Sumitomo Heavy Industries: Integrating Global Accounting with SAP Business Suite powered by SAP HANA

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1 Picture Credit Sumitomo Heavy Industries Ltd., Shinagawa-ku, Tokyo. Used with permission. SAP Business Transformation Study Industrial Machinery and Components Sumitomo Heavy Industries Sumitomo Heavy Industries: Integrating Global Accounting with SAP Business Suite powered by SAP HANA Sumitomo Heavy Industries Ltd. supports Japanese industry with industrial and construction machinery and shipbuilding. To strengthen business management globally, the company decided to integrate the business systems for each business unit. It adopted SAP Business Suite powered by SAP HANA as the cloud-based accounting platform for its domestic group companies.

2 Company Sumitomo Heavy Industries Ltd. Headquarters Shinagawa-ku, Tokyo Industry Industrial machinery and components Products and Services R&D for and manufacture and sale of machinery components, precision machinery, construction machinery, industrial machinery, ships, and environmental products and plants Employees 18,061 Revenue billion (US$5.4 billion) (FY 2014) BUSINESS TRANSFORMATION Objectives Build a robust, groupwide business platform to drive growth in global markets Enable flexible response to business environment changes, such as corporate split-ups, mergers, acquisitions, and reorganizations Streamline accounting and business management operations Standardize business processes to reduce overhead cost Integrate accounting systems using SAP Business Suite powered by SAP HANA Use the SAP HANA Enterprise Cloud service to enable flexible scaling and resource usage Deploy quickly at a low cost by minimizing add-ons Benefits Increased efficiency of accounting operations with improved performance Access to real-time information generated from monthly financial close processes Reduced infrastructure cost and more flexible resource usage with a cloud environment Reduced burden on IT administrators Read more 13 companies With integrated accounting systems in the cloud Lower Effort and processing time for month-end closing Greater Flexibility to scale IT systems in the cloud Web Site As our business is expanding globally, we have to quickly respond to business changes. With the SAP ERP application, we have built an IT system platform that enables us to visualize business information and get insight in real time. Satoshi Doi, Director, Corporate Information and Communication Technology Department, Corporate Planning Group, Sumitomo Heavy Industries Ltd. 2 / 6

3 Standardizing accounting to strengthen global business management As a leading machinery manufacturer, Sumitomo Heavy Industries Ltd. plays a vital role in the development of Japanese industry. Recently, the company has actively expanded its business across the world. Sales from foreign countries made up 55% of its overall revenue in FY Traditionally, most of the company s business IT systems have been designed and customized specifically for each business unit. Expanding its business worldwide, the company realized that business and performance management must be strengthened to meet global needs. This idea became a strategy to consolidate and integrate existing core IT systems. A robust, groupwide business platform is critical to accelerate global growth efficiently, explains Satoshi Doi, a director of the corporate information and communication technology department in the corporate planning group. To do this, we wanted an IT system platform that could centralize business management processes, help the headquarters govern, standardize business processes among different business units, and meet changing business needs. Sumitomo Heavy Industries first step was to integrate the accounting systems used in the head office and major subsidiaries in Japan. In 2009, when the company began planning the strategy, it was also required to comply with International Financial Reporting Standards. However, traditional accounting systems based on Japanese packaged software, even with significant customization, did not provide the flexibility the company needed. So the firm decided to build an integrated, groupwide accounting platform with standardized business processes, which would serve as a model of a comprehensive integrated business platform. 3 / 6

4 Deploying SAP Business Suite powered by SAP HANA in the cloud After evaluating enterprise resource planning (ERP) products, Sumitomo Heavy Industries decided to adopt SAP Business Suite powered by SAP HANA, which had just been released in Japan. Takayuki Okoshi, an engineer in the business transformation group of the information system department at Sumitomo Heavy Industries Business Associates Ltd., explains why the company made this selection: I knew that we would be the earliest adopter of SAP Business Suite powered by SAP HANA among heavy industry manufacturers in Japan. I was very interested in the idea that a single database can enable both online transaction processing and online analytical processing. We fell behind competitors in leveraging ERP and thus learned that early adoption of a modern architecture could maximize the benefits of ERP for us. The project, launched in October 2013, faced some challenges. Without a precedent, the company had trouble identifying an appropriate scale for the system. It resolved this by using the SAP HANA Enterprise Cloud service a cloud environment managed by SAP that enables users to scale resources flexibly. We had no concerns about the interoperability and security of the cloud service, because it is offered by SAP, says Okoshi. We built a simple test environment on Amazon Web Services to define requirements for SAP Business Suite powered by SAP HANA. This helped us understand which benefits can be achieved with cloud computing. In the next development phase, the company took the approach of minimizing add-ons, seeking to avoid customization for each use case. Additionally, the project took on dedicated resources who were able to focus on development. The new system was launched in April 2015, as planned. 4 / 6

5 Increasing efficiency, saving cost, and reducing IT burden Sumitomo Heavy Industries successfully built a groupwide accounting platform with SAP Business Suite powered by SAP HANA, becoming the earliest adopter of the software among heavy industry manufacturers in Japan. Currently, the head office and 13 of the major domestic group companies operate their business using the new platform. At this point, the first quarterly financial close process after deployment has just finished, and specific benefits will be measured from now on. Shunzo Kashima, ERP project team manager at Sumitomo Heavy Industries, believes positive changes have already occurred, explaining, Previously, we had to wait until monthly closing reports were generated from batch programs that ran twice a day. Now, we can get reports directly from SAP HANA in real time. We have no waiting time and can perform business processes more efficiently. Sumitomo Heavy Industries expects significantly reduced infrastructure cost. Cloud computing requires fewer physical servers, has a smaller footprint, and uses less power than an infrastructure hosted on premise. The company also built a data warehouse using views from SAP HANA instead of deploying the SAP Business Warehouse application. This helped simplify the system configuration and reduce hosted servers. An important benefit is the reduction in IT operational burden. Okoshi values this highly, saying, Traditionally, dedicated accounting systems were designed specifically for each business unit. Shifting them to SAP Business Suite powered by SAP HANA with standardized business processes can reduce burden on IT administrators. Another significant benefit from cloud computing is our ability to scale the IT system flexibly. 5 / 6

6 Sumitomo Heavy Industries Extending business management with a modern architecture (15/11) Sumitomo Heavy Industries plans to deploy the new accounting system to its other domestic group companies. The company has also started deploying SAP Business Suite powered by SAP HANA for logistics use in domestic business units. It expects production, sales, and purchase components to go live in FY 2016, and business IT systems to extend widely across business units in FY The company plans to deploy new accounting, production, and sales systems based on SAP Business Suite powered by SAP HANA to the major overseas group companies in the near future. It is also focusing on the trend to connect industrial machinery to the Internet of Things, and it expects the SAP S/4HANA suite to play a large role in this. Sumitomo Heavy Industries is pleased with its decision to deploy SAP s innovative architecture and cloud service earlier than its competitors. It serves as a successful model for companies that want to modernize their architecture and strengthen business management platforms. 6 / 6 Picture Credit Sumitomo Heavy Industries Ltd., Shinagawa-ku, Tokyo. Used with permission.

7 No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE 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 SE (or an SAP affiliate company) in Germany and other countries. Please see for additional trademark information and notices. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP SE or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP SE 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 SE 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 SE 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 SE 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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