A long-time SAP customer, Esri recently completed its multi-year implementation of SAP S/4HANA. A few weeks after finishing the project, Rob Seifert, senior manager of financial systems at Esri, and John Austria, SAP S/4HANA program manager at Esri, took time to talk with ASUG. In the first part of this interview, Seifert and Austria discussed the beginning stages of their SAP S/4HANA journey.

ASUG: How and when did your SAP S/4HANA journey start?

John: It started approximately three years ago for us. SAP and Esri have a very strong relationship from a product perspective. We’ve been a customer since 1996. Our GIS product is integrated with SAP S/4HANA and the solution is also a certified geodatabase. There was a lot of momentum on the product side, which led to momentum internally around implementing SAP S/4HANA. The progression to SAP S/4HANA was just a logical one. The move to SAP S/4HANA really gained momentum when Jack Dangermond, our founder, attended an IT all-hands meeting and mentioned SAP S/4HANA multiple times and wanted to know when we would be migrating.

That was the start of our journey. And then once that meeting happened, the ball got rolling internally. We connected with Rob on the finance side, and then Esri’s CIO and CFO agreed to partner on this project as an internal initiative. At the time our SAP Account Executive Erik Mekelburg was closely aligned with us as well. He brought in the SAP S/4HANA digital transformation team, who helped us build our business case and determine which version of SAP S/4HANA to implement. We put serious consideration into migrating to the SAP S/4HANA public cloud and private cloud solutions. We ended up leveraging SAP S/4HANA on-premise license, which we deployed to Microsoft Azure. It was a long three-year journey for us. We spent a lot of time as well selecting our partner. And we ended up picking PricewaterhouseCoopers (PwC) after a very extensive vendor selection request for proposal (RFP) process. We then rolled into an 18-month implementation. We recently went live on Jan. 19 with SAP S/4HANA version 1809 deployed to Microsoft Azure.

Rob: To add on to what John said, Jack did express an interest in SAP S/4HANA at that IT all-hands meeting. But before that, John and I had been working with CFO Lance Lenhert on use cases to support upgrading our current SAP implementation. Our CFO has been a strong proponent of moving to SAP S/4HANA for quite a bit of time.

ASUG: Why was SAP S/4HANA the best fit for Esri outside of the deep partnership that you already had with SAP? What were some of the main business drivers for this implementation?

Rob: SAP has served us well for over 25 years. The platform grew and evolved with us for many years. Over the last few years, we realized we needed to be even more nimble. We were on Enhancement Pack 6 and felt that there were gaps in some of the current functionality and usability needed by the company. We were intrigued by the opportunity to improve stability, scalability, and address some performance concerns by moving to SAP S/4HANA. I was hopeful that we could look at leveraging SAP from the cloud and improving the user experience, starting with customer service and professional services. These two organizations had some processes and functionality that needed to be improved on for us to adjust faster to our changing business. On top of that, there was excitement about the improved responsiveness with SAP S/4HANA.

John: I agree with Rob. The timing was right for us at Esri. Another thing that was under consideration was our on-premise hardware was also end of life at the time. We had to make a decision and then the original 2025 deadline to move to SAP S/4HANA was looming. We understand a lot of companies are still deciding whether or not they want to do that. But for us as an organization, we thought that again, the timing was right, and we wanted to take advantage of the opportunities around business process transformation that we'd have with focused involvement from the business, including building out a better user interface and getting the inherent performances gains with SAP S/4HANA memory platform.

ASUG: I know it’s only been a few weeks, but how has SAP S/4HANA resulted in improved business processes at Esri since you all implemented the ERP platform?

John: Jim, you sound like our executives (laughs). Our migration was a brownfield migration with a targeted business transformation in the order-to-cash areas and also in what we call our Advantage Program/Training Pass customer enablement programs. It's a credit-based program that customers can utilize for technical advisement and training.

We've seen the inherent gains around performance. For example, MRP (material requirements planning) is running five times faster, our treasury reports went from minutes to seconds. Those are things that we expected. We did put significant effort into optimizing order-to-cash processes. One of our key goals was order automation. When orders come in through our different sales channels, a lot of times the orders were being blocked for different reasons—credit or if you're purchasing an extension of one of our products without having the core product. A lot of it was implementing the business rules so we could process those orders efficiently.

We’re not all the way there yet, just to be honest with you. But we’re down that path already. We did deploy a new front end for our customer service team using custom SAP Fiori apps. Also, we’re leveraging WebGUI as a way to generate the custom transactions that our customer service folks utilize every day. We’re also seeing better integration. As part of our implementation, we did an integration platform migration to MuleSoft. We deployed 85 MuleSoft integrations plus several Microsoft SQL Server Integration Services (SSIS) and Microsoft BizTalk integrations. We also implemented the SAP SuccessFactors Employee Central SAP Cloud integration. Our implementation included over 100 integrations that connected SAP S/4HANA with SAP SuccessFactors, Salesforce, our My Esri customer portal, and our subscription and license management applications.

