Newport News Shipbuilding’s integrated digital shipbuilding journey moved into high gear when the highly regarded Virginia-based institution shifted course from SAP ECC to SAP S/4HANA. The project, detailed in the interview below with Kris Moturi, ERP leader for the organization, did encounter some choppy waters, yet has already resulted in substantial savings and business benefits.

Moturi also offers 10 lessons learned with recommendations for businesses considering or already underway in their S/4HANA excursions.

Question: Tell the ASUG community about Newport News Shipbuilding and the customers you serve.

Answer: Newport News Shipbuilding (NNS), a division of Huntington Ingalls Industries, is the largest industrial employer in Virginia, and sole designer, builder and refueler of United States Navy aircraft carriers and one of two providers of U.S. Navy submarines.

Founded as the Chesapeake Dry Dock and Construction Co. in 1886, Newport News Shipbuilding has built more than 800 ships, including both naval and commercial ships.

For 135 years, the ships built at Newport News Shipbuilding, like the American shipbuilders who built them, have served our nation in peace and war, in times of adversity and in times of abundance. Our legacy of “Always Good Ships,” includes the design, construction, overhaul, and repair of more than 800 ships for the U.S. Navy and commercial customers.

Q: How did Newport News Shipbuilding first begin using SAP solutions?

A: We have been an SAP ERP Central Component (ECC) customer for more than 20 years. We accelerated our effort to transform into an integrated digital shipbuilder. The digitization of our business was a driving force for our migration to SAP S/4HANA. It is the foundation for our integrated digital shipbuilding journey.

Q: Can you walk through how you built your business case for SAP S/4HANA? What steps did you all take to ensure that it would be thorough and effective?

A: We had a Complex Paper Process for tracking our drawings used to assemble our product. It resulted in time spent hunting for the right information, figuring out how it all comes together, and the confusion with changes to that information. So, we had embarked on converting our drawings to 4GD-based Visual Instructions and that was the driving factor for our digital journey. That required us to implement Production Engineering and Operations (PEO), which is available only on S/4 HANA. Not moving to S/4 HANA immediately was not a choice. We decided to use it as an opportunity to upgrade to S/4 HANA and modernize other modules, too, as we had it on our roadmap and knew we needed to do it anyway. So, we did not formally build a detailed business case.

Q: What is one piece of advice you would give an organization that is about to begin building its business case? What should do they do or what should they avoid?

A: When building a business case, you need to include timing, cost, and scope, but the most important thing to include is the benefit. Are you trying to generate additional growth? Are you trying to reduce operational costs? Are you trying to increase your speed to market? Again, focus on the objective and make sure it’s tangible so you can build all of it into your business case. Then, be sure to include how it’s going to be measured.

Also, have representation from all business functions at the table so they can each take ownership of their objectives, whether it's increasing sales or reducing lag time. The end goal here is to have a sustainable adoption of the solution and you can only do that if everyone is at the table and the objectives are clear and measurable. This helps in accountability to the overall goals of the company.

Q: What about your SAP S/HANA implementation project? What type of implementation strategy did you take, and why that particular approach?

A: We have a complex environment with SAP Product Lifecycle Management (PLM), Manufacturing, Production, Engineering and Operations (MPEO), Central Finance, SuccessFactors, and we had many programs/projects in flight at the same time. We also needed to do many sub-projects—such as accounts payable automation, security, Environment Health Safety Management (EHSM), product safety, and implementing automated testing software—requiring working with multiple partners. We negotiated SAP Licenses during the program. Our IT processes were not very mature and we were developing Agile governance during the implementation.

We executed a lift-and-shift strategy, aka brownfield approach. We completed three trial sandbox conversions of S/4HANA 1809 [version] before we re-planned in Fall 2019 to switch to the 1909 Feature Pack Stack (FPS) 00 version upon request from our business. We did seven dry runs and converted Development and Quality. In total we did 11 conversions before we converted Production.

The end result was that we saved $204,000 in recurring costs and $1.2M in one-time costs. The month-end and year-end closing was very smooth. And our auditors found everything identified was done correctly. So, it was a very successful implementation.

Q: What were some examples of hurdles you faced during implementation? How did you overcome them?

A: We faced a lot of hurdles, and it would take a book to mention them all. Allow me to focus on three important ones:

  • Support of SAP software: Significant portions of the solution has been rewritten for S/4 HANA, an example is Environment Health and Safety (EHS). This is a small project by itself and if you did not anticipate and prepare for it, it can derail your schedule and budget quickly. We found out about this early on and luckily worked closely with SAP Germany to come through some of the complex issues.
  • Support of third-party software: Ensure that you have compatible versions of third-party software. In our case, we found that the version we had was not compatible and again, we had to initiate a small sub-project for this. It also involved significant change management.
  • Prioritization of the program: It seems obvious that a large implementation such as this would be the top priority for the company and the best resources would be freed up to focus on it. But business operations need to run, too, while other equally important projects also need to be delivered. This can cause a severe resource constraint and need to be planned for early.

Q: Can you describe your implementation partners and how you came to choose them?

A: We did not hire an implementation partner due to various factors and decided to do this internally. We had some experienced staff who were able to guide and help others. I would not recommend doing it this way for others though.

Q: How did Newport News Shipbuilding handle the change management aspect of the implementation? What steps did you take to bring the necessary employees up-to-speed on this new project?

A: We did not have change management expertise in-house for large programs such as S/4 HANA before I ran this program. So, I recommended that we stand up this function internally as it can be used in other programs/projects as well. It helped us address three areas—training, communications, and functional changes for employees—more effectively.

Q: In what ways have implementing SAP S/4HANA improved your business and business processes?

A: We were seeking to modernize, digitize, and scale many areas of our business and were able to do so. In particular, we were able to make several improvements in our finance and health and safety areas.

Q: What advice would you give to organizations that are about to embark on their own SAP S/4HANA implementation project?

A: All successful projects share a similar set of processes and procedures, or methodology, for keeping on track and on budget. I shared 10 ingredients for a successful project in my ASUG presentation last year.

1. Build your teams’ technical and functional skills; training always comes first.

2. Ensure architectural due diligence is done; study the solution and prepare to correctly size the effort involved.

3. Leverage SAP Best Practices and SAP Model Company wherever possible. This is a no brainer.

4. Redesign your processes for in-memory computing and leverage the new efficiencies of Advanced Business Applications Programming (ABAP). Take advantage of the underlying foundation.

5. Create a User Experience (UX) strategy around Role-Based SAP Fiori UX. I think a lot of companies don’t start with the right UX strategy and find too late in the game what they need to do.

6. Scope and manage your custom objects Reports, Interfaces, Conversions, Enhancements, Forms, Workflows (RICEFWs). Since we did a brownfield implementation, we needed to make sure our custom code would work with S/4 HANA.

7. Archive your data if possible and clean it up. This reduces the data that needs to be migrated and will reduce testing and cut-over times.

8. Estimate, procure, and install hardware in a timely fashion. This is relevant for on-premise solutions. It’s often overlooked and can delay a program/project.

9. Prepare, plan, and execute performance/volume testing. Testing, testing, testing. I can’t emphasize this enough.

10. Choose the right partners, services, and project governance set-up. It helps to have an experienced partner in your journey or a strong senior leader with multi-dimensional experience who has done this before and can guide you.

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