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Building the soul of a new machine.

Heineken brings its breweries up to speed with a new client/server strategy based on the IBM AS/400

Holland is home to one of the world's largest brewing companies--Heineken. The $4.8 billion company operates 50 breweries around the world and sells its lager in more than 150 countries.

Like many world business organizations, Heineken realized in the late 1980s that the company would have restructure its monolithic mainframe computing environment and streamline its operations, adapting to a new age of corporate computing.

According to Rien van der Torren, chief financial officer at Heineken Nederland, an assessment of their IS environment revealed that costs on the mainframe were too high, while the quality of the aging software applications was much too low. The mainframe system, with the attached X-terminals, was old and the software applications were inflexible to the company's rapidly changing IS needs. "We had an enormous gap in price/performance," van der Torten recalls, "and we knew we wanted another computer platform." Company operations had become so widely dispersed over the years that the centralized mainframe approach to information technology had outlived its usefulness," he adds.

In order to respond more quickly to market fluctuations and demands, as well as control rapidly rising computing costs, Heineken knew it must downsize and decentralize operations. "We had to get information closer to the user, and give each department increased responsibility for operating and maintaining systems," says van der Torren.

The company, a 40-year IBM customer, decided it would scrutinize all feasible vendor offerings. After reviewing a variety of product offerings, including those from Digital Equipment Corp. and Hewlett Packard Co., Heineken executives decided on a comprehensive client/server strategy featuring the IBM Application System/400 platform as its primary computing component.

"Software availability was one of our key issues in choosing a new platform," says van der Torren, adding that the more than 1,000 applications then available for the AS/400 factored strongly in Heineken's selection process--that number has since increased to 20,000. As of today, the company is on an aggressive schedule--all company applications are scheduled to be running on the AS/400 platform and off the mainframe by 1995.

Outsizing and Downsourcing

To efficiently move large amounts of data from mainframe platforms to client/server technology is not a quick or easy proposition. To speed up its downsizing process, Heineken officials decided to temporarily outsource all of its mainframe activities to Electronic Data Systems until the new computing paradigm was up and running smoothly.

Moving the mainframe applications to EDS coincided with the arrival of the company's first AS/400 machine in early 1990. According to van der Torren, the outsourcing allowed Heineken to eliminate 50 positions in its Information Technology division, and freed up the necessary people to train the company's more than 1,000 users on the new software and hardware technology.

A number of 24-hour mission-critical applications are already running on the AS/400, including all order entry applications. Wholesalers throughout the Netherlands now use IBM PCs and compatibles, as well as terminals, to place orders directly through the AS/400 order entry application, expediting and invoicing applications. This automatically schedules the orders for truck shipments to customer sites--saving numerous paper steps over the previous mainframe and manual process.

Additionally, sales personnel stationed around the globe can now instantaneously receive order entry and management information around-the-clock, via laptop and portable PCs. For production logistics, Heineken relies on Marcam Corp.'s PRISM package for implementing and integrating its stock, purchasing, financial and quality control information for brewery operations. All primary business data will ultimately be stored on the AS/400. Most applications, which communicate file transfers over the company's LAN/WAN-based topology, will change when the new client/server applications (being developed by Progress Software Inc.) are implemented over the next few years. According to van der Torten, the company is extremely pleased with the integrated security and relational database capabilities of the AS/400. The flexibility of the new software and user interfaces will allow more than 1,000 users to access, enter and maintain information autonomously with little or no IT staff intervention, he says.

Building the Network

Currently the IT infrastructure at Heineken consists of three primary LANs (local area networks) connected together over 64KB WAN (wide area network) technology. While the first AS/400 was installed at the company's soft drink bottling facilities at Vrumona in Brunnik, as of today there are 22 additional AS/400 D, E, and F series models scattered about the company headquarters in Amsterdam and two Netherland's-based breweries. Heineken has installed additional AS/400 machines in its 48 other breweries around the world.

The system configurations vary according to specific functional needs, ranging in size from eight to 40 Mbytes of main storage and equipped with between eight and 12 Gbytes of DASD capacity. The AS/400 systems live in a heterogeneous environment, coexisting with Intergraph Corp. workstations, Hewlett Packard computers and DEC Micro VAX machines on the same networks.

The dedicated international network ties more than 600 IBM PS/2s, servers and other devices together. Eventually, Heineken will use Electronic Data Interchange (EDI) to further speed orders and other communications with its suppliers and customers. The soft drink enterprise is already using Data interchange/400 to accomplish this. However, van der Torten notes that EDI in Europe is "still in its infancy, and not all our clients are able to take advantage of the technology at this point in time."

While the company moves steadily towards its 1995 client/server deadline, user reaction to date has been a positive factor, says van der Torren.

"Users like it even though they have had to learn new skills" he says, pointing out that the client/server computing model has allowed them more autonomy and creativity in their work routines. "They have gone from being merely chauffeur-driven on a mainframe to driving themselves."

One helpful factor in the transitional process has been a continued standard of excellent service and support from the IBM Netherlands staff, says van der Torren. "We are in constant communication with them on the issues, and we have been pleased with both the high reliability and availability of the equipment we need."

Money Matters

The company is still operating in the transitional phase of computer operations, and van der Torren points out that it is impossible to gauge the exact dollar benefit from client/server technology at this point in time. However, he says immediate benefits were realized when the company downsized its massive, dual-mainframe IS department at the outset of the project.

Heineken has also drastically reduced its application development time, via standardized software products like PRISM and PROGRESS, especially designed and developed to work with the OS/400 operating system.

With this decentralization of information technology among the various divisions, as well as the empowerment of users on the desktop, van der Torren feels that the company has been successful in using IT to support its core business: brewing and selling premium beer.

"As a financial officer, I believe in a beautiful bottom line, rather than a beautiful IT application," he says, only half in jest. Using the IBM AS/400, coupled with PC and LAN/WAN topology, van der Torren says that Heineken will successfully complete its goal to a complete transition to client/server in 1995.

He says he has adapted the IBM acronym to apply specifically to Heineken's success formula: "International presense plus Business orientation equals Meeting the challenge for tomorrow."
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Title Annotation:Heineken N.V.'s automation
Publication:Modern Brewery Age
Date:Jan 31, 1994
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