The Toyota Indus Motor Company S/4HANA Case Study

Executive Summary

• Toyota Indus Motor is one of SAP’s S/4HANA case studies.
• This case study carefully excluded the views of the client and any consultants who worked on the project.
• Our access to one consultant pointed out the difficulties of getting S/4HANA experienced resources, including SAP support for S/4HANA.

Introduction

Toyota Indus Motor Company is based in Karachi, Pakistan, and it manufactures Toyota for the Pakistan market. IBM implemented S/4HANA. IBM, which has this to say in its press release about the implementation.

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• This is published by a research entity, not some lowbrow entity that is part of the SAP ecosystem. 
• Second, no one paid for this article to be written, and it is not pretending to inform you while being rigged to sell you software or consulting services. Unlike nearly every other article you will find from Google on this topic, it has had no input from any company's marketing or sales department. As you are reading this article, consider how rare this is. The vast majority of information on the Internet on SAP is provided by SAP, which is filled with false claims and sleazy consulting companies and SAP consultants who will tell any lie for personal benefit. Furthermore, SAP pays off all IT analysts -- who have the same concern for accuracy as SAP. Not one of these entities will disclose their pro-SAP financial bias to their readers. 

IBM’s Take on the Implementation

Not only has supply chain risk and unplanned downtime been reduced, but manufacturing capacity has also been maximized with lower costs. Greater sales order accuracy, fewer defects, and real-time delivery tracking mean happier customers. – IBM

So sounds great, of course. But we run into the issue of bias once again. Most of the press releases are published by either SAP or a consulting company, and for these two types of entities, there are no bad implementations because they don’t use the software they implement.[1] Instead, they make money selling and working software deployments.

In speaking with people who worked at Toyota Indus Motor Company, one gets a different impression from the implementation than that provided in the IBM press release. Let us review:

• The Industry of the Customer: Automotive
• The Scope of S/4HANA Implemented: SD, MM, PP (Simple Logistics), QM, PS, FI-CO (Simple Finance), PM, BW, and Fiori.
• Implementing Consultancy: IBM
• Implementation Duration: 10 Months. Running live for the past six months.
• Status: Went Live on October
• Customization: Many Customizations (many for PP in the areas of Forecasting, Planning, Allocation (ATP), Kanban, Heijunka
• Investment Decision: Our company intends to keep making the system more solid regarding performance and developing more in Fiori Apps.

Perspective on the Implementation from a Consultant Who Worked on the Project

Muhammad Ali Lozada is a consultant who worked on the S/4HANA project at the Toyota Indus Motor Company. Muhammad wrote a LinkedIn article on his experiences on the project. Here are what I found to be quite interesting quotations from this article.

The first describes the motivations that Toyota Indus Motor Company is moving to S/4HANA.

“The hardware itself was running out of database storage space.”

Hardware could have been replaced, so I would disagree with that as a reason to upgrade. One can upgrade the hardware and software separately.

“The software well did not meet the modern innovations of doing business.”

Changes to functionality are not a very good reason to move to S/4HANA. SAP may intimate this. However, S/4HANA is more technical in orientation as an upgrade. It combines a new database with code simplifications, some changed functionality, some removed functionality. It is a total rejiggering of the application, and as such, SAP does not have the bandwidth to add significant new amounts of functionality.

ECC, S/4HANA’s predecessor, has been stabilized for some time, with SAP adding most of the new functionality in applications outside of ECC.

The Logic for Moving to S/4HANA

Also, to add to the pile of frustration, our support contract with SAP was running out of shelf life with no possible way of extension. So, running out of options, we started looking for an up-to-date ERP solution.

The support contract should have had no problem being extended.

Looking at this quote, I don’t see a compelling reason why Toyota Indus Motor moved to S/4HANA.

