Moving to SAP S/4HANA is a journey, and no one way is going to be better than another. In fact, most organizations need to understand their unique reasons for moving before they can build their business case for the move. They can, however, learn best practices from other organizations that have gone through the trenches and come out successful.
Shell is mapping out its nearly 10-year move to SAP S/4HANA with lessons learned that apply across the industry. ASUG spoke to Evert Ruijs, lead design authority at Shell, to discuss how he and his team are designing a data model that will serve up the future ERP platform companywide.
“We’re working on an agenda across the enterprise to drive a simpler and more agile enterprise,” he said.
Sharon: Can you provide a high-level overview of Shell’s current ERP landscape?
Evert: We currently have up to 30 different ERP systems, most in SAP ECC 6 and some already in SAP S/4HANA. Shell has both an upstream and a downstream business, each with their own divisions. It’s quite a diverse landscape. You can think of it as a number of really big ERPs for the core businesses and then a number of smaller, peripheral ones that are usually either focused on a single asset or a small sliver of the business that is unique.
Sharon: What is working well in the current landscape, and what needs to be transformed?
Evert: We’ve got a really mature and relatively stable and cost-effective landscape. So, from the perspective of whether we’re happy with what we have, I’d say yes. Particularly if I talk with the downstream business, they actually don’t want to get rid of their current system.
But we know change is happening. We know the cloud is coming, and also business change is coming. For instance, because we have a diverse set of ERPs, it requires quite some effort to do things like common procurement or group reporting. Or what about benchmarking of assets? It shouldn’t need to be that difficult to do those things. Even performing upgrades has become difficult because we have so many customizations.
So, our objective with digital transformation is to drive more value by simplification, and for enterprise alignment of these different systems.
Sharon: What is the scope and timeline of Shell’s SAP S/4HANA project?
Evert: It’s a bit of a tricky question, because it is not going to be one project. We don’t expect to have one gigantic system. We’re instead looking at a multitenant scenario where the different tenants are covering different aspects of the business, but still driven from an aligned data design.
We are approaching each SAP S/4HANA deployment with a greenfield deployment with the end goal of eventually being 100% on the cloud. We currently have seven SAP S/4HANA tenants live, although they’re all relatively small. The first large asset to go live is expected to be in 2023. Hopefully, we can scale up very quickly to have more assets, but I expect that the full project will take us up to 10 years.
Sharon: What were the key elements in your business case that allowed for this project to move forward?
Evert: I’ll start with what we didn’t want—to run this project as purely an IT asset refresh. That shouldn’t be the main business case for going to SAP S/4HANA.
We went in emphasizing that business simplification and better enterprise alignment will have tremendous business value. But also, we are aiming for a better user experience, better analytics, and the ability to use some of the new advanced functionalities that are still in development. We also included a focus on having a clean platform without customization as a means to lower our total cost.
Having said that, individual business functions will have their own more-detailed business cases when making the transition. So, it’s not going to be just one single business case for the whole journey, but a series of business cases for specific implementations.
Sharon: Is there a center of excellence (CoE) in place?
Evert: Indeed, we have learned that establishing a single CoE has a lot of value. The existing SAP S/4HANA tenants that are already live fall under the purview of the CoE. And for the future, the CoE also will be tasked with running the implementation projects together with our business partners.
My team, which falls under the Shell Group CIO organization, provides the strategy and the approach for the design, and the CoE drives the execution.
Sharon: Can you provide a high-level overview of the steps you are taking to deliver a common data model across the ERP landscape?
Evert: We created different workstreams that we started in a staggered way. We are currently running three workstreams and we’re just about ready to move on to the fourth. We began the work by prioritizing business functions, first with finance. It was the most logical because it’s really the core of an ERP design. From there, we added other functions including procurement and asset management. We are now moving on to the supply chain. We went bit by bit, depending on the maturity of the products available from SAP.
Once we created the workstream, we took some time to fully understand the product within SAP S/4HANA. We looked up what is available in the product and checked to see if the data model was fit for purpose for Shell. We do that by both mapping what we have to the new model, but also, where we see differences, having discussions with process owners and data owners on how to get to an alignment.
It has been quite a journey because we’ve had to consider a lot of different moving parts within the process.
Sharon: Who was involved in the process?
Evert: The IT team is leading the design efforts together with our business excellence organization and finance operations. Every workstream consists of a combination of IT and businesspeople. This includes mobilizing business experts that we call data definition owners. They’re the people who really understand the data and how to use it, but particularly understand it from a perspective of how we’re going to use that data in the target setup. A lot of these people also are involved in the ongoing design efforts in the SAP Oil and Gas consortium, a joint exercise with seven other oil and gas companies like Chevron, Conoco, and Equinor. They’re helping us understand what is coming so that we can properly plan for the future. It’s a very collaborative effort.
Sharon: What have been some lessons learned so far that you can share?
Evert: One of the lessons learned is that it is a good idea to start a project of this scope with data design. It’s a good practice to adopt. Traditionally, ERP implementations have started off with process design, and data wasn’t thought about until it was time to ramp up the project and get it done, leaving little time to get the data part right. We’ve flipped the program and started with data because that gives us more time to align enterprise decisions on how we want to align the design in the future.
The second lesson learned is that it is important to spend the time and learn the system which you are implementing. Most of the time with an ERP implementation, an organization relies on a systems integrator (SI) to walk them through it. But the reality is that there isn’t a lot of experience with SAP S/4HANA at this time in the market, so you need to build up the knowledge in-house. We’ve done that by doing these smaller implementations first and learning from those.
Sharon: What are some obstacles you’ve run into and how have you addressed them?
Evert: The biggest obstacle has to do with change management, as there are many stakeholders. These system implementations require not only resources, but also the ability to bring users along to adoption. Sometimes that is difficult when you can’t explain that instead of looking for immediate return, you need to look out 10 years to understand why we’re doing this. You need to get the right stakeholders involved early on to help champion that change. We have a very complex organization at Shell, and it wasn’t easy to do that.
Another obstacle has to do with the fact that there are still parts of SAP S/4HANA that are not mature. So, this means that we are working with moving targets in some areas. We try to prioritize the work based on the maturity of the product, but that can still be difficult at times. It requires planning and the ability to be agile.
Sharon: In your opinion, what are the biggest challenges that the oil and gas industry is facing right now? How, if at all, can an SAP S/4HANA upgrade help address those challenges?
Evert: The biggest challenge right now is cash. When there is a halt in cash flow, it can mean the need to postpone investments and projects. But the truth is, there is tremendous value in moving forward with a project like this. Although the value may not be immediate, the long-term goal is to make the organization more agile, to allow it to deal with the level of business change we are in, like the energy transition. You do that with simplification. You do that by aligning processes and making it easier to glean insights. You do that by enabling decision-making based on data and advanced analytics. SAP S/4HANA will help make that more seamless.
Register for the ASUG Express: Achieving Success with SAP S/4HANA Virtual Boot Camp series, beginning on Oct. 27, 2020, to learn about strategy and vision, building a business case, project planning and preparation, successfully executing, change management, and how to execute a 100% remote project.