SAP & Mercedes-AMG F1 Team: Innovation On and Off the Track

In the high-stakes world of Formula One, success is often determined by milliseconds on the track and microdecisions off it. For the Mercedes-AMG PETRONAS Formula One Team, maintaining its competitive edge requires not just cutting-edge technology and top-tier talent, but also strategic partnerships that push the boundaries of innovation.

In an era where Formula One teams operate under strict cost caps and face ever-increasing technical challenges, the ability to leverage external expertise and advanced technologies can make the difference between victory and defeat. With that in mind, the team’s collaboration with SAP, a global leader in enterprise application software, aims to revolutionise the team's operational efficiency and unlock new data insights, potentially leading to crucial performance gains both on and off the racetrack.

SAP and Mercedes-AMG: A long-standing relationship

The roots of this partnership run deep. Michael Taylor, who heads the IT team at Mercedes-AMG PETRONAS F1, reveals: “We've been an SAP customer for many years, preceding my time here. I’ve been with the team for nine years and in the industry for over two decades, and Mercedes were the first to implement SAP to run their end-to-end Formula One operation.”

This long-standing relationship has been a key component of the team’s success, playing a crucial role in its unprecedented run of eight consecutive Constructors’ World Championships from 2014 to 2021. “We've proven the effectiveness of the ERP platform we run,” Michael says.

However, the landscape of Formula One is ever-changing, and the team faces new challenges. Michael explains: “Our business model has changed. The financial regulations introduced in 2021 have made the reporting side of Formula One more challenging than in the past.”

These changes necessitate a transformation in how the team operates. The partnership with SAP is seen as a crucial step in this evolution. “The partnership is a fantastic opportunity for us to map out the next 10 to 15 years of our technology portfolio strategy,” Michael says. “We aim to continue delivering success on track while ensuring we meet all our regulatory and sustainability targets.”

The role of SAP

Hagen Heubach, who leads SAP’s global automotive industry organisation, emphasises the importance of this collaboration from SAP’s perspective. “Automotive is one of the longest-standing industries SAP has focused on. We actually built the first automotive-specific solutions with Mercedes."

Hagen’s team is responsible for the entire solution stack for the automotive industry, as well as the strategy for the future of mobility. "We're always looking for the next big thing in automotive,” he says. “The industry is being disrupted by many technology trends, from electrification and autonomous driving to new business processes and battery management.”

One of the most significant aspects of this partnership is the team's transition to cloud-based solutions. SAP S/4HANA Cloud serves as one of the technology foundations for the team, enabling the exploration of how artificial intelligence (AI) and cloud solutions from SAP can inform and predict decisions, optimise resources and future-proof IT infrastructure.

Michael explains the rationale behind this move: “We've run our own on-premise instance of SAP for a long time. We migrated to S/4HANA in 2020 during the pandemic, and we’ve seen that that was a good time to make that move.”

However, the team recognises that to truly leverage the benefits of evolving technology, a move to the cloud is necessary. “Cloud isn't really optional,” Michael states. “It's the direction we're going, and it's better to work with SAP to ensure we do it in the right way, without impacting the business but bringing maximum benefit.”

Hagen echoes this sentiment from SAP's perspective: “The whole automotive industry is shifting towards cloud transformation. A simple one-to-one transformation won't work because the business model is changing.”

The impact on performance

The partnership between SAP and Mercedes-AMG PETRONAS F1 extends far beyond IT infrastructure, playing a crucial role in the team’s performance on the track. “From design release all the way through to the actual use of the part on the car, those business processes rely on SAP and have done for years," Michael explains. "This includes procurement, make-versus-buy decisions and manufacturing – both metallic-based and composite. All the processes underpinning these activities rely on SAP."

This integration extends to every aspect of the car's lifecycle. “Once [a part is] on the car, you might think the job is done. But we're still using SAP to track the car,” Michael says. “We track all the mileage, consumption, and usage of safety-critical components and those requiring servicing. All of that is done within SAP.”

Looking to the future

As Formula One evolves, so too must the technologies that support it. The partnership between SAP and Mercedes-AMG PETRONAS F1 is poised to drive innovation not just in motorsport, but potentially in the wider automotive industry.

Hagen sees this collaboration as an opportunity to push boundaries: “For SAP, it was important to do this with an agile organisation and an innovative partner in the automotive industry. Many processes that originate in racing are replicated in the standard automotive world.”

The focus on sustainability is a key aspect of this future-oriented approach. As Michael notes: “Formula One aims to be net-zero by 2030, and we as a team want to set the standard and achieve that before then.”

A partnership beyond branding

Both SAP and Mercedes-AMG PETRONAS F1 emphasise that this partnership goes far beyond a sponsorship agreement. “Our strategy on partnerships is clear,” Hagen explains. “We’d never do a pure sponsorship-driven engagement, just putting a sticker on the car. While branding and awareness are part of it, we're here to deliver and generate business value.”

For Mercedes-AMG PETRONAS F1, the partnership provides access to crucial expertise. As Michael puts it: “Running a technology operation of this size with just 25 people is tough. We don't have all the expertise to take the leap we need. That's where our partner network comes in.”

As the 2024 Formula One season reaches its conclusion, the ongoing collaboration between these two industry leaders is set to drive innovation far beyond the racetrack. Toto Wolff, CEO and Team Principal of the Mercedes-AMG PETRONAS F1 Team, sums up the spirit of this partnership: “We have a shared heritage and commitment to innovation and improvement, and with the move to the cloud we will be able to push limits even further. SAP is a global leader in its field, and we could not think of a better partner to help us improve our efficiencies in 2024 and beyond.”

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