Florida Crystals concentrates SAP in hosting sweet spot

“I inherited a gift from the previous CIO,” says Florida Crystals CIO Kevin Grayling. “I had a modern S/4HANA landscape for the majority of the business.”

That would have been an enviable situation for many of his contemporaries in the consumer packaged goods (CPG) industry — “Some have 20 or 30 different ERP solutions,” he says — but for Grayling, the 20% of the business still running on a legacy SAP product remained a source of discomfort, and something he wanted to change.

Florida Crystals grows sugar cane, sweet corn, and rice in Florida and elsewhere. It also runs ASR Group International, a sugar refining and marketing company it owns jointly with Sugar Cane Growers Cooperative of Florida. ASR has operations across Europe and North and Central America, and sells sugar under the Domino, Redpath, Sidul and Tate & Lyle brands.

It’s ASR that had the more modern SAP installation, S/4HANA 1709, running in a virtual private cloud hosted by Virtustream, while its parent languished on SAP Business Suite. “Its processes remained untouched for nearly 20 years,” he says.

When Grayling joined the company in 2017, he focused on business process transformation, which went well as long as the processes concerned didn’t cross the boundary between SAP instances — a challenge he encountered while transforming source-to-pay processes across the two systems by implementing SAP Ariba.

“Whenever you’ve got two ERPs, it makes a project or a transformation like that much more complicated, and much more expensive,” he says.

Of course, his predecessor knew that too, and so the consolidation of the two SAP systems was under discussion for almost a decade by the time Grayling finally convinced his fellow executives that the cost of consolidation would be less than continuing with separate systems. “It required a lot of selling,” he says. “It was easier to do with a strong financial benefit, for sure.”

Over the course of a year, he discussed the requirements with executives in charge of finance, procurement, and supply chain, among others, before settling on a course of action.

One of those requirements was to move out of its hosting provider data center and into a hyperscaler’s cloud.

Florida Crystals was one of Virtustream’s first customers. Initially, the hosting provider was a good match, but a decade on, he says, “Virtual Private Cloud, which once was the only way of doing it, became outdated. It was costing us a lot of money.”

Meanwhile, through 2017 and 2018, he says, “there was a big surge in companies moving from usually on-premises data centers to AWS or Azure, and then finding a partner to run their SAP in the cloud. Virtustream couldn’t compete.”

Another requirement was to get the two businesses on the same SAP application, upgrading ASR to S/4HANA 2020, the latest version at the time of the move, and migrating Florida Crystals to it from Business Suite on HANA.

With so much changing, that meant Grayling had an important decision to make: brownfield or greenfield? In other words, should he try to keep the S/4HANA 1709 workflows from ASR in the new system, or start over and reengineer everything for S/4HANA 2020?

To answer that, he and his colleagues conducted an exhaustive analysis, even deploying process mining tools from Celonis to better understand how their existing systems worked and what improvements they could make.

“We wanted to understand what the additional benefits of doing a greenfield migration could be,” he says. In the end, he says, the numbers pointed toward a brownfield migration, a longer but less risky path.

Reference implementation

Grayling reached out to his network to identify an implementation partner. Lemongrass Consulting was already running SAP for an agricultural cooperative and for a consumer products firm where he had contacts. “It was probably the easiest decision I’ve had based on reference in over 25 years in IT,” he says.

While he had no strong preference for one hyperscaler over another, at the time of the move, AWS had a clear lead in the number of SAP environments it hosted — and was also Lemongrass’s preferred host.

These discussions coincided with SAP’s launch of its Rise all-in-one hosting, licensing, and application management offering. Grayling briefly considered it, but at that time of the decision, it was too new to commit to. Instead, he says, he’ll stick with the bring-your-own license model for the next three to five years while he extracts the cost, operations, and agility benefits of moving to a hyperscaler. Then in three or four years, they can evaluate Rise again.

The initial plan was to migrate ASR’s existing S/4HANA environment from Virtustream to AWS and upgrade it in one operation in January 2022, then consolidate Florida Crystals’ business from its legacy environment six months or so later.

“We quickly realized there was too much risk with doing migrate and upgrade at the same time,” he says, so it was split into two operations, with the upgrade happening just three weeks later. The cutover plan worked flawlessly with zero incidents, and just a little fine tuning needed later, he adds. The upgrade was more complex because SAP had deprecated some of the functionality from S/4HANA 1709 in the newer version.

“We did a big study at the end of the previous year on what changed, so we could get ahead of that,” he says. “We had to do a lot of functional testing to make sure.”

Only one small thing marred the upgrade: a performance issue for a few hours on the second day of their go-live. Grayling put that down to not being entirely sure how the old system was configured. “When you’ve had an SAP environment with a partner for as long as we did, you don’t always capture all the idiosyncrasies of your customizations running in that environment. There was a little bit of knowledge transfer we lost.”

The consolidation phase was tougher. The plan was for Florida Crystals to adopt ASR’s business processes to keep the SAP core clean, but they operated in completely different fields, one in agricultural products and the other in consumer packaged goods. “There was a lot of change management, getting them to agree,” he says.

Another challenge was the data migration.

“The key thing with an SAP go-live — I’ve done over 20 in my career — is the quality of data migration and the quality of testing,” he says. “You want test scripts identified early so they can be proven, and you want to automate as much of that testing in regression as possible so you’re not just wearing people out.” The company partnered with HCL to build and automate a testing platform and spent two months on user acceptance testing.

Grayling warns not to underestimate the work involved in data migration ­— especially between Business Suite on HANA, which is essentially an SAP ECC data model, and an S/4HANA system. “There’s a lot of deprecated code, and the data model is very different between the two platforms,” he says. A lot of data will get left behind: historical financial information is reduced to summary balances, with no transactional detail.

In praise of change

While Florida Crystals profited from the stability of its ERP system over two decades, there were disadvantages when the time finally came to change the processes. “We were on Business Suite on HANA for over 20 years,” he says, “so there was a skills gap in us understanding why they’re configured that way. When you’re using a system for that length of time and you don’t change it, that knowledge fades away. When you’re making change, you keep that knowledge. We had to relearn it.”

The consolidated system went live in September 2022. “These big business process consolidation and customization areas are always a struggle, but it went relatively well,” he says. And the argument in favor of the brownfield migration has stood the test. “We’ve done a post-implementation review and the business case is 100% sound,” he says. The move to the cloud is also delivering the expected value.

There’s a sustainability aspect to why they picked Lemongrass and AWS too. “If you compare a virtual private cloud in a dedicated data center to a hyperscaler, byte for byte, CPU cycle for CPU cycle, there are significant greenhouse gas emission reductions, as well as energy consumption benefits,” he says.

Grayling also sees economies of scale outside the data center: “Think of all the energy that goes into software development life cycles. If you don’t do that, you’re a more sustainable business.”

Compared to custom-built applications, software-as-a-service or standardized cloud-based solutions built on a common core saves development effort. “Change is hard,” he says, “so if you can focus on adoption rather than design, build, test, and implement, you can spend energy on the things that matter most, on how to become more productive.”