How AI drove Daikin’s business transformation from complexity to agility

In the fast-paced world of heating, ventilation and air conditioning (HVAC), Daikin, a Japanese multinational company and global leader, faced a pivotal question: How can we unify operations to drive growth and engagement? With a diverse portfolio and over 400 dealer branches, Daikin recognized the need to transform its complexity into a competitive advantage across North America. The company set a bold vision, defining a North Star: “One Daikin” to simplify operations, empower people, and drive customer experience through sustained business transformation. Central to this vision is Daikin's commitment to people-centered management, ensuring that the focus remains on empowering individuals within the organization to foster engagement and drive success.

Daikin embarked on a journey to redefine its business operations, aiming to elevate the experiences of employees, dealers and distributors while personalizing offerings for homeowners through innovative technologies. However, managing a legacy enterprise resource planning (ERP) ecosystem that had developed over years of rapid growth posed a significant challenge. Vaidy Subramanian, Senior Vice President and Chief Information and Digital Officer at Daikin Comfort Technologies stated, “At Daikin, we are committed to driving meaningful change that improves operational efficiency and fosters a culture of innovation.” This strategic vision aimed at Daikin’s goal to be a leader in the HVAC industry, setting new standards for excellence.

The company’s acquisition-driven landscape led to diverse operations across business units, with workflows in order management, supply chain, fulfillment and finance varying by region and branch. To turn this complexity into a competitive advantage, Daikin sought to standardize processes and deliver consistent, world-class experiences for all stakeholders, realizing their vision of “One Daikin.” This shift focused on unifying enterprise data and enhancing collaboration, enabling seamless automation and real-time capabilities like mobile-first ordering, full inventory and shipment visibility, and streamlined service processes.

Daikin posed a pivotal question: How can we modernize and unify our ways of working to create a value-driven digital experience through a cohesive system that leverages AI integration? They understood that technology alone wouldn’t drive the necessary change across processes, platforms and workflows. Through “One Daikin,” the leadership envisioned a unified operating model across North America to consolidate shared HR, procurement, IT and finance services, creating a scalable foundation for global standardization. “True transformation starts with people, not just technology. In this case, it was about reshaping the dealer experience and empowering employees to adapt and thrive. When you build trust and focus on meaningful change, you unlock the potential for sustainable growth and a future-ready organization,” described Jennifer Maddox, Managing Director, People Consulting, Ernst & Young LLP.

For Daikin, technology implementation was not the end goal but a means to reimagine processes and daily workflows, infusing advanced AI capabilities to accelerate value for their dealer and distributor network while driving sustainable operational scale. To realize this vision, Daikin aligned its transformation efforts with a broader, multi-regional SAP initiative that had been underway across Europe and APAC since 2019. They engaged Ernst & Young LLP (EY) professionals to orchestrate this business transformation, support change management, and accelerate AI-powered capabilities to quickly translate the vision into empowering employee and dealer experiences.

In 2023, Daikin launched its initiative to scale transformation across North America, leveraging the SAP momentum from its global operations through the EY-SAP alliance. This effort aimed to accelerate the rollout of SAP S/4HANA^® and deliver an experience-centered, AI-infused, agile-powered transformation. From the onset, Daikin framed the initiative as a vehicle for business transformation to unify processes, empower users, and create a scalable foundation that delivers repeatable value for dealers.

Cross-functional EY teams mobilized an immersive discovery to explore the art of the possible for dealer, branch counter and back-office personas in a fully optimized digital environment. This discovery informed fit-to-standard SAP S/4HANA^® best practices and persona-centric experiences that prioritized user productivity. Leveraging these design principles, the Daikin-EY teams tailored single-screen workflows for counter personnel, mobile-first capabilities for dealers in the field, and consolidated finance and warehouse experiences that decreased manual workflows and accelerated decision-making.

To validate assumptions and de-risk rollout decisions, EY teams conducted 25 branch visits over 10 weeks, mapping end-to-end journeys across five customer channels. This effort produced high-fidelity wireframes and a pilot that helped modernize finance, logistics, procurement and sales experiences across dozens of Daikin branches, all purposefully structured for predictable and swift scaling.

Gundeep Singh, Partner, Industrial Products, Ernst & Young LLP noted that the entire approach is based on “leveraging experience solutions on top of core SAP to drive better outcomes, efficiency and value for all personas.” Putting that philosophy into action, EY teams and Daikin extended the SAP S/4HANA^® digital core, layering front-end order management, inventory planning and warehouse management capabilities through reusable accelerators developed on SAP Business Technology Platform (BTP). By adopting this route, legacy screens were replaced with convenient, persona-specific apps that simplified daily work for dealers, counters and back-office teams.

The program also harnessed firm-wide initiatives such as EY NextWave and industry collaborations to integrate manufacturing-level resilience, regulatory controls and secure-by-design operational practices into the rollout. By embedding traceability, audit-ready reporting capabilities, and region-aligned compliance controls into foundational workflows, Daikin strengthened governance and streamlined operations.

Change management and adoption were integral to every phase, easing the transition to new ways of working and helping Daikin users embrace modern AI-powered tools. The company incorporated converged user experience and AI-enabled training with a community of super users to guide uptake and sustain adoption velocity. As governance was integrated early, the program could measure, maintain and iterate on the transformation as it scaled across North America.

Daikin’s North American transformation quickly advanced the “One Daikin” vision, realizing significant business impact. Going live in just 10 months, the pilot modernized finance, logistics, procurement and sales workflows for more than 300 frontline users across dozens of branches. Early first-wave results demonstrated definitive commercial and operations gains, with 10% improved counter efficiency, a 20% faster financial close, enhanced pricing and freight revenue controls and a centralized data and compliance foundation that eradicated serial and quality escapes.

Influenced by a growth mindset and intentional design decisions emphasizing persona-driven experiences, fit-to-standard SAP S/4HANA^® practices, and repeatable accelerators built on SAP BTP, these achievements reflect a methodical blueprint for the global transformation. AI-assisted implementation, including code generation and automated testing, further accelerated delivery by approximately 30%, establishing a repeatable, scalable framework for future phases. The program delivered meaningful operational benefits through intelligent manufacturing and predictive forecasting that helped optimize routing and limited freight waste, ultimately enhancing the experience for Daikin employees and customers while contributing to sustainability.

Steve Grimmer, Executive Director, Industrial Products, Ernst and Young LLP, and the EY Global Client Service Partner for Daikin Americas, highlighted the significance of the collaboration. “The transformation journey we are undertaking with Daikin and SAP is a testament to our dedication to driving sustainable growth,” he remarked. “By leveraging advanced technologies and a people-centered approach, we are helping to enhance operational capabilities and fostering deeper relationships between Daikin and its dealers and customers.”

Treating adoption as a strategic transformation imperative culminated in modern “one-click confidence” experiences that allow Daikin users to view all relevant information on a single screen and complete actions in one click, increasing comfort when working with new AI-powered solutions. By empowering people first and foremost, these capabilities streamline seasonal staffing, help optimize counter efficiency and reduced training time, freeing employees to push the boundaries of creativity through high-value work and deliver world-class service for dealers. A unified service model for procurement and finance further improved cross-functional collaboration and provided a single source of truth for enterprise data.

Expanding on the AI-assisted delivery foundation, the program’s maturity continues to steadily advance along three complementary pathways:

1. AI for implementation: accelerating delivery through code generation, automated testing, and AI-generated specifications.
2. AI to augment experience: fueling statistical forecasting, conversational interfaces, and decision support that improves dealer fulfillment and service.
3. Selective automation: executing routine decisions automatically, with human oversight for exceptions and high-risk scenarios.