Gigaset, a German manufacturer of communications products and solutions, decided to move to the public cloud while migrating to SAP S/4 Hana because it wanted to further standardize and streamline its processes. In doing so, it was important to the company that certain functions from the external solution it had already been using for ten years to improve logistical processes in SAP could also be used in the public cloud.
In close cooperation with their trusted solution provider GIB – in future ifm -, which has many years of experience in the supply chain sector, the functions are now being transferred to the cloud. Both companies, Gigaset and ifm, have been working together successfully for a long time, whereby the manufacturer of the communications products has benefitted from the external consultant’s in-depth knowledge in logistics optimization.
The willingness of German companies to switch to cloud-based ERP systems has so far been low, according to a study by German-speaking SAP user group DSAG. In many companies, the idea is still firmly anchored that central business processes must be managed in a separate IT landscape, i.e., in traditional on-premises IT.
The biggest and most important argument for this type of ERP system is usually that companies do not want to relinquish control, especially when it comes to data protection. Furthermore, the data can be accessed at any time. However, local administration also has disadvantages that prevent the streamlining of processes and an associated increase in efficiency. These include high costs for infrastructure, personnel, and maintenance. In addition, trained IT staff are needed to guarantee data backups, install updates, and quickly fix bugs.
Finally, the upcoming updates and release upgrades for established ERP systems such as SAP have become immense in scope, which is associated with a large amount of work. In SAP S/4 Hana, there is one new release per year, so the update cycle becomes even shorter.
High staffing and management costs for on-premises models are thus a given. Companies that want direct control over their environments often consider moving from on-premises systems to a private cloud in the form of SaaS, IaaS, and PaaS as an alternative to gain benefits such as self-service, scalability, and elasticity while maintaining control and customization.
Through enterprise firewalls and internal hosting, this gives them a high level of security and privacy, yet the corporate IT department is still responsible for costs and liability in managing the private cloud. So staffing, administration, and maintenance expenses cannot be reduced with this option.
Contrast this with ERP systems in the public cloud. Instead of high initial costs, companies pay rent for a service, use the provider’s IT resources for rapid support, do not have to worry about maintenance, data backups and updates, and can access their data around the globe if required.
Data security in the cloud is ensured by regular penetration tests, among other things. In addition, in the public cloud, it is no longer possible to assign individual authorization rights to individual employees, but only to assign firmly defined roles. This serves to prevent unintentional data leaks.
Cloud for standardization
All these advantages led German communications products provider Gigaset to opt for the public cloud version when it converted its SAP on-premises system ERP/ECC 6.0 to S/4. Based in Germany, Gigaset has been producing communications products in Bocholt on the Lower Rhine since 1941. More than 550 employees develop, design, and produce innovative phones, smart home systems, and smartphones. As a reason for the switch, Gunther Schlingemann, Senior Vice President IT at Gigaset, cites the desired standardization, “Standardization was a must for us, which is why we opted for the public cloud. It forces us to standardize. As a mid-sized company, we think that this approach offers us the greatest advantages for the future. We will be able to stop worrying about so many things – such as hosting, security updates, system maintenance, and implementing workflows for new laws and regulations. Our new SAP system takes care of all of these things.”
Supply chain into the cloud
Despite the important position that standardization holds for Gigaset, it was clear to the company that certain functions from the GIB Operations solution were indispensable. For more than ten years, Gigaset has already been working in primary MRP with the software from the licensed SAP silver partner previously known as GIB. From June 2022, GIB, which has been part of the automation specialist ifm group since 2016, will operate under the name ifm. The familiar product names will remain unchanged.
“A few years ago, we noticed that the planning of finished products, i.e., primary MRP, was getting more and more complex. However, we didn’t have any more personnel available and needed to increase efficiency. Therefore, we replaced SAP customizing with GIB Operations. This opened up advantages for departments like operational procurement, production control, and assembly control. We now work with the software across departments and have recognized the portfolio overview and the focus on the core as a cockpit as a great benefit. The MRP controller can now handle a much larger portfolio, even if it changes two to three times a day,” says Dirk Lörwink, Senior Manager Logistics Controlling at Gigaset.
