How a Specialty Chemical Company Handles Integration in a Hybrid SAP Landscape Amidst a Move to SAP S/4HANA
by Lauren Bonneau, Contributing Writer
Despite financial and other crises that have arisen in the market along the way, a Swiss-based multinational specialty chemical company that supplies to the building sector and motor vehicle industry has experienced continuous growth and innovation. In fact, since 2015, the company has made 25 acquisitions, added 11 new national subsidiaries, and opened 44 new plants.
“We’ve been growing at almost double-digit figures for the last several years. Compared to our industry peers, that is quite a high growth rate, and there are a couple of key reasons for that,” says the company’s Head of the SAP Development Cloud and Integration (DCI) team. “First, we invest a lot of effort and resources in the research and development of innovative products. Second, we are a very lean organization so decisions happen very quickly, which helps us grow and be on top of our game.”
The DCI team is responsible for every technical aspect of the organization’s SAP landscape, including overseeing all development, integration, and implementation of new systems or processes. The DCI team is in charge of managing the integrations for this growing hybrid landscape that includes around 70 applications, including on-premise and cloud SAP and non-SAP applications.
Prioritizing Integration as a Strategic Imperative
A substantial part of the organization’s business is supplying components and parts to almost every major automotive company. Today, more than 50% of the cars that are manufactured worldwide contain the company’s products and technologies. With the organization selling to those in the business-to-business (B2B) and business-to-government (B2G) sectors, rather than directly to consumers, it has a large number of B2B interactions with heavy electronic data interchange (EDI) transactions.
“The automotive industry is a just-in-time business that runs primarily on EDI-based processes,” says the Head of the SAP DCI team. “When we started our SAP integration program, we focused on EDI as our main use case since a large part of our business integrations involve integrating with contractors, external partners, and large distribution businesses. With automotive customers expecting fast response times — in some cases, in as little as 30 minutes — we always have to be on our toes and monitoring systems 24/7.”
The DCI team is a global team, with resources located in Switzerland, Spain, Portugal, India, and the US, and most recently in Mexico and Asia Pacific. This dispersed team helps ensure that someone is always on hand to support business needs or address any application programming interface (API) or integration issues that arise.
While EDI is its primary integration use case, the enterprise has experienced several other use cases as well, such as when it acquired a company that required SAP integration with a certain product it was using, when a business requested to integrate with an internal on-premise company system that had no out-of-the-box integration, and when the use of cloud-based non-SAP and SAP applications, such as SAP SuccessFactors solutions, increased.
“The in-house expertise and SAP technology in place at that time allowed us to build integrations to those systems,” says the Head of the SAP DCI team. “Our yearly usage of SAP Process Integration jumped multifold when we started integrating not just EDI, but non-API gateway applications as well.”
Factors That Led the Company Toward Integration in the Cloud
With business channels such as online sales increasing in importance in the current economy, the DCI team faces new requirements for integration — for example, providing catalogs to distribution stores, such as Home Depot and Lowes, so they can integrate company data into their online stores. Using APIs to integrate with these stores and big online retailers such as Amazon, the company can seamlessly share data such as pricing information, digital images of assets, documentation, and safety sheets.
When the Head of the SAP DCI team first joined the company, certain products used a file-based integration model, where the integration was based on files generated from nightly batch jobs run in the SAP system. The team lead describes this process as tiresome and resource-intensive, and adds that it consumed more than $100 of CPU time each night just to generate files for one system. “When the opportunity came to replace those systems, we wanted to also update the integration model from file-based to real-time web services-based integration. That way, instead of generating all the data, we push the data out only when there’s an event or change.”
Cloud-based integration would eliminate the need to consume CPU time to generate a few files and, in turn, free the DCI team to focus on running mandatory nightly business processes more smoothly. Two other organizational shifts also contributed to the decision to move integration to the cloud, according to the team lead.
First, the team wanted to discourage duplicated effort in building similar APIs. “We had built a lot of integrations, for historical reasons, where we distributed the same data, and we wanted to replace that. We wanted to expose not just data as APIs, but also business processes — making the consuming applications not dependent on a point-to-point integration, but free to use that data.”
Second, the team wanted to offer the business more self-service for integrations, according to the team lead. “We wanted to be able to generate alerts for business users in real time for any integration errors so they can then access the system, trigger those interfaces themselves, and fix the data error on their own. And we wanted to expose an API and present data and business processes to users in a way that was familiar to them. For example, having a salesperson or customer service representative look at a CRM solution they are comfortable with — rather than forcing them to look at an SAP screen — will help grow our business.”
