In recent years, Bunzl, a global total supplier in ‘Non-Trade Goods’, has acquired more than 170 companies. Instead of consolidating all the companies’ IT environments, they retain a great deal of autonomy. Nevertheless, the application landscape also needs to move with the times.
Portrait of a unique company founded in 1854.
You probably do not know the name Bunzl. Even so, most people come into daily contact with products processed by Bunzl, as an international distributor of products needed by companies and institutions to perform their services. Bunzl purchases these products from suppliers and then ensures timely delivery to clients operating in the following sectors: healthcare, retail, hospitality, safety, hygiene and supermarkets. Examples include the bags that hold freshly baked individual bread rolls, face masks and gloves for the healthcare sector or coffee cups and serviettes for the hospitality industry. In some cases Bunzl delivers directly to larger organisations, sometimes to intermediary suppliers. The company, which has been in existence since 1854, operates in six different markets and is active in five global regions.
Bunzl Continental Europe, one of the five regions, is made up of more than 55 large and small operating companies (Opcos). These are all successful specialist companies, acquired by Bunzl in recent years. These Opcos have a high level of autonomy and their own P&L – an approach that is in Bunzl’s DNA. Even when it comes to IT strategy, these companies have a high degree of freedom. There is, for instance, a shared service centre within the Continental Europe region, which some of the Opcos use. This requires some explanation, as Bunzl has a remarkable history (see box) and strategy.
Shared service centre
Jos Hahury is Head of IT Infrastructure & Operations for Bunzl Continental Europe and responsible for the shared service centre. “When I arrived at Bunzl eight years ago, there were fifteen Opcos connected to the shared service centre. There are now 24 as a result of migrations of existing Opcos and new acquisitions. These businesses all use the same ERP system that is an essential part of the shared service centre. However, there are also quite a few Opcos that are not connected to the shared service centre and which still use their own systems. On the one hand that creates additional costs, on the other, it is precisely this decentralised, autonomous character that underlies the success of these business units. Our strength lies in the freedom of the Opcos. We also have small businesses on board – sometimes with less than ten employees – that for understandable reasons do not invest in large ERP systems and have previously mostly used smaller or customised solutions. For these smaller Opcos, it actually was interesting to connect to the shared service centre.”
Scan data fuel all types of processes
A splendid example of Bunzl’s strategy and culture is the acquisition of a small successful business in Waalwijk. Janssen Packaging, with Ben Janssen as founder and managing director, supplies packaging materials and packaging solutions, particularly to bol.com's central warehouse in Waalwijk.
The success of Janssen Packaging in Waalwijk resulted in 2015 in the acquisition by Bunzl. This has allowed the company to continue to spread its wings, but it still operates autonomously under its own name.
Nevertheless, Bunzl’s IT organisation too cannot escape issues such as digital transformation. “The world is changing. Globally, sustainability is high on Bunzl’s agenda”, Hahury explains. For example, our end-users are replacing plastics with other materials. Many clients submit orders directly to our ERP system from their own ERP system, but buyers are increasingly doing business online. We have been running webshops only for about eight years, which have emerged alongside existing EDI links. Digitalisation means our customer service teams have fewer and fewer contacts to process.”
Integration in the IT landscape
Although Bunzl therefore offers a great deal of freedom to Opcos, movements are evident in terms of IT. Bunzl wishes to continue with acquisitions in the years ahead. At existing Bunzl businesses and at many of those potential acquisition candidates, application landscapes will change in the years to come, so connecting those businesses to Bunzl’s IT landscape will be a focus area. Hahury explains: “Every year there have been one or two businesses that connected to the shared service centre. To achieve a more scalable and easily expandable ecosystem, upgrading the hardware in our own data centre was necessary. Eight years ago, we were faced with a choice: investing in a new in-house data centre ourselves or start outsourcing. The need to scale up and the urgency to invest significantly in security led to the decision to outsource, also in view of the lower TCO.”
Bunzl put out an RFP to outsource IT infrastructure. Four service providers made it to the final, with Open Line eventually coming out on top. Open Line has now been managing the hybrid cloud environment for Bunzl for several years, as the Office 365 environment is also managed by Open Line. “We entered into a technician-to-technician contract with Open Line. We therefore handle first-line support for our IT end-users ourselves. We have now created our own DevOps team, which is responsible for building the points solution ecosystem we are now setting up. That team is mainly concerned with developing and implementing integrations between the various systems.”
A scalable IT environment
“Open Line has made our IT environment scalable”, says Hahury. “Open Line also facilitates the digital workplaces of the 24 Opcos, including second and third-line support, for a total of seven countries.” The improved scalability enables Bunzl to unbundle its existing ERP system, which also runs in Open Line’s data centre. Hahury: “Two years ago, we started replacing the central ERP system of our shared service centre. That will be broken down in stages and rebuilt modularly in the cloud based on best-of-breed solutions. We are therefore working on an ecosystem of functionalities that all Opcos will soon be able to connect to as they see fit. For example, a Warehouse Management System. That is now an inextricable part of our old ERP system, but it will soon become a new separate module in the cloud.”
In other words, the services now running in Open Line's data centre will gradually move to the public cloud. “Our approach is cloud first. In practice, however, you sometimes come up against the fact that a newly intended point solution turns out to be a private cloud application, requiring additional network connections to use it.” In this respect, Open Line's and Bunzl’s pragmatic attitudes align perfectly, according to Hahury.
Fortunately, Bunzl has a relatively manageable and limited application landscape. While the 55 Opcos run 20 different ERP systems, there is a great deal of overlap in other areas, says Hahury. “Even if we were to standardise all applications of all Opcos, we might end up with three quarters of the 60 or so applications we have today. In that respect, we are not an average client and we do require a little extra attention – sometimes the 24 Opcos also have 24 opinions. Opcos do not want to be excessively involved in IT management, but this view has not yet resulted in a rigid strategy to centralise all IT. Of course, there has been a lot of standardisation at governance level, e.g. cyber security. Important in our partnership is Open Line’s acceptance of Bunzl’s strategy not to force autonomous Opcos into a strait jacket.”
The name Bunzl refers to its founder, Moritz Bunzl, who started a haberdashery business in 1854 in Bratislava, currently the capital of Slovakia. The company has relocated several times in its history and has also changed its primary business more than once, e.g. Bunzl switched its focus to manufacturing paper in 1883 from its base in Vienna. In 1938, the head office relocated to London.
Since the 1980s, the company has followed a buy-and-build strategy with more than 170 acquisitions. Over the past 20 years, however, the manufacturing operations have been hived off and the company has moved into wholesale operations and logistics in various B2B markets. The business employs 21,000 people and operates in 31 countries for 800,000 clients, making it the global market leader. Bunzl is a listed company with a turnover of approximately 10 billion euros. Dutch clients include bol.com, CitizenM, Bijenkorf, Jumbo and the Efteling theme park.