Managing Expansion and Complexity in Growing Chemical Enterprises

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1 Chemicals Managing Expansion and Complexity in Growing Chemical Enterprises Table of Contents 3 SAP ERP: Not Just for Large Enterprises 4 The Next-Generation Deployment Model: Chemical Company in a Box 7 Customer Case Study: Elevance Renewable Sciences 2013 SAP AG or an SAP affiliate company. All rights reserved.

2 To survive and thrive in today s economy, small and midsize companies need to prepare for rapid growth and globalization. And the business challenges and market expectations for smaller companies are not much different from those faced by large global chemicals producers. They need to develop innovative applications and formulations, respond quickly to changing customer needs, manage complex supply chains, and deal with increasing regulatory requirements. An IT infrastructure built to support adaptive business models and processes for core enterprise functions, as well as industry best practices, is essential to meeting these complex challenges. However, smaller companies typically do not have the capital and resources required to operate and maintain their own IT infrastructure and on-site data centers like their larger counterparts. They need a flexible IT infrastructure that scales to their business needs one that can run enterprise resource planning (ERP) software that supports all critical business functions, including manufacturing, sales, purchasing, inventory, and finance. Smaller chemical companies typically do not have the capital and resources required to operate and maintain their own IT infrastructure and on-site data centers like their larger counterparts. 2 / 9

3 SAP ERP: Not Just for Large Enterprises The fact is, implementing ERP software can be a complex, costly, and time-consuming task. To help companies streamline this undertaking while mitigating associated risks, SAP developed a preconfigured template that captures chemicals-industry best business practices. This template is widely used by large enterprises that want to standardize or harmonize their business processes as part of their system landscape consolidation efforts, particularly after mergers or acquisitions. AN APPEALING APPROACH FOR FAST-GROWING COMPANIES But this approach has proven to be equally appealing to small and midsize chemical companies that need to quickly ramp up a robust, industry-specific ERP foundation to support their growth plans. Today, the SAP Best Practices for Chemicals package and the SAP Business All-in-One for Chemicals solution enable more than 100 preconfigured industry scenarios, including critical functions for manufacturing and environment, health, and safety processes. This approach serves as an advanced start for SAP or partner implementation projects, with typical deployment in five months or less. Overall, it helps small and midsize companies maximize operational visibility and process efficiency across their organization, improve performance, profitably fulfill customer demand, secure new revenue streams, and protect brand reputation. GAINS FOR SAP CUSTOMERS USING INDUSTRY-SPECIFIC SOLUTIONS Companies that successfully implemented chemicals industry specific ERP solutions from SAP achieved the following benefits:* 20% increase in revenue supported 350% increase in number of products sold 30x faster access to sales data (monthly to daily) 25% reduction in customer response times 5% increase in on-spec delivery performance 90% reduction in customer complaints related to order and delivery errors 100% increase in productivity 43% decrease in days of stock in inventory while inventory costs declined by 60% 15% reduction in inventory 10% decrease in material turnaround time 36% reduction of time for consolidated closing 50% less effort required for year-end financial closing 40% reduction of system cost Worldwide visibility into financial, sales, manufacturing, and supply chain metrics *Source: SAP customer reference database 3 / 9

4 The Next-Generation Deployment Model: Chemical Company in a Box This approach offers many compelling business benefits. However, SAP Best Practices for Chemicals and SAP Business All-in-One for Chemicals build upon a traditional on-premise IT deployment model while, in fact, many companies are exploring the benefits of cloud computing. For these companies, what makes sense is a flexible and scalable infrastructure, deployed and hosted by a partner in a cloud environment and based on a pay per use model. This way, they avoid up-front capital investments and gain more agility to thrive in today s dynamic global business environment. They can further reduce the time, costs, and risks of an on-premise implementation and much more easily adapt to rapid growth while leveraging the latest business process and technology innovations. SAP and partners offer this innovative deployment model as managed cloud as a service, which enables subscription delivery of SAP solutions on the private cloud of the SAP-certified partner or service provider. ACCELERATED IMPLEMENTATION, REDUCED COST, A SINGLE CONTRACT Specifically for growing chemical companies, SAP has teamed up with qualified system integration partners to develop the chemical company in a box concept based on SAP Best Practices for Chemicals, SAP Business All-in-One for Chemicals, and managed cloud as a service. In short, you can choose to do business with a single vendor a qualified SAP partner providing all software licenses, services, and fees for the hosted or cloud-based environment. This offering comprises the following building blocks: Application: SAP ERP is the core application component. SAP ERP is used by nearly all of the world s top 100 chemical companies to support their global operations. In addition, partners offer supplemental options such as analytics, mobile solutions, or a simplified user interface. What makes sense for smaller companies is a flexible and scalable infrastructure, deployed and hosted by a partner in a cloud environment and based on a pay per use model. GAINS FOR SAP CUSTOMERS USING SAP HANA The SAP HANA platform allows chemical companies to: Reduce data load time by 95% Increase gross profit by 0.6% Reduce order and billing analysis to 15 seconds* *Source: SAP customer reference database 4 / 9