About this time the company was invited to attend various SAP-led workshops to preview features planned for SAP Integration Suite. SAP incorporated feedback from the company into the product deployment, which was a key reason that the organization decided to implement SAP Integration Suite for cloud-to-cloud integration and on-premise-to-cloud integration, according to the team lead. “It’s faster, quicker, and easier to maintain, build, and deploy. Because it’s in the cloud, you can work on it from anywhere, and it’s easier to train people on. There is no learning curve every time we have to do a new integration.”
Prior to using SAP Integration Suite, the company used a third-party add-on for a certain B2G integration, which created its share of challenges, according to the team lead. “Having an add-on within the on-premise system means every time we do an upgrade, we have to validate with the vendor if there is a support pack available or an upgrade required, which slows down a project. We faced issues like this during our SAP S/4HANA migration, where we couldn’t complete our testing cycle because of some of the packages, which resulted in us having to push back certain activities.”
A cloud-based system for integration eliminates those types of hardships, according to the team lead. He also says that fast and easy integration is doubly important when considering mandatory compliance with various countries’ legal requirements, such as reporting invoices to the government within a certain number of days. “For example, say a requirement from a government changes, and it’s now an easy process to deploy an updated version. We don’t have to worry that an integration won’t work after an upgrade, or worry about new regulations in countries, because that updated package is provided by SAP.”
The team lead especially appreciates the pre-packaged content of SAP Integration Suite, since other products require manually building integrations from scratch, which takes a lot of time, money, and effort. “The functionality of SAP Integration Suite allows us to seamlessly deploy this content with a few clicks in the cloud.”
Preparing for an Integration Explosion with a Dedicated Competency Center
The company has come a long way over the past decade with the number of interfaces and types of integration scenarios built by the DCI team, and this is just the tip of the iceberg, according to the team lead. “As we move our SAP landscape into new regions and emerging markets — and as we consider the current situation, where we need to connect more electronically with our customers and distributors — our integration requirements are going to explode in the coming years. We will be well prepared to handle this explosion because of how we built a dispersed resource model and trained in-house resources.”
The enterprise has no plans to outsource the governance of its overall integration and development strategy, according to the team lead. In fact, in 2018, when the company set out to define its integration strategy, a main pillar was to create a governing competency center, which the business plans to establish by the second quarter of 2021. This center will be a central place where different people from various internal business and IT teams can discuss their opinions and make decisions together about the right products and types of integrations to use.
“Considering the scale of integration the DCI team is working on and what other teams at the company are involved in, having such a team and oversight body is a very important step,” says the team lead. “It will help us keep track of the technology and also make sure we are not just following a single source of truth for data, but for the business processes — as all integration starts from a business process.”
A Growing Hybrid SAP Landscape
Approximately 70 systems comprise the company’s hybrid SAP landscape, which includes on-premise SAP applications such as SAP ERP 6.0, SAP Extended Warehouse Management, SAP Transportation Management, SAP Global Trade Services, SAP Business Warehouse, and SAP ERP Human Capital Management, as well as cloud-based SAP applications such as SAP Integration Suite, SAP SuccessFactors solutions, SAP Concur, SAP Integrated Business Planning for Supply Chain, and SAP Business ByDesign. There are also many homegrown and non-SAP systems that connect to these on-premise and cloud applications.
The company’s SAP landscape is continuously expanding due to organic growth and many acquisitions. In 2018, the company recognized the need for a better way to integrate smaller acquired companies with just a handful of employees and no need for a large-scale and complex ERP system, as well as newer acquisitions of larger organizations not yet on the SAP ERP system. To address this need, the DCI team began rolling smaller companies onto the cloud-based SAP Business ByDesign, and in 2019, it kicked off a project to migrate everyone else to the on-premise SAP S/4HANA system.
According to the team lead, the company elected to keep the management of its SAP S/4HANA system in house, and it plans to follow a regular upgrade cycle (every three years) starting in 2022. “We run a single-instance system that is used 24/7 across the globe, so we can’t have a downtime maintenance window every quarter, for instance, for regular update cycles. That’s why we decided to operate the system on premise, where it’s under our control and we perform our own updates.”
The DCI team will have its hands full handling the integrations for this growing hybrid landscape amidst these concurrent rollouts. “While a large part of our processes and systems are — and will remain — on premise, the usage of our cloud-based processes and systems is increasing daily,” the team lead says. “By 2025, our target is to have all the companies across the board running an SAP product as their core ERP system — be it in the cloud with SAP Business ByDesign or on premise with SAP S/4HANA.”