A Low-Disruption S/4 Transition

Festo has been relying on SAP for more than 40 years. The SAP mainframe system R/2 was introduced at the end of the 1970s. According to anecdotes, Professor Hasso Plattner was personally involved in the introduction of SAP R/2 on site at Festo. Later, the company switched to the client-server ERP system SAP R/3 at an early stage; then to SAP ERP ECC, which is now used worldwide in all Festo companies on one system. This ERP system was followed by SAP S/4 Hana, which Festo has now been using productively for around a year with over 15,000 users (with over 20,000 employees) worldwide. These key figures make the importance of SAP at Festo tangible.

In order to better understand the S/4 transition or migration at Festo, here is a brief excursion into Festo IT/SAP. As an SAP user company, Festo has a differentiated approach and an individual view of how IT is done or used. And always with the aim of using IT and therefore SAP ERP for its own purposes, its own strategies or to achieve its own competitive advantages.

This simplified statement naturally conceals many important issues, necessities and framework conditions.

Critical-constructive view

For Festo, the focus has always been on acquiring evaluation and implementation skills and thus its own knowledge of relevant IT topics and thus also of practically all SAP topics; always building on its own wealth of experience. Also in order to be able to evaluate SAP issues in a critical, constructive and balanced manner. The question is asked with an open mind: What is good for your own company in terms of SAP innovations or changes and what is less so or not at all? In order to meet these requirements, Festo certainly invests an above-average amount in IT and SAP compared to other companies. At the same time, Festo has set itself the task of using IT, and therefore SAP, as a kind of "production factor" in order to secure or expand the formulated strategic corporate goals and strategic competitive advantages in an agile manner. In fact, this applies to the entire company and all business areas. The finance area as well as logistics with a worldwide, sophisticated production network and a powerful sales team around the globe.

Of the 550 employees working in IT, the majority have been dealing with all SAP topics of importance to Festo for years. From module topics and the use of SAP in the Lines of Business (specialist departments) to process support and application development, infrastructure aspects and much more. Newer topics, such as artificial intelligence, are dealt with by a separate Festo "IT Innovation Team". In connection with SAP, but also outside of SAP (non-SAP).

Consolidation and modernization

At the end of 2020, Festo decided to switch from SAP ERP ECC to SAP S/4 Hana following a benefit analysis. Then, as now, Festo saw no alternative to SAP in the ERP environment. Shortly after the SAP S/4 vote, it was decided to implement S/4 in a big bang, i.e. to go live with all SAP S/4 Hana ERP modules together. The reason: interdependencies between the modules and processes in a single-client ERP. It was also decided to operate S/4 Hana ERP on-premises. Although S/4 cloud use was included in the calculation, it was rejected after consideration. Festo does not have a cloud-first strategy. Decisions are made on a case-by-case basis as to whether cloud use is considered sensible or not. In the case of the so-called SAP satellite systems, cloud use is a matter of course, as these can often only be used in the form of cloud-only. The same applies to the SAP BTP (Business Technology Platform).

Festo also decided to carry out the S/4 transition largely independently. In other words, without the involvement of an SAP general consulting company. External support was used in specific areas. The migration of the ECC S/4 processes and data as well as the code migration were carried out together with the companies smartShift and SNP.

Two main aspects were practically equally important for Festo when it came to the SAP migration. The first was to utilize the new features and innovations associated with S/4. For example, the use of a modern user interface with Fiori, extended analysis options or the use of extended functions. Secondly, Festo aimed to significantly reduce the number of SAP customizations and SAP adaptations that S/4 enables. Specifically, a very clear minimization of code modifications and Y-transactions (Abap) was to be achieved. In order to ultimately be able to make more agile changes to the commercial core in particular.

IT and LoBs working together

Naturally, a project plan with individual project steps and stages was drawn up for the migration. In terms of approach, the migration at Festo can be broadly categorized as a brownfield approach, although elements of the bluefield approach were also used. In any case, Festo was migrating from an existing SAP system to S/4. Back in 2014, a database switch from Oracle to Hana took place as a quasi-mandatory database for S/4 use while still using SAP ERP ECC.

As outlined, one of the main objectives and tasks of the project was to reduce or minimize the many SAP Festo versions in the form of modifications and Abap in the SAP standard.

To this end, function compatibility lists and incompatibility function lists were first used or created as a basis. The aforementioned lists were then worked through in teams consisting of lines-of-business and IT employees. The aim was to define the processes in the new S/4 - always taking into account the modification and Abap reductions.

These consultations and decisions were challenging and time-consuming. And here and there, the struggle for the best solution took longer than expected. The reason: they affected practically all lines of business and all S/4 ERP modules and components.

From financials/FI to purchasing/MM, procurement/CP (Central Procurement, formerly SRM), sales/SD, production/PP, quality/QM, supply chain management/SCM, HR management/HCM and maintenance/PM. The process or function coverage with SAP APO was handled separately for S/4. For various reasons, Festo decided to replace SAP APO with another solution (Kinaxis).

A total of eight SAP test systems were set up to map the new consolidated processes and functions in or with S/4. The existing Hana infrastructure was also revised for S/4. Festo teams, including the SAP Operations Team and SAP Basis, were responsible for this. The infrastructure consists of a hot standby environment including DR/fail-over mechanisms. With two connected data centers at two different locations; including transaction-accurate system recovery after a possible system failure. Initial performance irregularities (response times, SAP long runs) were smoothed out together with SAP (PSLE service) before the go-live. Festo currently uses servers from HPE. The operating system is RHEL from Red Hat. The Hana database size (Hana version 2.00.07700) currently amounts to 7.5 TB. The estimated growth of the database per year is around one TB.

SAP in a changed focus

Festo considers it positive that the SAP ERP ECC-SAP S/4 Hana changeover (currently S/4 version 2021 FPS2) was completed at an early stage. This has put Festo in a position to use the latest ERP system from SAP as a lever, particularly for optimizing the implementation of strategic corporate goals and increasing competitive advantages. It also allows innovations to be implemented more quickly and in line with requirements. With the upgrade to S/4 2023 FPS2, Festo will benefit from innovations and optimizations, for example in financial functions, from mid-2025.

Minus 90 percent modifications

The targeted system streamlining was achieved to a high percentage. The SAP code modifications were reduced by 90 percent; the individual versions developed with Abap by 60 percent. Incidentally, Festo not only uses standard Fiori apps, but also a range of custom Fiori apps. Despite the additional workload for employees over a certain period of time and some unroundedness, the SAP ERP ECC SAP S/4 Hana transition at Festo can be rated as trouble-free. During the migration project, the Festo employees involved were committed, goal-oriented and pulled together at all times.

Festo's early adoption of S/4 and the associated far-reaching changes have sharpened its differentiated and constructively critical view of SAP. SAP strategy changes, in particular the SAP Cloud First guideline and the associated application code separations and shifts, are not only presenting Festo with major challenges. Problem point of the SAP strategy changes: Companies like Festo, which rely on individuality and their own SAP identity with their own support and implementation expertise, are required to deal with issues and topics that did not previously exist. Not only at Festo, but also at other well-known companies in the industrial belt around Stuttgart, a very close eye is kept on the extent to which customer requirements are included and taken into account in the newer SAP activities.

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