Fit to Standard

Gigaset, a German manufacturer of communications products and solutions, decided to move to the public cloud to migrate to SAP S/4 Hana because it wanted to further standardize and streamline its processes. In doing so, it was important to the company to make certain functions from the external solution for improving logistical processes in SAP, which it had already been using for ten years, usable in the public cloud as well.

In close cooperation with the trusted solution provider GIB - in future ifm - , which has many years of experience in the supply chain sector, the functions are now being transferred to the cloud. Both companies, Gigaset and ifm, have been working together successfully for a long time, with the manufacturer of the communication products benefiting from the in-depth knowledge of the external consultant GIB in the area of logistics optimization. 

The willingness of German companies to switch to cloud-based ERP systems is still low, see also graphic from the DSAG investment survey. The idea that central business processes must be managed in a separate IT landscape, i.e., in traditional on-premises IT, is still firmly anchored in many companies.

The biggest and most important argument for this type of ERP system is usually that companies do not want to relinquish control - especially when it comes to data protection. Furthermore, the data can be accessed at any time. However, this local administration also has disadvantages that prevent a streamlining of processes and an associated increase in efficiency. These include high costs for infrastructure, personnel and maintenance. In addition, trained IT staff are needed to guarantee data backups, install updates and quickly fix bugs.

After all, the upcoming updates and release changes for established ERP systems such as SAP take on an immense volume, which is associated with a large amount of work. Under SAP S/4 Hana, there is one new release per year, so that the update cycle is shortened even further.

High staffing and management costs for on-premises and private cloud are thus predefined. Companies that want direct control over their environments often consider moving from on-premises to private cloud in the form of SaaS, IaaS, and PaaS as an alternative to gain benefits such as self-service, scalability, and elasticity while maintaining control and customization.

Corporate firewalls and internal hosting give them a high level of security and data protection, but the corporate IT department is still responsible for the costs and liability of managing the private cloud. So personnel, administration and maintenance expenses cannot be reduced with this variant.

In contrast, ERP systems are based on a public cloud. Instead of high acquisition costs, companies pay rent for a service, use the provider's IT resources for rapid support, do not have to worry about maintenance, data backups and updates, and can access their data worldwide if required.

Data security in the cloud is ensured by regular penetration tests, among other things. In addition, in the public cloud it is no longer possible to assign individual rights to individual employees, but only to assign firmly defined roles. This closes unintentional data leaks.

Cloud for standardization

All these advantages led German telephone manufacturer Gigaset to opt for the public cloud version when converting its SAP on-premises version ERP/ECC 6.0 to S/4. Always based in Germany, Gigaset has been producing communications products in Bocholt on the Lower Rhine since 1941. More than 550 employees develop, design and produce innovative phones, smart home systems and smartphones. Gunther Schlingemann, Senior Vice President IT at Gigaset, says the reason for the switch was the company's desire to standardize: "Standardization was a must for us, that's why we chose the public cloud. It forces us to subordinate ourselves to standardization. As a medium-sized company, we see this as the biggest advantage for us in the future. In the future, we won't have to worry about many things such as hosting, security updates, system maintenance and new legal features, because everything is automated via SAP.

Supply chain to the cloud

Despite the important position that standardization holds for Gigaset, it was clear to the company that certain functions from the GIB Operations solution were indispensable. For more than ten years now, Gigaset has been working in primary dispatching with the software from the software manufacturer and licensed SAP Silver partner previously known as GIB. From June 2022, GIB, which has been part of the automation specialist ifm's group of companies since 2016, will operate under the name ifm. The familiar product names will remain unchanged.

"A few years ago, we noticed that the disposition of finished products, i.e. primary disposition, was becoming more and more broad. But we didn't have more staff available and needed to increase efficiency. Therefore, we replaced SAP's Z-programming with GIB-Operations. This creates very big advantages for departments like operational procurement, production control and assembly control. In the meantime, we work with the software across departments and have recognized the portfolio overview and the focus on the core as a cockpit as a great advantage in particular. The scheduler can thus trade a much larger portfolio, which even changes two to three times a day."says Dirk Lörwink, Senior Manager Logistics Controlling at Gigaset.

