For many organizations, wanting to move to SAP S/4HANA isn’t the problem. The want, and the need, is there. According to ASUG’s 2019 State of the Community study, 56% of ASUG members that participated plan to implement SAP S/4HANA in the future. Most, however, are experiencing the same four roadblocks, which include not being able to prioritize the project, a lack of resources, waiting for the product to mature, or needing to justify the move.
Global sporting goods company Callaway Golf ran the same central instance of its SAP ECC 6.0. system for more than 20 years. When the business ventured from designing and manufacturing golf-related products to now retailing lifestyle-related merchandize in more than 70 countries, the IT department needed to build a business case to move to SAP S/4HANA.
ASUG News sat down with Alan Schneider, Callaway’s senior director of global ERP and business applications, to discuss how he built a business case, what challenges he and his team faced, and what’s next in the move to SAP S/4HANA.
ASUG News: Where is Callaway in its S/4HANA implementation?
Alan: I’ll start by talking about our approach and business case for adopting SAP S/4HANA solutions, because it’s key to how we began our journey. Through acquisitions, we had the opportunity to recommend SAP Fashion Management as a necessity to help grow the business and drive goals forward.
Callaway is a long-time SAP customer. In fact, we’ve been ASUG members since 1994 and went live on our first SAP project in 1997. We’ve run the business globally on that same central instance ever since. We’re currently on SAP ECC 6.0 and run SAP Suite on HANA. It works for us and our needs.
ASUG News: So, what’s changed?
Alan: A little more than two years ago, we acquired OGIO, our first brand that wasn’t purely golf-related, but it was easy to integrate it into our existing SAP ECC system because it was a smaller company. Our next acquisition, TravisMatthew, was a very different brand with very different needs. It had several different retail stores at the time as well as an e-commerce business.
Even though we feel we can do anything in SAP ECC, we didn’t have any processes for fashion management within our existing system. So, it gave us a jumping point where we could decide—from a technology standpoint—to look into SAP S/4HANA Fashion. It made more sense to use SAP’s fashion solution than to try and build our own.
The other key piece was being able to provide an omnichannel experience through the TravisMatthew brand for the consumer. SAP provided a roadmap to do that with SAP Hybris, SAP Point of Sale by GK, and SAP Customer Activity Repository. This really helped build our business case and started the journey.
We have more than 20 years of experience with SAP and are a phenomenal internal team. We know what we have to do to get to SAP S/4HANA. And quite frankly, if we were just looking at Callaway from a corporate point of view, it would be a tough pitch because SAP ECC works just fine for that purpose. But we found our business need through the acquisitions and will roll over the rest of the company to SAP S/4HANA over the next several years.
ASUG News: What are some of the early benefits you are seeing from implementing SAP S/4HANA? Which ones haven’t materialized yet?
Alan: The main driver is the capability map. It’s how we can offer a direct-to-consumer experience wherever you come in and talk to us. We have built that into our phase one. It’s not like we are going to grow into that. Our phase one is the omnichannel with all these tools.
Now, we won’t be able to experience that until we have our e-commerce up and our wholesale up where I can ship directly from the distribution center. But right now, all transactions in the retail stores come through the SAP Customer Activity Repository into SAP S/4HANA. The stores are hitting the omnichannel inventory. They’re not sharing with anyone else because they’re the only ones on there, but the foundation is there, and we are using it. As we add more pieces, the usage will become more complete.
We have about 20 omnichannel scenarios of “buy anywhere, fulfill anywhere” that we have enabled in this first release. We can continue making them better.
Consumers are used to shopping at Target and Amazon, where it’s easy. I can purchase on my phone and immediately go pick it up. A small retailer with 15 stores doesn’t offer that convenience. So, I think it is going to be a differentiator for us, and once we have it live, the goal is to make it a model we can replicate elsewhere.
ASUG News: How did Callaway prepare its systems or data in advance of the SAP S/4HANA migration? Was there anything that surprised you about the preparation phase?
Alan: No, I don’t think anything surprised us. The preparation phase was more focused on functionality, because what’s challenging with omnichannel is that it isn’t just dealing with the SAP roadmap anymore. You have got a different project team working on payment processes, tax processes, and so on. We had about seven projects that all had to come together. So really, the challenge with this was that I had six or seven project teams at any one time, trying to make all these pieces fit. And if they all don’t come together, then the experience doesn’t exist. If I can’t take a payment or calculate taxes correctly, then I can’t go live.
ASUG News: What skills did you need to make this move that weren’t already available? How did the makeup of your staff change to fit this transition?
