Consolidating its SAP environment on public cloud infrastructure is paying off for Florida Crystals Corp.
The migration was complex, but FCC took advantage of its experience as an early adopter of SAP technology to consolidate its multisystem SAP infrastructure to S/4HANA on managed services public cloud AWS.
According to Kevin Grayling, vice president and CIO of Florida Crystals Corp, this new SAP environment enables FCC's IT team to focus on the business transformation and improving business processes in running S/4HANA rather than managing the underlying infrastructure.
The FCC SAP environment on AWS is now run by Lemongrass Consulting, a managed cloud infrastructure services provider based in Ewing, N.J., specializing in running SAP systems on AWS, Microsoft Azure and Google Cloud Platform (GCP).
Four companies span FCC's SAP environment: Florida Crystals, the original company, which is an agricultural business that grows and mills sugar cane; American Sugar Refining, which processes the milled sugar into refined products; Tellus Products, which makes compostable and biodegradable tableware from sugar cane fiber; and FCI Residential, a capital diversification business that builds and leases apartments in Florida.
FCC grows around 1 million tons of sugar cane annually, milled into around 6 million tons of sugar by American Sugar Refining, which operates refineries in the U.S., Canada, the U.K., Portugal, Italy, Mexico and Belize.
When FCC was a small agricultural company 27 years ago, it implemented its first SAP ERP. The company then had relatively simple IT requirements and business processes. Still, the CEO recognized it would need a system to meet future needs as the company grew, Grayling said.
The company was an early adopter of many SAP initiatives and products. For example, it was the first company to move an on-premises ERP Central Component (ECC) environment to a virtual private cloud hosted and managed by cloud services provider Virtustream, a subsidiary of Dell Technologies.
It was also the first company to move to the HANA database; the first to move to S/4HANA; the first to adopt several SAP cloud products, including Analytics Cloud and Integrated Business Planning; and the first to adopt what at the time was called SAP Public Cloud and is now known as S/4HANA Cloud.
When FCC planned for its SAP environment's future around 2018, the company decided to consolidate its cloud infrastructure and migrate to the public cloud to reduce operational costs and focus on business process transformation. It was already using S/4HANA, but the business processes were ageing and inefficient, Grayling said.
“The SAP landscape was like having straight, flat and wide roads that you could drive fast on, but the problem was the [processes] were like cars from 1970,” he said. “They were inefficient, took too long to get the result, and were ineffective.”
Focus on transforming business processes.
Before the move to a public cloud, FCC spent time transforming its business processes rather than the underlying landscape.
Kevin GraylingVice president and CIO, Florida Crystals Corp.
When the cloud consolidation project started, Grayling managed three distinct SAP environments. One was a S/4HANA version 1709 system that was running in the Virtustream virtual private cloud, which ran about 80% of the company's transactions; the second was a legacy SAP Business Suite on HANA, also running on Virtustream; and the third was an SAP Public Cloud ERP running at the Belize refinery facility.
The project's goal was to consolidate all three SAP environments into one public cloud infrastructure for simplicity, Grayling explained. Previously, when the company needed to build processes that spanned SAP applications, it had to add customizations for specific environments so that the processes could talk to each other. Migrating to a single underlying infrastructure changed that.
“When we do things, there's a lot of cross-functional processes between the companies,” Grayling said. “It's much simpler doing it in one S/4HANA environment.”
When choosing a managed services provider, FCC chose to go with Lemongrass as it offered the most comprehensive and cost-effective public cloud services for SAP at the time. Lemongrass only offered AWS management services then but has since included Azure and GCP. FCC had an existing relationship with AWS for cloud services.
Flexibility is the key.
Grayling considered Rise with SAP's initiative to offer customers a SaaS-like deployment option, but Lemongrass offered a more flexible bring-your-own-license model.
“Rise was still very new, and we weren't sure that going down an SAP subscription model with SAP would give us the flexibility we might need later,” he said. “You're signing up for a five-year relationship that's very hard to extract yourself from if things aren't going well, and you have to give up a lot of license assets that you would not get back.”
So, FCC has kept the SAP licenses it acquired over 20 years, and Lemongrass purchases the AWS services and runs the environment and SAP Basis, the administration platform for SAP systems.
“We've retained some senior Basis expertise because we need to make sure that we know what's happening and we can understand it and agree with it strategically,” Grayling said. “We don't need to be operationally focused on [running SAP], but when we have operational questions or recurring issues, we need that expertise to know which way is up.”
Migrate, then upgrade
FCC structured the project in two pieces, Grayling explained. First, it migrated the S/4HANA 1709 instance from the Virtustream private cloud to the Lemongrass AWS infrastructure and upgraded to the most current version of S/4HANA. The second and more complex piece was moving the Business Suite on the HANA system and the SAP Public Cloud in the Belize facility to AWS and consolidating those business processes onto the S/4HANA model.
He said that the main challenge for any move from a legacy SAP system to S/4HANA is the differences in the data models.
“The functionality of how you do financial controlling or consolidations doesn't change much, but the data migration and data model differences were the most complex part of the project,” Grayling said. “Especially if you're moving to a public cloud model because the public cloud is a different data model from ECC.”
By moving the SAP environment to Lemongrass managed services on AWS, the company reduced operating costs by up to three times compared with the private cloud on Virtustream, and it reduced the cost and complexity of customizing the system, he said.
FCC has relatively simple business processes that don't need to be significantly differentiated from more complex consumer packaged goods company processes, so Grayling was looking to move away from the software customization development cycle.
“[Getting out of customizations] allows us to focus on the real value proposition of digital transformation, which is adoption — how can you get the users to use the capabilities they've been given in the right way that makes them more efficient and effective,” he said.
FCC's next move
Now, FCC is focused on improving sustainability and reducing the amount of energy it uses to grow, refine and make sugar into products, Grayling said.
The company has initiated Project Evolution, an agricultural commodity trading and risk management project on SAP Master Contract Management, which accounts for the origination of raw sugar and its movement from mills to refineries, as well as the physical contracts for raw sugar and energy usage.
“This is a big business process transformation, and probably the last big one that we need to do because it's replacing many manual or outdated processes and systems,” Grayling said.
He said that the company is also planning to converge manufacturing operations. The FCC IT team plans to integrate production control systems upstream into purchasing and delivering raw materials and packaging and downstream through the supply chain, accounting and HR.
It's easier for FCC's IT team to do this now that the company operates on a modern platform with more advanced capabilities than those usually found in the operations platforms. However, those platforms are catching up quickly, according to Grayling.
“There's a lot of investment and venture capital going into manufacturing technology, and we're doing some exciting things with packaging lines and refining assets in terms of IoT and predictive maintenance,” he said. “Integrating what we're building into our corporate ERP is easier because it's modern and simple.”
Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.
Janice is a full-time mom who likes to write on a range of topics in her spare time. She specializes in the Home, Garden, and Recycling topics. Janice is our Lifestyle and positive vibe expert. She keeps the office running.