktop infrastructure in a matrix business that didn’t have full buy-in across the business units and their CIOs. He says:
They were not on the same page, thus this project could not be completed as planned. So, the first thing is to make sure that it is understood what you want to do, that there is buy-in, and that there is the appropriate change management in place.
It is a common story of our time that customers change or increase their demands. Often the underlying technology and business processes of organizations cannot cope. As a result, many organizations are having to carry out significant change programmes while seizing the opportunity in their marketplace.
Johnson Controls is operating in such an environment in Germany. Germany is setting itself big ambitions for sustainability, and it expects to remain a leading economy in manufacturing and financial services. That means there are a lot of buildings that need to run more effectively. This is a great opportunity for Johnson Controls. To fully service the demands of this expanding market, Johnson Controls is shaping its IT to enable such business growth.