The cockpit-like view is particularly helpful here, as it gives employees quick access to individual items and allows them to act promptly, for example, to change the preliminary planning or to discuss orders with suppliers. From there, the entire scheduling process can be controlled and it is possible to view all details and jump to all relevant transactions. The time and cost savings resulting from the efficient display and analysis of the inventory development of materials are enormous. At the same time, both shortages and surpluses are identified at an early stage and appropriate measures can be initiated directly. "For us, the support from GIB Operations is extremely important because it significantly increases our work speed", says Lörwink. 

When Gigaset made the decision to migrate to the public cloud, the question of how to integrate the current subsystems and interfaces quickly arose. After analyzing the scope of functions in the cloud, however, they noticed that it was precisely the tool with a cockpit-like view that was not included. Instead of a clear dashboard, the functions in the cloud are available in the form of apps. "This would force us to work in a more small-scale way, and we would lose tremendous speed", explains Lörwink.

"When it became clear that operations important to us were not included in the cloud standard version, we contacted our long-time solution partner ifm. Because it was a 'no-go' for us to work without the additional support that GIB Operations offers us in the dispositive area. The ifm experts were quick to accompany us on our way to the cloud and to transfer the most important features from Operations there. They grasp the problems of discrete manufacturing very well and can think their way into the tasks. We appreciate that very much."explains Andreas Tourneur, Vice President Order Center at Gigaset. In the SAP Public Cloud, the solution is called MRP view XLNce. In the future, this will also be available to other interested parties in the SAP Store.

Motivate change process

Gigaset is currently in the middle of the implementation phase for the switch to S/4 Hana, with a core team working in a test system. The change process involves more than just the technical implementation. Employees must also be convinced that the new system is forward-looking and will improve their work. For Lörwink, the move to the cloud is a paradigm shift: "Until now, we were used to driving the system to where we wanted it to go. Now the direction has reversed. Following the motto fit-to-standard, we have to adhere to the system specifications and adapt our processes to them."

This approach as a passive part was a challenge. In the meantime, however, the new way of thinking has taken hold and all employees are motivated to tackle the changeover, thanks in part to a number of information events and key users who act as multipliers.

During the change process, unexpected issues keep popping up, but thanks to a dedicated project team and external support from ifm, they are well cushioned. "We are glad that our long-standing partner supports us not only in terms of software technology, but also in terms of content. The experts think in terms of supply chain processes and understand our process-related requirements very well. Through their expertise, they help us transform our processes for the cloud.", Tourneur said.

Strategic advantages

The goal is to move completely to the public cloud with the system in 2023. "We are aware that a go-live in this new environment is risky, but we have prepared very well through agile projects and testing. Before the go-live, we take six months to check. Of course, there remains a residual risk, but we are highly motivated and eager to create standardization in our processes"announces Schlingemann.

For Gigaset, the move to the cloud is worthwhile above all strategically. The company accepts the relatively long preparation phase in order to then be able to take full advantage of the benefits. These include faster and more transparent processes, mobile access to a real-time database, scalability and the new option of connecting partners via interfaces.

"With the offer of the public cloud for S/4 Hana, SAP has created a super tool for medium-sized companies in which they can map their processes. Even if some functions are missing, with the cloud we have the possibility to integrate providers such as ifm, which are important to us, via web interfaces".Schlingemann summarizes.

Now that some features essential for the go-live have been transferred from GIB Operations to the cloud as MRP view XLNce, Gigaset hopes that more functionalities will follow soon. "We are very pleased to remain in close cooperation with Gigaset in the future and to see eye-to-eye. The plan is to continue to jointly develop clear and advanced solutions for process optimization in SAP Fiori design. In doing so, our goal is to provide users with the best possible support for their operational and strategic work."says Christof Weyand, Product Manager Procurement, Inventory and IIoT at ifm.

Fit-to-Standard Conclusion

Today, companies are faced with the challenge of demonstrating more agility and flexibility. Especially in times of crisis, processes and entire business models are often put to the test in order to make them leaner. The public cloud is forward-looking in preparing established ERP systems for new digital operating and business models. To standardize processes, Gigaset, a German manufacturer of communications products and solutions, decided to move to the public cloud when it switched to S/4. In the current implementation and test phase, the technical and consulting support of the long-standing solution partner ifm (previously GIB) is particularly valuable in order to make the change process run smoothly and to transfer essential functionalities into the new environment.