ABB and Celonis: The art of co-innovation

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ABB, a global technology company, is an extremely comprehensive business with a large product portfolio, over 105,000 employees in more than 100 countries and $29 billion in revenue. It’s also one of Celonis' most tenured customers and has developed a relationship that revolves around solving engineering challenges, creating a data driven process culture, mutual trust and co-innovation that helps both companies.

The relationship between the companies began shortly after Celonis was founded and process mining started to garner attention. Heymen Jansen, Group Vice President, Advanced Process Analytics at ABB, first met the three Celonis co-founders – co-CEOs Alexander Rinke and Bastian Nominacher and CTO Martin Klenk – in 2014. Jansen still refers to Celonis' leaders as the ‘Three Musketeers’.

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https://videos.celonis.com/watch/9zvZT8CBk1ydUbdTqUrccS

"At the time [2013-2016], there was a learning phase from both sides: ABB had more than 130 years’ business experience globally but didn’t have a huge number of employees working on data and analytics. And Celonis had a brand-new technology but not necessarily a large number of people with decades of business process knowledge in practice. We needed to bring these worlds together and the only way to do that is building trust, confidence, and commitment for partnering," said Jansen, who recently retired.

ABB scaled from 5 Celonis users in 2013 to 300 within two years. Jansen kicked off the global rollout in 2016, first in two of the largest divisions and then, in 2018, started a global program for process analytics across all global divisions, countries, and covering more than 40 ERP systems and other globally used applications.

Celonis Co-CEO Alexander Rinke said the ABB relationship also influenced the product roadmap. “In the early days, we needed to find people that believed in our vision years before it became mainstream,” said Rinke. “Extremely innovative and knowledgeable, ABB didn’t just quickly become one of our biggest early adopters of Celonis, their input and ideas also shaped our product suite. I probably took the train to Mannheim fifty times. Such great memories.”

Indeed, ABB has a lot of business process knowledge. Celonis supplies technology that provides data transparency at scale and the ability to simplify and standardize processes and automate them.

Also see: How ABB freed up working capital by paying on time | How ABB Kept Their System Migration on Track | ABB on sustainability: Just get started

Björn Rosengren, CEO of ABB, said in a first quarter shareholder letter that the company is expecting steady margin improvement even in a volatile market. Rosengren said the company is targeting margins of at least 15% "supported by increased efficiency as we fully incorporate the decentralized operating model and performance culture in all our divisions."

To support ABB businesses to reach those margins and continually improve, the Global Process Analytics team is relying on Celonis across multiple processes including accounts payable and accounts receivable, order management, IT service management, purchasing, inventory management, and production planning. Those efforts have already delivered value for ABB.

A few recent wins include:

For IT service management and desktop-as-a-service ABB used Celonis to reduce open returns in 2021.
ABB is building out its digital twin to target use cases such as end-to-end lead time and inventory improvement, and create transparency in the overall global footprint.
In 2021, ABB renewed a three-year contract for Celonis’ Execution Management System to move toward prescriptive analytics and process execution.
Today, ABB is operationalizing its sustainability tracking efforts and has recently used Celonis to quantify outbound shipping emissions in Finland across its Order Management process. Shipments were tracked with quantified emissions, and substantial CO2e reduction potential identified, and now preparation of a roll-out is ongoing, targeting also inbound logistics, supplier sustainability monitoring, and material emissions.

But like other Celonis customers, ABB's Jansen takes a wider view of value. Yes, there are savings in operations and efficiency gains to buffer companies against inflation, supply chain disruptions and a host of other events, but there are also cultural benefits, he said.

Redefining value

According to Jansen, Celonis has helped turbo charge the culture of continuous improvement that has developed at ABB over the last two decades. These continuous improvement principles include the following:

‘Measure waste not as a shame but as an opportunity’. ABB reports monthly on OPQ (Opportunities for Perfecting Quality) and not on COPQ (Cost of Poor Quality).
Build a continuous improvement community. In each and every ABB factory, Sales Office, Service Center, R&D Lab, there are people dedicated to improving processes, tools, behavior, and in the end, business.
Incentivize teams to rid waste from operations.

