After its successful spin-off from Henkel KGaA in 2001, Cognis had to decouple IT applications and the entire technical infrastructure from its parent company. This challenge was also an opportunity to standardize the IT landscape, which required global harmonization and thinning of process flows and systems because the applications in use had previously been set up to meet the requirements of the former parent group. Comprehensive technical automation was to make the processes more efficient. In the beginning, the parent company was to deliver group functions, such as accounting, transportation management, or foreign trade, as services. Responsibility for processes would be transferred to Cognis step-by-step.
The young company decided to implement a software solution consisting of SAP R/3 4.6C, SAP Environment, Health & Safety (SAP EH&S), and SAP Global Trade Services (SAP GTS) for its European offices. The decision to implement these applications was made against the background of Cognis’ desire to react more quickly to new internal and external challenges in the future. To support the growth of the enterprise, new companies had to be integrated into the IT landscape rather quickly and without complications. The organizational structures were not allowed to be hardwired in the IT systems. The underlying processes and data models were to allow rapid adjustment to new, local requirements. That’s why the overall solution that was selected stayed close to the SAP standard, but remained flexible.
Realization of these goals began in September 2002 with the creation of the Blueprint project, which included all business process in the areas of finance and controlling, production, and supply chain management. The conditions of the contract defined a tight schedule for the project. After only four months, the project team had defined all the business processes and had coordinated them internationally. In 2003, it first implemented the template that was rolled out with the new processes in Germany and France. As 2004 began, 75% of European employees were already working according to the new process models. Implementations then began in Spain and Italy. Additional countries will follow later on.
Using best practices
A project team from Cognis and the consulting firm Capgemini tackled the design process together. The team enlisted experts from all the important national offices for the work involved. Individual teams consisted of representatives from user departments along with process and application experts.
As part of the design phase, the project team held workshops on the company’s core processes and the integration points among the processes. Starting with standard SAP functions, this phase also included experience gained from using best practices and the knowledge of project partners. A prototyping system simplified communication and coordinating processes: the team implemented newly developed processes in the prototyping system as examples. This approach meant that representatives of user departments could familiarize themselves with the first results of the implementation very early in the course of the project.
The project team created a global template, a functional prototype of the solution, according to the 80/20 principle. The global template covered customizing, required special developments, documentation, and training material. As is typical of international projects, the team first dealt with all the processes and functions that are mandatory for all countries. The remaining 20%, usually country-specific processes with special legal requirements, were implemented as part of the rollouts to national offices. The team implemented supplementary requirements only when they could be expected to produce additional benefits. This procedure not only produced a very thin solution, but also reduced the length of the project to the minimum. The template itself is in English, but it was supplemented with local languages (English, German, French, Spanish, Italian, and Turkish) during the implementation.
Flexible off-site development
Capgemini programmers developed the majority of interfaces, reports, and add-ons in software development centers located in Essen, Germany and Wroclaw, Poland. In addition to producing significant cost savings – about – 600,000 in the first year – this type of off-site development is extremely flexible. Capacities can be increased or decreased over the short term depending upon the needs of the project, and over the long term depending upon the needs of maintenance and operations.
To develop the template, the most important developers traveled to the Cognis project office in Düsseldorf, Germany. During the visit, project management set up procedures and coordination processes with the developers. At the same time, project members had an opportunity to collaborate with and get to know each other. The transfer to decentralized development work in Essen and Wroclaw occurred smoothly.
Off-site development also meant that clients were forced to specify requirements exactly; experience has shown this specificity improved the quality of the results. Fewer iteration steps were required to reach the ultimate solution, and program documentation was improved. Most important, Cognis retains the knowledge gained during development after the project was completed.
Clear increases in efficiency.
From order entry to production and logistical possessing, Cognis now works more efficiently across the board. A few examples clarify the increased efficiency. An exchange of goods between international subsidiaries used to require several manual steps across various systems. Employees had to create and trace orders and invoices manually, and they had to coordinate delivery schedules on the telephone or by fax. Today, the entire process is handled in SAP R/3 in an integrated manner as a cross-company-code stock transfer. Printing and mail services were outsourced so that service providers can directly print and send order confirmations and invoices from SAP R/3.
Cognis is one of the first companies in Germany to implement the compliance management application of SAP GTS. This foreign trade solution contains all the relevant tariff and foreign trade laws for import and export processes in more than 50 countries. The system supports companies in their efforts to comply with international legal requirements in the areas of checking for sanctioned business partners, export controls (including license management and embargo checking), and import controls.
Consolidation of master data reduced the number of master data records for materials and customers by more than half. The number of master data records for vendors was reduced by more than 70%. The project team clearly defined all the processes of master data management and provided them with unique responsibilities. Automated workflow drives the process and enables real-time monitoring – across user departments and national borders.
Fit for future challenges
The new IT landscape is tailored to Cognis and makes numerous legacy systems obsolete. Modifications, enhancements, and interfaces have been reduced by more than 90%. “The implementation of the European solution from SAP is of strategic significance for our company,” says Cognis CIO Ralf Stalinski. “The solutions that have been developed make us independent and make an important contribution to the positive development of our company. The new process and system landscape creates the foundation for our ability to react flexibly to new market demands. New services and technologies can be implemented in the future more quickly and at lower costs.”