Alan: The biggest hurdle was training on the new products and processes. Callaway has a relatively small direct-to-consumer business. We’ve never run retail stores before. We’ve had people that supported golf for so long, and they knew everything about the product. When questions came in, the familiarity was there with the whole business. Now, the products are foreign. But at the end of the day a process is a process and an order is an order wherever you take it. That’s the easy part.
Doing things like retail replenishment, however, we just didn’t have that knowhow. So, we brought in some extra staff that had fashion and retail experience. We brought in staff that had point-of-sale experience. We brought in a partner that could get us a foundation we can grow on, because anything and everything together is great, but you have to make sure you get it right—or else you are just going to be fixing things.
ASUG News: What kind of change management did you do to get your teams ready for the move to SAP S/4HANA? What were some of the biggest hurdles or pain points you’ve had to work through?
Alan: It’s interesting because there were two aspects of change management we needed to address. First, we needed to train the staff coming into the fold through acquisitions. They had never worked in an ERP, so they don’t even have the concept of a structured process that is tied together into one. They had many processes with spreadsheets and things in the middle to keep things moving, but they were essentially part of start-up organizations. So, moving them into a process-driven environment was a big part of change management.
It involved teaching them to be more structured, helping them see the value of the structure, and making sure we were supporting how quickly they needed to move as a small company—all while having the structure that can support these integrated environments. Because you can’t be free-form when everything is tied together.
The other side of change management involves training the people who have been 20-year SAP users on now using SAP S/4HANA. We have a highly customized system, as everybody does who has a 25-year old system. I actually had someone ask if they can keep their z-codes. I had to chuckle and say no. I had to explain that by leveraging SAP S/4HANA Fashion we no longer have a lot of customizations because the system does what we need it to do. We didn’t have to build for the gaps. They are going to have to learn to use things differently.
ASUG News: From an IT leadership perspective, is it better to streamline your system and get rid of some of that custom code or is it a painful thing to let some of that go?
Alan: The pushback was from business users because that’s what they know. Their interaction with SAP has always been through z-codes. You know there will always be people who say it was so much better when we coded it, but what we are learning is that the more standard we are, the quicker we are to answer needs.
So, if we drive into custom solutions for everything, we are slower to adopt the next new thing. We are slower to move somewhere. If we can use standard, and we can focus on outcomes and not how you got there, then that’s to our advantage.
SAP S/4HANA is going to do the things it needs to do. It will be different. The change is tough, but over time, everybody will learn to appreciate it because when I ask for something, I’m going to be faster to deliver.
ASUG News: How has the shift from wholesale to direct-to-consumer experience changed how you use your technology? What are the biggest areas of change you’re seeing related to this trend?
Alan: In short, retail stores are now SAP objects. I can see all my inventory from retail stores in my SAP system. I have access to hundreds of stores that are part of our Jack Wolfskin brand in different cities and countries. This changes the way we think about managing the flow of product.
And then, we need to think about consumer experience. Once I have e-commerce tied to a brick and mortar, as well as marketing, I’ll have a complete view of my customers. I’ll have stories—not transactions. Now, I don’t know what that means yet. But as an IT guy, I want to make sure the building blocks are there.
ASUG News: How do see Qualtrics XM helping to enhance a Callaway customer’s experience?
Alan: It’s definitely something we will look at. I’m a 20-year SAP guy where transactions are my business; it’s what I what I know. And I also understand sentiment. But I’m waiting to see how these two are tied together. There are so many questions of how to do this for different scenarios, and we know it’s too early. There is not a consensus yet. There is not a best practice yet.
ASUG News: What advice can you give ASUG Members to help them make the best possible business case and/or smoothest transition?
Alan: My best advice is to find a business event that answers a need for anything you are doing. The technology answer doesn’t play anymore. When we pushed for SAP S/4HANA. We were presented it as “SAP has a great apparel solution for our new business that will help support its growth.”
Every executive got on board very quickly because we weren’t asking for new technology, we were presenting a solution or a direction we should go in. From there, you can talk about all the pieces and how to get there.
So, find a need that you can answer with some of these new technologies and use that as your jumping off point.
Register today for the Consumer Industries Forum on October 2–3, 2019 in Phoenix, Arizona. Join other retail and consumer product professionals to learn about digital technology trends and the latest solutions from SAP. If you’re ready to make the move to SAP S/4HANA, watch a “How to Build a Business Case and Road Map to Justify Your Transformation to SAP S/4HANA” webcast, available on demand.