The cockpit-like view is particularly helpful, as it gives employees quick access to individual items and allows them to act promptly, for example, to change pre-planning or coordinate orders with suppliers. From there, the entire MRP process can be controlled, and it is possible to view all details and jump to all relevant transactions. The time and cost savings resulting from the efficient display and analysis of the inventory development of materials are enormous. At the same time, both shortages and surpluses are identified at an early stage and appropriate measures can be initiated immediately. “The support from GIB Operations is very important to us because it significantly increases our work speed,” says Lörwink.
Once Gigaset had made the decision to switch systems and take the path into the public cloud, the question of how to integrate the current subsystems and interfaces quickly arose. After analyzing the scope of functions in the cloud, however, the company noticed that it was precisely the tool with a cockpit-like view that was not included. Instead of being available in a clear dashboard, the functions in the cloud are available in the form of apps. “This would force us to work in a more small-scale way, and we would lose speed,” explains Lörwink.
“When it became clear that operations important to us were not included in the cloud standard version, we contacted our long-term solution partner ifm. Because it was a no-go for us to operate without the additional support that GIB Operations offers us in dispatching. The ifm experts were quick to agree to accompany us on our way to the cloud and to transfer the most important features from GIB Operations. ifm grasped the problems of discrete manufacturing very well and was able to really understand our tasks. We appreciate that very much,” explains Andreas Tourneur, Vice President Order Center at Gigaset. In the SAP public cloud, the solution is called MRP view XLNce. It will also become available to other interested parties in the SAP Store in the near future.
Gigaset is currently in the middle of the implementation phase for the switch to S/4 Hana, with a core team working in a test system. The change process involves more than just the technical implementation. Employees must also be convinced that the new system is future-proof and will improve their work. For Lörwink, the move to the cloud is a paradigm shift: “Until now, we were used to ‘driving’ the system to where we wanted it to go. Now, the roles have reversed. Following the motto ‘Fit-to-Standard’, we have to adhere to the system specifications and adapt our processes to them.”
This approach as the more passive part initially presented a challenge, but the new way of thinking has taken hold and all employees are encouraged to tackle the changeover, thanks in part to numerous information events and key users who act as change motivators.
During the change process, unexpected issues keep popping up, but they are never truly disruptive, thanks to a dedicated project team and external support from ifm. “We are glad that our long-standing partner supports us not only in terms of software, but also in terms of content. The experts think in terms of supply chain processes and understand our process-related requirements very well. Through their expertise, they help us transform our processes for the cloud,” said Tourneur.
The goal is to completely move the system to the public cloud by 2023. “We are aware that a go-live in this new environment is risky, but we have prepared very well through agile projects and testing. Before we go live, we will take six months to check if everything is indeed enterprise ready. Of course, there is always going to be residual risk, but we are highly motivated and are determined to standardize our processes,” explains Schlingemann.
For Gigaset, the move to the cloud has above all strategic advantages. The company accepts the relatively long preparation phase to then be able to take full advantage of the benefits. These include faster and more transparent processes, mobile access to a real-time database, scalability, and the option of connecting partners via interfaces.
“SAP’s public cloud offering for S/4 Hana is a fantastic tool for mid-sized companies to map their processes. Even if some functions are missing, the cloud gives us the opportunity to integrate providers such as ifm via web interfaces, which is important to us,” says Schlingemann.
Now that some features essential for the go-live have been transferred from GIB Operations to the cloud as MRP view XLNce, Gigaset hopes that more functionalities will follow soon. “We are very pleased to remain in close cooperation with Gigaset in the future and to continue to see eye-to-eye in this partnership. We plan to jointly develop simple, modern process optimization solutions based on the design of SAP Fiori. Our goal is to provide users with the best possible support in their operational and strategic work,” says Christof Weyand, Product Manager Procurement, Inventory and IIoT at ifm.
Today, companies are faced with the challenge of demonstrating greater agility and flexibility than ever before. Especially in times of crisis, processes and entire business models are often put to the test to make them leaner. The public cloud is the future when it comes to preparing established ERP systems for new digital operating and business models. To standardize processes, Gigaset, a German manufacturer of communications products and solutions, decided to move to the public cloud when it switched to S/4. In the current implementation and test phase, the technical and consulting support of the long-standing solution partner ifm (previously GIB) is particularly valuable in order to make the change process run smoothly and to transfer essential functionalities to the new environment.