5 Industry template: SAP Best Practices for Chemicals speeds implementation projects with more than 100 preconfigured settings supporting industry-specific business processes, along with extensive documentation and built-in accelerators. SAP is continuously enhancing this template with innovative applications and technology, focusing on delivering speed, insight, and simplicity. Deployment: A hosted cloud-based environment keeps the total cost of ownership down, eliminating the need to procure and maintain hardware. Licensing: SAP partners offer managed cloud as a service, providing a single contract for all software licenses, services, and fees for the hosted or cloud-based environment Testing and evaluation: Partners can provide a testing or evaluation landscape within two business days, allowing your company to get the project started in a very short time. The solution is based on the SAP HANA platform, which enables your company to run your operational ERP and analytics systems on the same platform for real-time decision making, reduced IT costs, and greater business value. In addition, by deploying this chemical company in a box packaged solution, your company can take advantage of the following benefits: One partner, one vendor, one contract For fast time to value and simplicity, the partner offers a complete package of software licenses and services included in one contract. A tailored industry solution This is one of most comprehensive packaged solutions available anywhere, tailored for the chemicals industry and related specialties. BENEFITS AT A GLANCE The chemical company in a box package offered by SAP partners offers: Simplicity: One vendor, one contract, one point of contact Preconfigured and prebuilt content Affordability: Pricing model that scales for growing companies Lower-cost cloud solution IT costs less than 1% of revenue* Best-practice templates that reduce implementation effort often by 20% to 30%* Reduction or redeployment of in-house IT resources Reduced risk: Ability to try before you buy Scalability for future needs *Source: SAP customer reference database 5 / 9

6 Accelerated implementation and reduced total cost of ownership The software can be up and running in two days and can be fully implemented in five months or less. Managed cloud as a service significantly shortens implementation time, and total cost of ownership can be reduced by 30% or more (see figure). Flexible business models and mitigated financial risks Partners offer flexible payment terms, tailored to fit your cash-flow situation. The use of the industry template as a subscriptionbased solution hosted in the cloud mitigates the risk of project scope creep and budget overruns. Faster access to the latest technology innovations The solution is based on the SAP HANA platform and in-memory database, enabling real-time decision making and business transparency. Scalability The solution and services can be scaled in response to business needs and growth plans. Overall, the chemical company in a box package makes it easy to become a best-run chemical company by quickly adopting the benefits of SAP software and capitalizing on the industry expertise of SAP and its partners. Figure: Expenses for Managed Cloud as a Service, as a Percentage of On-Premise Deployment Cost 100% 80% 60% 40% 20% 49% 60% 65% 68% 70% Source: VMS AG Report, The Impact on Total Cost of Ownership TCO of Running SAP, July % Year 1 Year 2 Year 3 Year 4 Year 5 The software can be up and running in two days and can be fully implemented in five months or less. 6 / 9

