Viessmann Implements Industrial ERP Transformation to SAP S/4HANA

Viessmann, a globally operating manufacturer of energy systems, has completed a high-speed migration to a new, futuristic digital enterprise resource planning (ERP) platform based on SAP S/4HANA.

During a seamless  go-live, the company migrated a total of 28 production units in 34 countries to the new system, along with 78 sales organizations worldwide.

The demanding system conversion was pursued as a greenfield project, with 190 company codes and 30 billion data records transferred and more than 6,000 users impacted. The migration was carried out using the near-zero downtime method and the overall project was completed in just 18 months.

Digital Transformation: Pioneering is a Viessmann Tradition

Viessmann is in the middle of a digital transformation. For its IT department, this means taking a dynamic approach to implementing business requirements. Therefore, it was only logical that they tackled the conversion to SAP S/4HANA at an early stage. Viessmann wanted to get its central IT platform in shape for the digital age in global markets. The goal was to establish a digital core in addition to harmonizing and standardizing business processes worldwide.  Viessman aimed to achieve this goal through business practices based on an intelligent ERP system. Processes change very quickly at Viessmann and IT must respond directly. The implementation of new, leaner process flows at the company can occur much faster with the new ERP foundation.

“We couldn’t afford a protracted enterprise project lasting five years or longer,” said Dr. Harald Dörnbach, managing director of Viessmann IT Service. “For a global player like Viessmann, the SAP S/4HANA transformation is a mission-critical future project of strategic importance. At the same time, it was the largest IT project in our history. As such, it represents a quantum leap when we can implement a project like this quickly, and at a fraction of the cost.”

Custom-Tailored Project Approach to ERP System Conversion

Viessmann decided to pursue a selective approach, “s.m.a.r.t. Green,” which was developed by Corporate Business Solutions (cbs). In an upgrade project entitled “system conversion,” the company would have had to transfer all existing processes and data on a 1:1 basis – including custom developments and processes that were no longer viable or needed. That did not seem to make sense. Under the cbs approach, the core business processes are initially reviewed with regard to their viability. Eighty percent of the processes were deemed to have a high level of maturity and were migrated to the new ERP system. The rest was adjusted or completely redesigned according to business requirements.

The company motto stressed to keep what works and redesign what was obsolete. Viessmann took a selective approach and concentrated on the processes where transformation added value to the company’s business model. From the start, Viessmann expected a large leverage effect from SAP S/4HANA.

Viessmann managers knew if they wanted to standardize their processes worldwide, they would need a centralized control structure. Dörnbach explains, “We wanted to ensure that the global standards were followed consistently throughout. That’s why we appointed global process owners – to ensure uniform process standards.”

SAP ERP is the central component of the internal system landscape at Viessmann: 190 company codes and one client are used by more than 6,000 users in 34 countries. Twenty-six languages had to be taken into account.

Selective Data Transition: Migration Without Technical Constraints

The technical migration approach was a “selective data transition,” which required three steps. First, an SAP S/4HANA system was set up. Then, relevant customizing settings were copied and adapted into the system. Relevant customer developments were also migrated. Finally, the data migration and go-live took place.

The standard software cbs ET Enterprise Transformer for SAP S/4HANA transferred all the data from the source system to the new system. This transferal was minimally invasive and used the near-zero downtime method with minimal interruption in ongoing operations.

ERP System Go-Live Success

The demanding system conversion was pursued as a greenfield project, with 190 company codes and 30 billion data records transferred. More than 6,000 thousand users were affected by the worldwide conversion.

During the project, Viessmann selectively optimized and harmonized processes, implemented innovations, defined global standards, streamlined systems, and cleansed data. The transfer included all SAP modules: financial accounting, asset management, controlling, materials management, warehouse management, production planning, sales and distribution, human capital management, customer services, project systems, quality management, and plant maintenance. The migration was carried out using the near-zero downtime method and the overall project was completed in just 18 months.

“Looking back, it was the easiest conversion I’ve ever experienced during my career in enterprise IT,” Dörnbach reflected. “All processes in the ERP system worked smoothly from the start. Production, shipping, warehouse – all areas continued running at full load without any interruption.”

Users could continue working on purchase orders, deliveries, billing documents, and projects exactly where they left off before the go-live weekend.

ERP Transformation: Flagship Project for Manufacturing Industry

The new, selective, customer-specific migration approach has paid off. “This was a pioneering project,” Rainer Wittwen, a member of the Executive Board at cbs, emphasized. “It shows that global ERP transformations don’t have to take years on end, yet can still deliver solid business benefits. Creating global standards in record time, implementing digital innovations selectively, and migrating an entire company to the new platform in just a few months. That’s smart, and sets new standards. It will be a model for future SAP S/4HANA migration projects.”

High-Speed, Low-Cost Implementation

The following factors contributed to the project’s success:

  1. Close cross-functional collaboration between process owners, key users, Viessmann IT Service, and cbs consultants
  2. Strong focus on business processes
  3. Intensive preparation and repeated testing of the end-to-end processes in SAP S/4HANA
  4. Support and governance by top management
  5. Integration among project management, time management, and risk management

The transformation strategy is the secret of the success. “The cbs s.m.a.r.t. approach greatly reduced the implementation time and captured significant cost savings,” said Dörnbach. “What’s more, the selective migration made it possible to migrate directly to SAP S/4HANA without technical constraints.”

Extensive Benefits from SAP S/4HANA

The project managers draw an entirely positive conclusion: “We now have integrated digital business processes company-wide,” continued Dörnbach. “Our future platform is here.”

Viessmann will benefit from significant process improvements, greater efficiency in many business areas, and a reduction in the complexity of the entire IT infrastructure. The new ERP platform makes critical spare parts available more quickly, made possible through internal prioritization in case of bottlenecks. This, in turn, enables reduced inventories and opens up further potential savings. All of these benefits will have a positive impact on the satisfaction of Viessmann customers.

In addition, Viessmann has implemented innovations such as integrated business planning and material requirements planning. In material requirements planning, calculation times have been cut drastically, from six hours to just 50 minutes, a reduction of 86 percent. As a result, workflows within the supply chain can be coordinated better and more quickly. This means Viessmann is also improving their service levels in logistics.

Successful Collaboration Between Project Partners

In the end, the project’s success is also a result of the close collaboration between the partners.

“Our collaboration with cbs went very well,” said Dörnbach. “It was an outstanding cooperation at eye level and with highly streamlined communication channels. cbs put its expertise as quality leader and pioneer for demanding SAP S/4HANA transformations to the test and proved to be a valuable partner to us. The custom-tailored project approach was groundbreaking and enabled a decisive step forward.”

Rainer Wittwen is a member of the executive board at cbs.

This story originally appeared on the German SAP News Center.
Top image via the Viessmann Group