Implementing performance-based solutions to be prepared for future innovation is critical to Albemarle Corp., a global specialty chemicals company headquartered in Charlotte, North Carolina. The company, which operates in more than a dozen countries, acquired several production and service facilities that needed integration with Albemarle’s business processes and technology systems.
A Catalyst for Tech Change
The catalyst for change was when Albemarle completed the purchase of a lithium company in 2017, which became its largest asset. The company’s VP of Business Transformation Larry East and Chief Information Officer Patrick Thompson directed a complex transition that involved migrating two legacy SAP systems—one of which had been in place for more than 20 years—to SAP S/4HANA. In an interview with ASUG News, Thompson shared details about how Albemarle prepared for and executed this global migration. He discussed some of the ways Albemarle overcame its challenges and offered tips for forming your own go-live strategy.
Ann Marie: Could you tell us what Albemarle’s tech environment was like before your move to SAP S/4HANA?
Patrick: We had two legacy SAP platforms. Version 4.6 had been in place for more than 20 years. We also had SAP ECC 6.0, which was acquired along with our lithium general business unit (GBU) that now forms the largest part of our business. We are migrating both platforms to SAP S/4HANA.
Ann Marie: What was the goal for the migration?
Patrick: The goal was to bring our IT environment into alignment with our business strategy. We had been setting up shared service centers in low-cost markets like Dalian, China and Budapest, Hungary. We wanted to standardize and centralize our business practices, bring synergies to the back office, and ultimately optimize our plant performance. That was the driver behind our decision to go to a single platform.
Ann Marie: How did you make the business case for moving to SAP S/4HANA?
Patrick: Several features are important to us, especially the chemical best practice platform and the transportation management platform. We were on a manual transportation management system, and we recognized that there’s a lot of value in automating transportation management. Those benefits were a big driver—in terms of ROI—for our move to SAP S/4HANA. It offers better financial reporting, real-time analytics, and more drill-down capabilities.
Ann Marie: How did you decide on your approach to implementation?
Patrick: We took the greenfield approach. We’re proud of the fact that we migrated with no code customizations, which is pretty unheard of in this day and age from an IT perspective. We focused on avoiding customizations with this implementation. Our management team was committed to best practices and no customizations.
Ann Marie: How did you work through the change management process? How did you get people at the acquired company to walk away from the old customizations?
Patrick: We aligned our business processes with SAP’s best practices for the chemicals industry. Our senior management team was absolutely committed to not making customizations. They stuck to our principles and supported us on that path.
Ann Marie: How long did it take for you to migrate?
Patrick: Eighteen months was the official timetable to go live with the first deployment, which we hit in January 2018. We just completed deployment two and have two more deployments to come. Our journey is not complete yet.
Ann Marie: Did you decide to implement in the cloud? Why or why not?
Patrick: We didn’t implement in the cloud, mainly because SAP S/4HANA was not mature enough for some of the functionalities we needed at the time we made the decision. All the modules just weren’t there yet. We decided to go with a private cloud, so we’re not using the SAP public cloud. We’re using a hybrid solution. We do have SAP Ariba, SAP Concur, and a few other SAP cloud products though.
Ann Marie: How did you prepare for the migration?
Patrick: A lot of planning and preparation was associated with this project. The planning went on for about six months prior to the initial implementation kickoff. We used Deloitte as our system integrator, which provided our methodology and subject matter experts to help us. This is a business-led project, so our business leaders are heavily involved in its management. It’s a joint effort between business and IT.
Ann Marie: When you say that it’s business led, do you mean that multiple departments were involved in the process?
Patrick: We’re using just about every module that SAP has to offer, so we involved all our workstream teams, including finance, plant managers, plant maintenance, the back office, procurement, payables, and receivables. The team had about 200 full-time people, including the Deloitte consultants. It takes a village to make this kind of implementation happen.
Ann Marie: How did you align people, processes, and technology within your go-live strategy to make sure it succeeded?
Patrick: The people involved in the project included the implementers, the users, the managers of the information, and the executives. They influenced the design, the testing, and ultimately the implementation.
In terms of technology, we’re taking advantage of the SAP HANA analytics and digital dashboards. The SAP Fiori apps are the most compelling benefit for our users. These applications sit on employee devices, so we’re deploying mobile and BYOD solutions as part of the change. This encourages better adoption among users. The interfaces in the SAP Fiori apps are much more user-friendly than the old SAP GUI.
Ann Marie: What were some of the biggest challenges that you faced during the transition?
Patrick: Change management. For example, it was challenging to move from a highly customized system to a packaged configuration and adopt a standard way of doing things when we had customized things in the past. And when you’re dealing with an acquisition, the cultures are different.
Ann Marie: How many divisions or groups were involved in this go live?
Patrick: Our three general business units (GBUs). We also have corporate shared services. The three GBUs are similar in size.
Ann Marie: Are they divided by region or by function?
Patrick: They are diverse. They cross each other in different parts of the world. One of the GBUs is far-reaching, with plants in China, South America, and Australia. The others sell into those markets, but they don’t have physical plants in those countries. Right now, we have a single instance of SAP in the United States, Europe, and Asia-Pacific. The next deployment will add South America and Australia to the list.
Ann Marie: How did you overcome the challenges you faced in change management?
Patrick: Hypercare, with people on the ground hand-holding through the changes. We have an SAP business system analyst group that monitors the business processes to help manage changes like these. We also have subject matter experts in each functional area who help with this.
Ann Marie: What benefits have you seen since making the transition?
Patrick: It’s still too early to tell, but there’s a lot of excitement about the ease of access and information visibility within the SAP Fiori apps and digital dashboards. Many of our users never logged into the SAP GUI in the past. We’re gaining a lot of traction with those users now.
Ann Marie: Have you seen any benefits from your new analytics and reporting yet?
Patrick: That’s a big part of the excitement. We now have reporting and drill-down analytics, giving people visibility that they didn’t have before.
Ann Marie: What advice do you have for other customers who haven’t yet begun their transitions, particularly those in the chemicals industry?
Patrick: I’m the president of the Chemical Executive Advisory Board (CEAB), so I polled the group on their past experiences and drew out some of their knowledge on how to approach this. That was a good sounding board. Also, I talked with Olin Corporation, which was going through a project similar to ours at the same time. Our program manager, Larry East, was heavily involved as he led our efforts. He did a lot of research with SAP and Deloitte before starting the project.
Ann Marie: What did you wish you knew when you started that you’ve learned along the way?
Patrick: Our integration testing schedule didn’t leave enough room for some of the break-fix issues that we encountered. We didn’t leave enough time between the integration testing points. We thought it would be a perfect world and it wasn’t.
Ann Marie: Any other parting thoughts for SAP customers to consider?
Patrick: This was a challenging project that was well thought out and planned accordingly. We missed our original deadline, but it was too aggressive. Fortunately, senior management listened to us, and we paused for three months. That extra time paid off. We mitigated a lot of the problems that we might have had if we went live earlier. I applaud our senior management team for respecting the decision to delay our launch by three months.
Ann Marie: Thanks for sharing your experiences with us, Patrick. And congratulations on the go-live.
Don’t miss your opportunity to hear about trends in the industry from other chemicals customers at our virtual experience ASUG Best Practices: SAP for Industries in September 2020.