Two weeks ago, we published the first part of our conversation with Umar Farooq, the vice president of information technology at NexTier Oilfield Solutions to speak about how the organization implemented SAP S/4HANA during a merger. In this second part, Umar discusses the benefits of leveraging the ERP solution.
ASUG: Why was SAP S/4HANA the best solution to use when merging these two organizations into NexTier?
Umar: We went through a very rigorous evaluation process between picking SAP S/4HANA as our future system. Keane Group and C&J Energy Services had strong stories and good use cases in each of those applications and operating in the most efficient and nimble manner. What we looked at from our perspective were growth and scalability. And it's not just our scalability or growth, but it's also SAP's. SAP was moving more towards SAP S/4HANA and adding more components and additional functionalities that we know we could leverage as we move forward. Looking at the strategic initiatives that we had and looking at our growth trajectory, we felt SAP S/4HANA was the right platform for us to grow on.
The redesign was important to us. It was also important for us to share with our stakeholders, especially the superusers of the system, that our vision was not to start from scratch because we knew there was a foundation that was laid out in SAP S/4HANA by C&J Energy Services that would work for the future company. However, there were certain processes that we wanted to focus on to make them more fit for purpose. Those were primarily in our supply chain organization. Examples include the way we wanted to operate and the way we wanted to integrate with our vendors. Those were some key areas that we focused on during that redesign effort. As with any implementation that would go through a merger, acquisition, or redesign our biggest focus was data—all the data that we have coming in from different streams when it comes to customers, vendors, products, and pricing. We went through a very rigorous exercise to streamline that data so that we could have the most efficient way of processing our transactions as we move forward.
ASUG: Are you all on-prem or in the cloud?
Umar: We have an on-prem version of SAP S/4HANA, version 1709.
ASUG: Why did you all decide to go with an on-prem as opposed to a cloud deployment?
Umar: It's just because of how the contracts were set up with SAP at the time. It is an on-prem version, but it is hosted in Google Cloud Platform (GCP). So, it's not truly like on-prem like I hold a server in my data center. It is managed by GCP. It's just the licensing is for on-prem.
ASUG: How has SAP S/4HANA has helped NexTier in its day-to-day operations since the merger?
Umar: Once we went through this redesign effort, we still kept the core principle of finding the right fit-for-purpose tools for the business. Not all applications and modules in SAP S/4HANA were utilized. There were certain third-party applications that we integrated with SAP. And to us, that was one big success story. When we integrated our field ticketing system, which is Salesforce-based, with SAP. It was a tool that helped the field be more efficient in terms of their ticket management, as well as operations in the field. The operations folks use that tool to its full capacity, but we were able to integrate with SAP. So we did not have an impact on RDS. Our AR was running directly from SAP through integration with Salesforce.
SAP also helps us with our day-to-day transactions. We have streamlined the process in the way how we operate with our vendors. We're using SAP OpenText. It helps us get the documentation from our vendors on time, get them processed—on time—and then make the payments on time because we're an offering services company. Our relationships with our customers are just as good as our relationship with our vendors. So a lot of that work is done by our third-party partners. SAP does help us a lot, especially when it comes to the visibility of payments and sales.
Where SAP S/4 HANA adds the value for us is around governance and controls. We're a publicly-traded company and for us, it's extremely important that everything that we do has a control parameter defined, and it is segregation of duties and other elements that are part of those transactions that we manage. We work closely with our external third-party auditors as well as our internal audit team. That one particular piece on governance and compliance is a huge value add because we have everything documented, everything has a rule and some type of application design set behind it. We can always go and do those audit trails if we needed. That was one of the big selling factors of SAP S/4HANA compared to other tools: we can retain all information that happened in our system of records.
ASUG: We’ve touched on the topic of data. With that in mind, I'd love to know what specific hurdles associated with the merger of these two organizations into a single entity did SAP S/4 HANA help you overcome?
Umar: From a system of records perspective, the biggest value add of SAP S/4HANA was the fact that even though we had customers between the two companies, it was very easy for us to identify history with one vendor or another. That data helped us give insight when we renegotiated the future terms for NexTier. It was a very seamless process for us. And then the visibility that we get through that data within our day-to-day operational tasks, as well as reports and other analytics, that's very powerful.
With us working directly in SAP S/4HANA, everything is real-time. It's not batch job-driven. It's not like after the fact. Every time I need to go look at something, I can always go look at the latest information for that particular function. Our AP team and AR team are always transacting within SAP working with our vendors and customers. That's the value we add as far as our data is concerned. We're not 100% perfect, but we make a very conscious effort to keep that data clean.
ASUG: I assume that those value adds that helped you all during this process. Is that something that you all are counting on for any future acquisitions or mergers?
Umar: Absolutely. Having a clean ERP along with a defined process is a great foundation for any future acquisitions and growth. We put a lot of effort and are proud of the team that works around our ERP applications that make it happen. This is just one of those things where we took a lot of pride in how we operated. That helped us navigate through the pandemic as well as the downturn in oil. We are set for any growth over the next few quarters.
ASUG: What advice would you give to companies that are about to enter into an acquisition or a merger and are looking for a centralized ERP platform to help them along with that process?
Umar: One of the things that I always preach is that no detail is small enough for us to consider and unravel. For everything we do, we have to do our due diligence, validate the data and its source, and make sure we're making decisions as a collaborative team. There are a lot of implications that happen when you are working in a very integrated environment. You can't lose the focus or sight of any decision that you make that would have a trickle-down or a downstream impact. It's extremely important that you validate the data and have all the right stakeholders involved early in the process. That would just make everything seamless and work very efficiently.
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