​​Arvato optimizes warehouse operations, deploys new environments within minutes using SAP on Azure​

Extending the modern workplace to the cloud

In business today, speed, scalability, and flexibility are integral to companies’ growth, sustainability, and success in the short and long term. Well-known companies in the fashion and lifestyle, beauty, technology, and healthcare sectors across 20 countries rely on Arvato, a global logistics and fulfillment company. With innovative supply chain management and e-commerce solutions, Arvato supports its clients' efficient warehouse operations.

Bringing together skilled people and innovative technology, Arvato’s culture is defined by its delivery of operational excellence with a strong client focus. Digital transformation comes from the top down, leading employees to embrace their CEO’s open-door policy when exploring groundbreaking ideas that align with the modern workplace. For example, to make the most of its data, Arvato adopted Microsoft Power BI—a product that many of its global clients use—to help identify patterns it can use to proactively address issues and avoid client support tickets. The company has also empowered its employees to use Microsoft 365, including Microsoft Teams, and Microsoft Power Platform, with some teams connecting Power Apps, automation, and language models to drive new efficiencies.

Arvato is working toward a cloud-first strategy as the basis for global collaboration and operational excellence, applying some edge computing where necessary. One of its first and largest migration projects is reducing complexity and improving stability for its SAP environments in the cloud. 

Moving and consolidating SAP systems in Azure

At the beginning of 2023, Arvato completed a full migration of its large-scale SAP systems, including its SAP S/4HANA environment, to Azure—a platform the company says is perfectly aligned with its modern workplace strategy. To ensure resilient processes for its clients, Arvato chose Azure for SAP versus being multicloud, and it relies on Azure for enterprise capabilities. “Azure has the flexibility, adaptability, and cost-saving features that we need for our modern workplace,” says Dr. Dietmar Guhe, Vice President of Cloud IT and Infrastructure at Arvato.

With all of Arvato’s warehouse processes and related tasks driven by SAP systems, every level of the organization now benefits from enhanced infrastructure offerings on Azure. “When deciding where to go with SAP, we appreciated how it’s an important part of the Azure journey right now, with Microsoft providing SAP solutions on top of the infrastructure,” says Stefan Koehne, IT Director, Platform Services and SAP Architect at Arvato.

As Arvato locked in its move to SAP on the Microsoft Cloud, it prioritized migrating its global production systems and the infrastructure supporting its logistics services for clients across the United States, Asia, and Europe. These systems must be continuously available. Thanks to the Azure platform’s ease of adoption and extensive capabilities, Arvato managed to accomplish all of its Azure migrations in one step, moving on-premises workloads to SAP S/4HANA on Azure over a single weekend. “Our goal for each migration and upgrade to S/4 was to keep downtime as short as possible, and we did it in less than 48 hours while using Azure ExpressRoute to scale up our transfer of more than 4 terabytes of pure system data to the cloud and using our optimized approach to ensure a simultaneous S/4 upgrade,” says Koehne.

When maintenance or patching is required, systems can be taken offline and turned on again within a weekend. Arvato can also set up new environments from scratch in 10 minutes, down from hours. Both time-saving measures help the company ensure uninterrupted operations of its scanners, scales, forklifts, and other warehouse equipment and associated data, all of which come in contact with its SAP systems and infrastructure. “We did all of this work on time and within budget with no rollbacks and limited re-architecting of our processes and data,” remarks Koehne. 

Post-migration, Arvato used Azure to meet its long-term goal of reducing and consolidating dozens of domains. “We had more than 70 systems before migrating to Azure, and now we’ve optimized and moved our entire landscape to 40 systems running on Azure,” says Koehne. 

Merging cloud capabilities and on-premises connections through edge computing

While retiring and downsizing certain systems, Arvato has been able to retain others for edge computing, particularly those related to processes like image recognition that require on-premises connections but can be trained in the cloud for hybrid benefits. “We have lots of Windows PCs in our warehouses, and SAP runs its GUI on these devices,” says Dr. Guhe. “Now we wonder, ‘Why do this on PCs that need to be maintained, managed, and updated? Let’s do it on less expensive hardware and connect them to a virtual environment in Azure.’” 

With fast connections between on-premises, hybrid, and cloud systems on Azure, Arvato’s teams can easily scale up and down to decrease costs and warehouse energy consumption within a flexible and elastic new working environment. “We’re always prepared for the unknown, whether that’s onboarding a new client or moving a warehouse,” says Dr. Guhe. “We can react quickly and move or fire up new servers in Azure.” 

Achieving maximum compute capacity and accelerating backups with Azure Virtual Machines

Before Azure, Arvato’s on-premises infrastructure was made up of Oracle on Linux–based SAP systems partially virtualized on VMware ESXi hypervisors. Sticking with the Linux operating system and SAP HANA database, it’s now running up to 6-terabyte (TB) versions of Azure M-series and E-series virtual machines (VMs) with Azure Premium SSD v2 Disk Storage.

Arvato is continuously renewing or upgrading its VMs to the latest editions, despite recently finishing the migration, for maximum computing capacity and power. That flexibility is crucial for adjusting to growth, including adding more storage to better manage changing client demands and to shrink costs. “During peak demand, such as Black Friday or the lead-up to Christmas, you only need to spend a couple of hours getting your servers set up and then shut them down afterward,” says Koehne.

With more than 100 VMs supporting its full scope of services for SAP on Azure, Arvato uses Azure NetApp Files for Azure-native storage and creates snapshots of its SAP HANA databases to use as backups and reduce restoration time. “Running a backup for 4 to 6 TB can be done in a couple of minutes on Azure, and we can restore the whole system from the latest snapshot very fast in our defined SLAs,” says Koehne.

Remarkably, Arvato accomplished all of this while realizing better cost management and cost savings. “When I go to the Azure portal, I can easily see the whole company’s cost consumption for Azure,” says Dr. Guhe. 

SAP on Azure: The right decision for a growing business

From the top down, Arvato’s employee network agrees SAP S/4HANA on Azure is key to the company’s agility and adaptability in the face of changing market and client demands. “SAP S4/HANA based in Azure is Arvato’s choice for our large professional and reliable ERP landscape as it ensures state-of-the-art and secure operations on a flexible and scalable IT architecture,” says Christian Horz, Chief Information Officer at Arvato. “The combination of SAP S4/HANA and Azure lifts Arvato in the position of providing outstanding IT services for our logistics customers globally.”

Migrating its SAP estate to Azure and using the latest VMs and Azure resources has given Arvato more flexibility, greater stability, and most importantly, better time to market. As a result, the company has cemented a state-of-the-art process to incorporate new services into its business model and best prepare for the future. “We have RF scanners in our goods process, image recognition in our warehouses, and processes in the product returns cycle where AI can assess the condition of goods,” says Dr. Guhe. “We wouldn’t be able to integrate all of these services if the whole platform was still in a local datacenter. And it’s much easier with the whole platform being in the cloud, or in the case of edge computing, connected to the super-fast Microsoft network internally.” 

Setting up new locations with only an internet connection and a mobile router is smoother than ever, making the company less dependent on other vendors and copious amounts of hardware for the traditional four to six weeks of initial setup. “We can start our own logistics much faster and are more independent, and we don’t have to rely on hardware because the software handles configurations for us,” says Koehne. “With SAP on Azure, we can adjust our processes and infrastructure, increase the bandwidth of our connections, push more CPUs and memory to our virtual machines, and get over peaks without any problems.” 

Find out more about Arvato on LinkedIn.