We're just starting to scrape the surface of the benefits of SAP S/4HANA. The sky is the limit. With our initial go-live, our main objective was to get on the platform as fast as we can, while seeing some incremental benefits in targeted areas. But now we have the keys to what we call internally our SAP S/4HANA Telsa Roadster (laughs).

Rob: As John said, limited process improvements were part of our initial go-live. We wanted to get on the platform and start leveraging the stability, speed, and performance capabilities. It was important to know we were on a more sustainable platform to adjust to the market and any of the changes our company needed us to make. I do agree that our advantage program, which is a custom set of processes and programs that we have at Esri, was completely re-engineered as part of this go-live. By far, it's our biggest accomplishment and will help not only our internal staff manage the relationships with our customers, but will also help us make sure that we're providing closer to real-time information to our customers. On top of that, this migration is foundational for us to allow us to have closer to real-time integrations into our other platforms and for information shared with our customers. This is huge for us. That's part of our road map post-go-live.

ASUG: How did you develop your business case? How should companies begin that process, and what are some of the financial information that you include in your business case that helped you all get executive buy-in?

Rob: From a business case perspective, we got lucky. Like I had mentioned earlier, John and I had already started having conversations with our CFO about the state of our existing implementation. We talked about where we felt we were doing things well and where we weren’t. We interviewed our different business colleagues.

We also partnered with Erik Mekelburg and SAP. We had about a weeklong effort where SAP came in to interview all of our key business units about the state of our ERP right now including what was working well and what wasn’t. I remember Eric telling us that he didn’t think he’d ever had conversations with the business where they've been so open and honest with what they thought was working well and what wasn’t without pointing fingers. We used that feedback to get back in front of the executives and lay out the main points shared. It was a nice mix between the business and technical sides figuring out together what would be the primary implementation drivers for us.

From there, we had discussions figuring out what the best move for Esri was. Early discussions included whether to do a public cloud implementation, private cloud, or on-premise implementation. We put every option on the table. We looked at where our processes were, where our hardware and our technical support were, and we examined where we felt we needed the flexibility to support our customers and our business colleagues. We developed what we thought were the main points that were resonating with not only our business unit leaders but also with corporate leadership.

John: We keep repeating this, but the timing was perfect. Erik Mekelburg built a strong relationship with our CIO. We had executive-level interest and buy-in already from the CFO and our founder. As I said earlier, Erik also brought in the SAP S/4HANA digital transformation team. They facilitated those workshops, drew out those pain points, and then helped us make the best decision around which version of SAP S/4HANA to implement. They walked us through each versions’ features and functions and helped us see the value the versions would have to Esri.

Rob: In parallel to those meetings with SAP, internally we created what we call the “big rocks spreadsheet.” We went through and got everyone's perspective on what were the biggest pain points in each of the divisions. We used those interviews and this spreadsheet to come up with our list of top 10 challenges that we needed to address and how well would migrating to SAP S/4HANA would help us. We spent quite a bit of time working closely with our CIO and the CFO and making sure there was alignment on SAP S/4HANA being the correct path forward.

ASUG: You all did a cloud rollout. What was the financial gain of that decision?

John: We were very thorough in our analysis, starting with comparing the costs around procuring on-premise hardware versus deploying to a hyperscaler. As I said earlier, the scalability of deploying the cloud was very attractive to us. For example, being able to spin up additional app servers when needed at month’s end was appealing. We already had some competency around deploying to the Microsoft Azure Cloud on the product side. We're already very experienced as an organization deploying to Amazon Web Services. But the partnership between Microsoft and SAP played a big factor. There were some incentives that we got from Microsoft to deploy on Microsoft Azure. We had fantastic support from the Microsoft Azure team, as well. We got support from a company called Vnomic. They have automated scripting tools to deploy on Microsoft Azure. And I did the ASUG webcast with Vnomic CEO Allen Bannon.

Of course, moving into the cloud becomes an operating expense versus a capital expenditure. At the end of the day, the numbers aligned. The inherent scalability and capability to deploy on a cloud platform with a full high availability and disaster recovery set up was a huge factor in our decision to deploy to the cloud.

Rob: I appreciated the high availability and the disaster recovery. The shift to the cloud and in resource responsibilities helped provide our BASIS team the ability to focus more on monitoring and maintaining the SAP S/4HANA platform and not operating system activities. I see this as a definite benefit to the proactive support of the platform.

John: It's definitely a shift in mindset going from on-premises to the cloud. There are different complexities now such as the costs of keeping instances up.

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