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When faced with an impending SAP HANA implementation, the Jack Link's Beef Jerky company had two choices: build the system on premises or head to the cloud.
The maker of beef and protein snacks urges its customers to "feed your wild side," but there was nothing wild about this choice. They simply needed the best and most cost effective way to deploy HANA, which was needed to upgrade their ERP system capacity and run new functions to help with goals like improving supply chain planning. They ultimately chose to deploy HANA on SAP HANA Enterprise Cloud (SAP HEC) with good initial results, although there were lessons learned about how to effectively manage a hosted ERP environment.
Jack Link's, based in Minong, Wis., has had an SAP implementation for about five years, according to Jackie Hartman, Jack Link's vice president of IT. Before SAP, they ran a Microsoft Navision ERP that had outlived its usefulness and needed to be replaced. The company considered several ERP systems before deciding to go with SAP, and they implemented SAP ECC (ERP Central Component) and SAP BPC (Business Planning and Consolidation) with the main functions in financials, sales and inventory.
"It's a pretty limited implementation, and I would say the original implementation was not as good at helping people understand how to use and how to adopt it, and how to change business processes to accommodate the technology," Hartman said in an interview at the 2017 Sapphire Now conference.
To cloud or not to cloud
When they decided that they needed SAP HANA, the question became whether to implement it on premises or in the cloud. They ultimately elected to deploy SAP HEC to be hosted by SAP. Going with the cloud option was primarily because Jack Link's has a small IT department, making an on-premises instance of HANA impractical.
Getting to SAP HEC running on SAP's data center was by no means straightforward. First, Jack Link's faced an initial decision whether or not to move to the cloud. Given the project's tight deadline to get HANA up and running, building it was taken off the table. Hartman explained that it would have taken a long time to recruit people for the implementation project, acquire the required software and hardware, and then build the system.
"Hosting quickly became the preferred option. We did cost-benefit analysis and hosting was more cost effective, which made that decision the wiser one," Hartman said. "The great things about putting it on SAP HANA Enterprise Cloud is that we were able to get it implemented and up and running quickly -- start to finish in four months for all three environments. That would not have happened if we had built it for ourselves and I'm not too sure it would have happened with another partner, and I'm fairly confident that we would have seen a lot of finger-pointing between ourselves, SAP and whatever hosting partner we would have gone through."
Selecting SAP as the provider was primarily to simplify the chain of responsibility, Hartman said.
"We didn't want to run into the challenge of not knowing whose responsibility it was to solve a problem, so we felt more comfortable with the adage of 'one throat to choke' versus trying to figure out what was SAP's responsibility versus the hosting provider's responsibility, so we decided to put it with SAP," Hartman explained. "SAP was super competitive too and their rates and prices were definitely in line with what we were seeing from the other providers. I started looking for who I thought was going to be the better partner and better relationship manager, and I thought SAP would do a better job there as well."
Once the SAP HEC environment was up with SAP as the host, they began to take advantage of HANA's speed and capacity for transactional applications, implementing Trade Promotion Management (TPM), Demand Planning (DP) and Supply Network Planning (SNP). The BPC function was also upgraded and put into HEC.
"We put all that close to our ECC system which is on premises, so we have a hybrid environment," Hartman said.
New functionality in SAP HEC pays off
In some ways, the actual implementation of SAP HEC and the applications was the easy part, but as is often the case, change management and user adoption were much more challenging. Hartman needed to re-educate users on how to use the system and take advantage of the new capabilities.
Also, the system master data was in poor shape, naming conventions had no consistency and a lot of "fix-it" work had to be done before the new system could be used effectively.
"We had built a lot of ancillary spreadsheets that we were using to manage inventory positions that were outside of ECC, so not only did we implement a bunch of APO capabilities, we also retrained people to get back to the core system," Hartman said. "We just did our last APO implementation in March so this is still relatively new to the organization and we're still learning how to best take advantage of those capabilities. We're starting to see the value and starting to develop the discipline, but we still have a ways to go."
Nevertheless, the new functionality is starting to pay off for Jack Link's, particularly in their supply chain, Hartman explained. They now have better visibility into where demand is, where products are in the supply chain, and where they have and lack capacity. HANA's speed has made it possible to drive immediate business decisions on when to make products and proper inventory levels, which makes a big difference in a product-driven company.
Cloud is not as easy as it looks
One of the persistent mischaracterizations of the cloud is that it's easy. Hartman discovered that there's much more to it than simply putting your system up in a data center to be managed by someone else.
"You need to be really thoughtful about what you're signing up for and don't be naïve," she said. "Don't think that just because it's cloud that it's going to be easy and it's out of your hands. No, it's not out of your hands, it's actually in some ways harder to manage because now you're trying to influence your technology partner to care as much about your business and your stability as I do. My team will always care more than a nameless set of people who are just keeping things running."
Hartman warns that you need to be invested in a long-term relationship with your business partners, because the short-term can be pretty bumpy. One thing she advises is to be careful with the contracts and pay particular attention to the language around service-level agreements, system stability and uptime.
"If I were to do this over I would have been a lot smarter about the contract," she said. "I think I just would have gone into it with eyes wide open versus being a bit naïve about 'well it's in the cloud it's easy.' It's not easy."
CenturyLink hosted services can bring more HANA to the enterprise.
Here's a rundown of the HANA deployment choices, from purely on premises to managed cloud.
Here's advice on creating a hybrid ERP environment if you want to move some business processes to the cloud and leave some on premises.
Move business processes to a hybrid cloud.