Journey to the Cloud

Flowserve Corporation, one of the world's largest manufacturers of pumps, valves and seals, employs more than 17,500 people in over 50 countries.

From Germany, the consulting and IT service provider All for One Group is managing the move of SAP systems from Flowserve to the Azure cloud platform.

The goal is to standardize the very heterogeneous IT infrastructure that has grown organically from many subsidiaries and to merge processes - from master data governance (MDG) and compliance to enterprise resource planning (ERP) with SAP S/4 Hana. A summary of Flowserve's digital transformation journey, which has now lasted 18 months.

The challenge: the battle of IT heterogeneity

"The journey started when Diego Silva, our IT Vice President Technology and Architecture, said we should stop dealing with local infrastructure providers and find a holistic solution"

recalls Jacky Kugler, IT Manager and SAP Corporate Infrastructure Architect at Flowserve.

The company had announced a program called "Flowserve 2.0", in which all processes and structures at Flowserve were to be questioned and adapted. The digital transformation was defined as a focal point.

A tall order given the company's history: Flowserve innovations enrich a range of industries, including oil and gas, energy, chemical, water, pharmaceutical and food processing.

Building on more than 50 traditional brands, Flowserve has gained worldwide recognition in its 220-year history. This heterogeneity is the company's strength. But at the same time, it is also the greatest challenge for digital transformation:

"Accounts payable and accounts receivable were handled very differently in the countries"

says Jacky Kugler.

"And we were asked to consolidate these processes across the entire company, i.e. across more than 300 sites. The amount of data is huge: 38 million material master data, 1.2 million customers, 300,000 suppliers. This can't be done in one big bang. It can only be done gradually."

As a first step, Flowserve set up its own Shared Service Center (SSC) in Hungary in mid-2016 to bundle finance business processes.

The more than 200 employees were tasked with handling the accounts receivable and payable processes using the legacy systems at the individual locations.

This proved to be time-consuming and not very efficient. After deciding on S/4 Hana as the strategic ERP platform, Flowserve approached its long-time IT partner All for One Group. The Microsoft partner, which specializes in German SMEs, had clear advice - namely to go with SAP on the Azure cloud platform.

"Microsoft maintains a close partnership with SAP - so in the long run, Azure is the only platform that makes sense for our customer Flowserve."

says Michael Scherf, member of the All for One management board responsible for Managed Cloud Services. And Jacky Kugler adds:

"All for One was what we call a one-stop store - with competencies for both SAP and Microsoft. We got infrastructure hosting in Azure and the same service levels we already knew. This package made it easy for us to get started with cloud-based services."

The solution: successive move of all systems to Azure

Flowserve's transformation journey has gone through several stages. The first was high-quality master data management. Accounts receivable, accounts payable and master materials were consolidated across all existing landscapes.

"This common platform with all business partners and items was our basic building block"

says Jacky Kugler.

"To make work easier for our colleagues in the SSC, we used interfaces to transfer the processes of the legacy systems at the sites to an S/4 system hosted in the cloud. This central platform makes work more efficient."

In the future, all systems that interact at Flowserve will run on the Azure cloud platform. In addition to master data management, these include the governance risk compliance system (GRC) and the complete enterprise resource planning (ERP). This also includes Manufacturing Integration and Intelligence (MII).

"Due to heterogeneity, we lacked transparency in production"

says Jacky Kugler.

"By bringing information from the store floor into the MII landscape, it allows us to better manage and utilize the utilization of our production sites. If we know where there is capacity right now, we can relocate production and deliver to our customers faster."

This means special requirements for the high availability of the cloud solution.

"If a Flowserve manufacturing facility anywhere in the world is unable to process data for production immediately, that's business critical"

says Michael Scherf.

"One major reason that speaks in favor of Azure. Microsoft's cloud platform is not only highly available, but also flexible, powerful and scalable. And through the possibilities Azure provides, we can generate added value for our customer Flowserve as a managed service provider and implement our services uniformly in all regions worldwide."

To achieve this, the All for One Group now uses around 50 virtual machines based on Azure. The availability of the systems was close to 100 percent in the first 18 months of the transformation journey. In the future, it is also planned to shut down instances during periods of non-use in order to save additional costs.

"Through the close partnership between SAP and Microsoft, Azure will continue to be the platform of choice for all SAP services"

Michael Scherf summarizes. After the experience gained so far, Jacky Kugler has decided on a strategy for the company:

"For future systems, rollouts or replacements worldwide, we will use Azure-based solutions in the medium term. We already have a few projects in the pipeline for 2020, and in 2021 we will also be converting systems that are currently still with other partners.

The advantage is obvious: With Azure, we can roll out new structures worldwide in all regions, and with All for One we have a partner that takes global responsibility for the smooth transition and operation."

In this way, Azure is helping Flowserve's IT contribute to the Flowserve 2.0 global transformation program.