Brownfield and conversion

Existing customer KHS is an internationally active manufacturer of filling and packaging systems headquartered in Dortmund. The long-established company is active worldwide and has an export quota of more than 90 percent. The machine builder operates plants in Germany, the USA, Mexico, Brazil, India, and China.

KHS is able to sell and set up machines in practically any country in the world. For the S/4 conversion it was clear to those responsible that it was to be a system conversion with a brownfield approach. Together with cbs, KHS carefully prepared the technical conversion, worked through various preliminary projects, and realized the switch to the new SAP world in the record speed of just twelve months. The big bang go-live was a success. 

KHS is part of Salzgitter AG. Two years ago the Group set up a comprehensive roadmap program to consolidate the existing eleven different SAP systems. Due to acquisitions and takeovers of some parts of the company, there had been a proliferation of systems in the past which were not harmonized. The goal was now to consolidate this ERP landscape to four plus one as part of the S/4 strategy.

The target picture: one SAP system each for the Steel, Mannesmann, Trading and Technology business models and a superordinate one for the central functions. The aim is to harmonize processes throughout Salzgitter across these five systems, including FI systems with similar charts of accounts, purchasing processes and the requirement to use central master data throughout the Group. The entire program is scheduled to run for several years. The aim is for all systems to be consolidated and migrated and running on S/4 by 2025.

Optimization in S/4

The requirement for KHS was to complete the conversion quickly and then optimize the S/4 system afterwards. Why is KHS planning the changeover a little differently and much faster?

That's because the company is active worldwide. "We see ourselves as a frontrunner. And one stipulation was that we wanted to migrate the KHS Group subsidiaries worldwide to our new S/4 system. This means that all foreign subsidiaries will be working with our ERP system in the future, which will bring many advantages," explains Martin Resch, Chief Financial and IT Officer at KHS. 

Together with cbs, KHS initially launched a preliminary project. The questions were: What is our base from which we come? And where do we want to go in the first place? The overriding goal was to immediately bring speed into the project, take complexity out of it, and keep the stress curve for the organization as flat as possible. "So we decided to simply convert our existing ECC system to S/4 and initially make as few adjustments as possible to the processes or systems" explains Mathias Offermann, Vice President IT at KHS. 

One important point was authorizations. The SAP ECC 6.0 system operated by KHS was getting on in years, having been in use for 20 years. Several half-started authorization concepts were active in the system. Under no circumstances did KHS want to take these with it to S/4. Around 12,000 composite roles had accumulated in this system, and this mass was no longer manageable.

So the old authorization concept had to be massively streamlined. In the end, they reduced the system to 300 business roles. "These roles roughly represent the functions in our company. Therefore, this is already a massive reduction that helps us in our day-to-day business," explains Offermann. 

Pre-projects minimize the effort

In the first preliminary project, KHS switched to a Hana database. Offermann is certain: "If we had still had a normal SQL database immediately before the S/4 switch, it would have been significantly more work. Therefore, I can only recommend to everyone: Migrate to the Hana DB first and then to S/4 in the second step to stretch the overall effort and take the complexity out of the actual migration." 

Furthermore, those responsible set the Business Partner live at an early stage. The business partner was already running in the background in ECC. At the same time KHS continued to work with accounts receivable and accounts payable. The BP issue involved a certain amount of work, because KHS not only uses it in ERP, but also in SAP CRM and SAP's Sales Cloud.

There were still one or two hurdles to overcome in this synchronization across different system boundaries. "But we had a good contact person at SAP who supported us here" says Offermann. 

Another preliminary project: the introduction of the new Asset Accounting (FI-AA). It is used within the SAP system to manage property, plant and equipment. In accounting, it functions as a sub-ledger to the New General Ledger (New G/L).

The biggest point in the preliminary project: KHS worked with cbs to set up an S/4 development system, as a copy of the production system, and then used the cbs Enterprise Transformer to systematically streamline this system.

The first step was to take all master and occupancy data with us and then eliminate a lot of old data. "We then had a new development system with selected master data, with our coding, our processes, but already on S/4", reports Offermann. 

This is precisely where KHS then started early on to make the coding stations S/4-capable with the Abap Test Cockpit (ATC). The subject of code adoption should not be underestimated. The old KHS system has been in place for 20 years and it "lives. "We have a lot of Z-coding - everything you can imagine" Offermann says. "You also have to check all of that and adjust it accordingly to make it S/4-ready, if it is still needed."A busy task for the developers at KHS.

KHS started the first tests with the business at an early stage. The business units put a lot of effort into preparing appropriate test cases which could then be run through. The 400 testers from the business were equipped with the new authorizations.

As part of the new collective roles, different test users were specifically defined, i.e. test purchaser, test salesperson, test production manager, test designer, etc. At the end, there was valuable feedback and a number of suggestions for improvement, which were then implemented for the next test phase.

There was an expert from cbs who took care of almost nothing other than coordinating the testers at the five German locations and the three foreign locations. Who should test what and when? It was a matter of coordinating interfaces and determining when they would be available. "This is an immense amount of work that we did here, especially because it was across so many locations. The different time zones added to it," reports IT manager Offermann.

With Big Bang on S/4

Due to the smooth process during the early testing and conversion phases, the project team even decided to bring the system conversion forward by one month, contrary to the initial planning. During the successful go-live, a total of eight production sites, 34 company codes in four countries, and 39 sales organizations worldwide were converted to S/4 in the Big Bang.

More than 4500 users were affected by the worldwide conversion. The system included all SAP modules (FI, CO, MM, WM, PP, SD, CS, etc.) and was converted "in-place" with the SAP Software Update Manager (SUM) during a regular weekend. The SUM Downtime Standard Approach was used, which was optimized and shortened in many areas, both in terms of system performance and with many automatisms in cutover management. 

Everything went optimally. "In such a migration, the continuity of business processes is the be-all and end-all. Against this background, it was a perfect changeover for us. All core processes in S/4 worked smoothly right from the start - downtime was ultimately minimal"explains board member Martin Resch. On Monday morning, users were able to continue working on orders, deliveries, invoices or projects in the new S/4 Hana system exactly where they had left off before the go-live weekend.

Basis for digital transformation

"KHS is well on the way towards digital transformation, the foundation for the KHS Group has now been laid", says CFO and IT Director Resch. Now the remaining national companies can gradually move into KHS' S/4 system.

The success factors for the rapid switch are obvious: the careful, individual project planning, including the preliminary projects, the high level of acceptance among employees, the consistent support from top management and the extensive test phases.

What's more, the project remained well below the budget estimated in advance. In the end, the good cooperation with the cbs consultants was also decisive for the success of the conversion. "In a project like this, new complex challenges always arise. We always communicated openly and discussed at eye level. cbs was a competent and constructive partner who always focused on the optimal solution for us.", sums up IT boss Offermann.