7 Customer Case Study: Elevance Renewable Sciences Headquartered in Woodridge, Illinois, Elevance Renewable Sciences Inc. creates novel specialty chemicals from natural oils for use in personal care products, detergents and cleaners, lubricants and additives, engineered polymers, and other specialty chemicals markets. Commercial shipments from the company s first biorefinery, a 180,000-metric-tons joint venture with Wilmar International Limited located in Gresik, Indonesia, began in The Elevance biorefinery produces multiple high-value chemicals and advanced biofuels streams similar to petroleum-based refineries. BUSINESS CHALLENGE Elevance was using a financial and accounting system that was not able to meet the flexibility required of a specialty chemicals company. As it prepared for significant growth, including bringing additional refineries online, Elevance recognized the need to take action by replacing various business applications with SAP software. WHY SAP AND PROTERA FOR ELEVANCE Elevance needed a hosting and application management services partner with the experience and technical know-how to transition its SAP landscape to a cloud-based model. This model provides the SAP Best Practices for Chemicals package and the SAP Business All-in-One for Chemicals solution (which is based on SAP ERP) as the functional foundation. Elevance teamed with Protera Technologies Inc., which not only had the experience but the prepackaged services that would help reduce the risks involved. We had a tight six-month time frame in which to establish a reliable IT infrastructure along with ongoing support for our users around the world, said Michael Cogan, Elevance controller. It was an effort that required all parties working in complete lockstep to ensure delivery on time and within budget. Protera worked quickly with Elevance to understand all aspects of the SAP and non-sap software landscape, including number of users and transaction volumes. Protera deployed Elevance s infrastructure in a highly secure tier-one data center. The data center supports Elevance s rigorous internal and external audit requirements. In addition, Protera performed rigorous testing to make sure that Elevance staff around the world could access the deployed applications from home, the workplace, or anywhere else with an Internet connection. With the chemical company in a box package, you can choose to do business with a single vendor providing all software licenses, services, and fees for the hosted or cloud-based environment. 7 / 9

8 IT RESOURCE REQUIREMENTS SAP offers so many powerful tools that it was easy for users to want to stray from the project s chartered mission, remarks Kurt Conway, IT operations manager for Elevance. Our IT team had to step in from time to time to help keep the scope of the project within budget and within the time frame. So far, IT has relied on the relationship with Protera for installation of the SAP client on the desktops of end users. BENEFITS Today, SAP ERP supports 25% of Elevance s business processes. Our group depends on SAP ERP for transactional processing, explains Heather Christophersen, Elevance director of business operations. The application is the source for our reporting and master data. The software also supports Elevance s strategic efforts to ensure superior customer satisfaction and operational excellence. Sophisticated monitoring tools automatically notify both Elevance and Protera staff members of issues regarding the security of the application or any connectivity problems. Continuous online availability of SAP ERP means that the varied mix of Elevance s employees, contractors, and partners can gain access to the software anytime and anywhere. Elevance s remote facility in Mississippi is able to get into SAP ERP, helping streamline finance and accounting processes. Further, Elevance enjoys predictable monthly costs for its hosted SAP ERP application. WHAT S NEXT? The Elevance IT team prefers a buy versus build model whenever possible, recognizing that, as a high-growth specialty chemicals company, Elevance is not in the business of IT. The team does, however, leverage best-in-class software and support, and Protera has proven to be a highly valuable partner. At the outset, Elevance defined a phased approach to the implementation of SAP ERP. The company has replaced its old finance and accounting system, revolutionized the customer service group, and helped its Mississippi facility gain efficiencies. As its end users become power users, Elevance will further expand the functionality of SAP ERP in phased rollouts to enhance its functionality and scope. Additional phases of the SAP implementation will continue to drive ROI, Conway says. Using Protera s hosted solution will allow us to quickly expand its capabilities to meet our needs. We plan to implement additional SAP functionality before our next biorefinery comes online, including materials management, HR, and logistics essentially growing our business to the point where we will leverage multiple components of SAP ERP. 8 / 9

9 GET STARTED TODAY Now, your company can get set on a path toward sustainable growth in a complex global business environment taking advantage of sophisticated ERP software while reducing cost, effort, and risk. Team up with SAP and partners to become a best-run business by quickly adopting the benefits of SAP software as a subscription-based hosted solution in the cloud. FOR FURTHER INFORMATION For more information, call your SAP representative or visit us online at /3_1_chemical_company_in_a_box.html. The chemical company in a box package makes it easy to become a best-run chemical company by quickly adopting the benefits of SAP software and capitalizing on the industry expertise of SAP and its partners. CMP28626 (14/01) 9 / 9

10 No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG or an SAP affiliate company. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG (or an SAP affiliate company) in Germany and other countries. Please see for additional trademark information and notices. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP AG or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP AG or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. In particular, SAP AG or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP AG s or its affiliated companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP AG or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.

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