In business for nearly a century, Baillie Lumber is one of North America's largest hardwood lumber manufacturers, distributors, and exporters. Although it established its roots by supplying lumber regionally, it has grown into an international hardwood manufacturer that can ship hardwood lumber anywhere in the world.
The company recently completed a greenfield implementation of SAP S/4HANA for one of its three business units. With plans to go live with the other two business units next, Chief Technology Officer Gary Braunscheidel and Director of Marketing Communications Tony Cimorelli shared some strategy tips and valuable lessons learned.
As the head of the IT function at Baillie Lumber, Gary was responsible for the overall delivery of the SAP S/4HANA project as well as establishing an SAP Center of Excellence and strategy to best leverage SAP business value. Tony was involved in both external and internal communications regarding the SAP S/4HANA project and was charged with leading the organizational change management initiatives. In part one of this two-part article, the two discuss building the case, building the strategy, and making the move to SAP S/4HANA.
Sharon: What was your legacy system before moving to SAP S/4HANA? What were you looking to achieve by moving to SAP S/4HANA?
Gary: We have three primary business units and therefore three different ERP systems. Two of our business units—Baillie Lumber and American Hardwood Industries—had legacy systems including an AS400 and a Windows-based system that were more than 20 years old. The third, Wagner, was operating on a newer software as a service system called Forestry Systems. For Baillie Lumber we were using Oracle for business intelligence, analytics, and data warehousing. For the other two, we were using custom reporting apps.
We needed to combine all three business units because we were, for the most part, using applications with aging technology. We needed one ERP that provided visibility into all our inventory. We wanted to automate business processes wherever we could so that we can find opportunities to grow. We’re still in the midst of that evolution, but it includes automating everything from sales to accounting and manufacturing and more. Ultimately, we want to be able to provide better business decision support to all business units. SAP S/4HANA will help us to do that, and we’re starting to see some of that now.
Sharon: Why did you decide on a greenfield approach?
Gary: Ultimately, it came down to time and effort, and both were substantially less with a greenfield implementation. The age of our legacy technology put some restrictions on our ability to build the kind of temporary scaffolding required for a brownfield implementation.
So, we decided to test it at one business unit first by going with a big-bang approach for all functions at all the plants for that unit. We found that while it was painful and required a lot of work, it was likely the fastest means to an end.
Sharon: What were the benefits of hosting SAP S/4HANA on the SAP HANA Enterprise Cloud?
Gary: SAP HANA Enterprise Cloud, which is a private cloud solution hosted by SAP, allowed for us to quickly implement SAP S/4HANA. We’re on the private version, which means we are technically on-premise and not on the cloud.
It was the right fit at that time. We had a cloud-centric type of strategy and SAP HANA Enterprise Cloud allowed us to follow that without having to have the SAP talent in-house. We didn't have the internal SAP skill set required to launch the platform on our own. And even if we were to use system integrators to help with that, the reality is, we were able to set that aside temporarily and focus instead on better understanding the benefits of the new system and what’s required to run it.
We have been running SAP HANA Enterprise Cloud for more than two years, but we just went live with SAP S/4HANA in November 2019. And so, we’ve had the ability to learn from that and gain understanding and experience. Now, we have our options when it comes time to whether we renew as it is now, bring it on-premise, or host it somewhere else. We’ll address that with a new business case when we cross that bridge, but we’re better positioned to make that decision.
Sharon: What were the most compelling factors within your SAP S/4HANA business case that helped you gain executive buy-in for the project?
Gary: Our legacy platforms were holding us back from our growth initiatives, both on the sales side organically, as well as through acquisition. Our growth objectives really required a seamless connection between all the functions as well as the ability to more effectively predict our ability to provide product to the marketplace. That was the core of the business case.
Tony: I agree. One of the driving factors that helped the business case was the availability of inventory visibility. We had disparate systems and our sales teams had to go to three or four or five different places to find inventory. So, having the ability to quickly, simply, and easily find inventory for sale was key. Another key driver was access to advanced analytics. With our legacy systems, most of the analytics we were looking at were already dated, meaning they had happened some time ago. It was key to show how real-time analytics can help make better business decisions.
Sharon: How did the IT and business departments work together to make this a successful project?
Gary: We had developed a center of excellence (COE) right from the very beginning in addition to introducing the concept of Agile and the terminology associated with it. We established key business functional roles and we established a new role we called product owner. The product owner is a person who owns the capability within the SAP space in that function and is responsible for educating end users, process review, and implementation.
This allowed IT and the business units to work together. It helped with ownership of product and it helped with adoption.
Another key to success was executive buy-in and participation. We had two key executives at the leadership level who were really driving the agenda. They actively participated and became champions of the project.
Sharon: Did you have a clearly defined road map for your move to SAP S/4HANA?
Gary: We knew we had to get SAP S/4HANA across all businesses. That was clearly articulated. We also knew we were going to start with a single business unit, and we were going to do all business functions within that unit with a big-bang approach.
In terms of the overall road map, we considered requirements for all three business units and we created what we're calling a global template that can be used for all lumber manufacturing going forward. Being the first hardwood lumber manufacturer to go live on SAP S/4HANA, we essentially created best practices. Now, our hope is that we can use this template for any business unit we want to bring on in the future.
In part two of this article, we will discuss the change management requirements, the benefits of moving to SAP S/4HANA, and lessons learned for the next two implementations of SAP S/4HANA.
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