"Waste has negative wording, doesn't it? I personally see waste as an opportunity. I think that there's always an opportunity to do better than what you did yesterday or last year," said Jansen. "If you look at value only as taking cost out, then I think you have a very limited view on value. Value is also making sure that people are aware of what can be improved. Value is that people see the sense of urgency of improving things in a company. So, value for me is much bigger than only quality or cost or cash."

The approach aims to make performance and execution everyone's responsibility at ABB, said Jansen. Process improvement needs to be everyone's job since ABB has an impressive number of improvement projects running across the company.

"There are various process domains where our people are working on continuous improvement projects. These could be individual projects, which can be a local factory or in a service center, or it could be a global project where a business unit or a division wants to optimize the end-to-end supply chain to our front-end sales offices and to the end customers," said Jansen. "It can be very diverse, either bottom-up projects or top-down driven projects. But it's all basically related to improving processes."

What Celonis has supplied is the data to improve processes much faster through its EMS platform.

"There is a lot of data needed to figure out what the problem is and where it happened, and what's the root cause. And that's the domain of process mining, to take a look at the process behind a KPI," said Jansen, who added that standardization, eliminating tasks or automation are all potential solutions. "We need to give our people the right tools so that they can do their job well."

Jansen also said that creating a culture that revolves around process excellence has had a positive impact on collaboration among employees — even when they’re based in multiple countries and have never met in person. "I think that process mining is a language, a specific language,” said Jansen. It has enabled people to have data-driven conversations, which helps them work better together. “I'm a strong believer in using data to better make decisions," explained Jansen. "If you look at how process mining has evolved over time, I'm very happy to see it has evolved into process execution."

This culture of process execution can also stand the test of time. Business context is always changing, said Jansen. Today, it's inflation and supply chain shortages on raw materials and semiconductors. Before that it was COVID-19. "Market dynamics have been there since Roman times. Companies cope with changes, disruptions, etc. and there are most likely a few other surprises to come," he said. "What I've seen over the past 40 years is that the problems are more or less the same, but that the opportunities to solve them are improving."

The art of co-innovation and the road ahead

How has ABB and the Celonis partnership evolved over time? Jansen said both companies are very different today than when they started. What has remained is that there's real teamwork.

"What we have learned in terms of co-innovation, between Celonis and ABB, is that you need to work as a team. So, no barriers between supplier/customer, but really working as one team,” said Jansen. "I think co-innovation, and co-development and co-partnership are always built on trust and honesty. Be very open about any issues so that both partners can work on solutions as one team."

Jansen likens the Celonis partnership to a marriage. “You want to stick together for a long time because you love each other, but sometimes there’s turbulence, which is good since open communication and clear positions of both parties make the relationship stronger,” he said.

The roadmap ahead for ABB revolves around leveraging Celonis for sustainability as well as deploying EMS after a move to the cloud. Jansen said the migration to the cloud went smoothly thanks to ABB's Celonis Center of Excellence, but the team is working to improving loading performance. And we keep challenging Celonis, as always, to make that extra step. Not only for ABB, but also to learn from it and make improvements available for other installed base customers.

ABB could also benefit from further development of process digital twins with context, a concept being explored by Celonis Labs. "If you do process mining, then you already have a full copy of what people are doing on a day-to-day basis. That copy of the organization is already part of the digital twin. I think that the missing element of that originally was that you maybe did not always have the full context," said Jansen. "A digital twin of an organization is an intelligent system to tell people what is a specific risk in a process, and then to help them to take the right actions."

Jansen also said he plans to roll out EMS apps and ultimately change the way ABB works.

"If you talk about ABB being more prescriptive, then we are talking about EMS. I think that it's going to change the way we work from less reactive to more proactive working," said Jansen. "I expect that people are going to collaborate better. In the end, people at ABB will be happier with how they are doing their job, because they will see that they can create more value for themselves and their ABB colleagues, wherever they might be located around the world."