If you read IBM’s press release on the implementation, they state the following:

• Cultivate a strong brand by enhancing product and service quality
• Implement a complete end-to-end solution, enabling sales forecasts from dealerships to flow efficiently to primary suppliers and manufacturers
• Gain real-time insights into data to improve customer service, ensure timely delivery of products, and gain a competitive edge

The problem with these statements is that they can equally be said about ECC. For instance, ECC is as much an end-to-end solution as S/4HANA. Perhaps the final bullet point would be a motivator to move to S/4HANA as due to using a reporting database like HANA, the reporting performance should be faster.

Getting Resources Experienced in S/4HANA

“Though the processes were very close to home we faced a serious issue of manpower in the market. There were no consultants in our region who had the experience or had fully implemented this solution elsewhere.”

Pakistan and the region in which it resides is a small market for SAP. However, this shortage of S/4HANA implementation consultants is still an issue even in the large markets for SAP, the US, and Europe.

Documentation Shortages with S/4HANA

“I am mentioning this for a couple reasons, at the time there were very little to no configuration documents available online therefore, this took extra time. We got through by using the trial and error method and our SAP customer care platform. Yes, there were plenty of documents on benefits of a “specific” process but very little on the configuration. Now a year later I think though for most of the processes there is some form of configuration document available to (Customers). I won’t lie those configuration documents are extremely hard to find.”

As a long-time SAP implementation consultant myself, I can attest to the importance of this documentation type. S/4HANA has gone out under extreme development timelines because of how early it was announced. And when development is under tight deadlines, documentation is the first thing to get left behind and pushed to a later date.

A Renewed Pitch to Remove Customizations

“So yes, our company has a lot of customizations but these were only developed where there was no standard available to use after research and development. Furthermore, our company has a unique production system which is based on the Japanese model of Heijunka (leveling) and Kanban (Sign board scheduling systems) with various 3rd party integrations. So in regards to PP a lot of processes are customized to our environment. I have to say though that the foundation of the processes for the most part was the same as in the older versions of SAP so this was a standard routine config. setup for most of the consultants. There were hurdles in those processes that were completely revamped from the old traditional SAP versions.”

Given what Muhammad has stated, there is no option to remove these customizations, as recommended by SAP, because how Toyota Indus Motor Company’s manufacturing process works do not match entirely with S/4HANA. And the adjustment of those customizations was complicated by the change made to functionality in S/4HANA, which would have to have been added to the customization code changes to point to the correct table S/4HANA has a different database schema than ECC.

Issues with SAP Support of S/4HANA

“My experience dealing with SAP does have to come to surface because it does take a large part of one’s time during implementation. I went back and forth in correspondence with SAP a number of times on various SAP tickets. “SAP Tickets” will be very common in your S/4 Hana 1511 Implementation. One common occurrence which I experienced with SAP was there non-empathy towards us the customer. We would raise a ticket and by the time they got around to replying to it (days later) there usual reply was something around the lines of this is a “consultancy issue”. They would say that we did not put such and such check in the standard configuration or this field is missing which is true. When SAP finally goes into the system 4 days later and checks yes maybe something was changed from the standard. The reason for this is that no customer is going to sit idle waiting for SAP to get back to them while you have strict time-lines.

You can share the steps to re produce the error and even screen shots and they will still give the famous line it’s a “consultancy issue”. This line reminds me of those offshore call support people who always stick to the standard booklet of what to say when someone calls for help.”

The Problematic Reality of SAP’s Support

I covered this topic in the article What to Do About SAP’s Declining Support, but SAP has cut down its capability in support by starving its support organization of resources.[2] Most of SAP’s support organization only speaks and writes English at a very restricted level. This allows SAP to procure offshore resources in the $25 to $30 per day range. All while SAP charges 23% yearly on the license list price for its basic support. We typically call this type of thing labor exploitation. However, if SAP, IBM, or Google do it, it is accepted as a good thing and can’t be criticized. However, while the moral implications of this can’t be brought up, at least one should observe that continually driving costs down has had a negative outcome on support, which used to be far better. And with a new product like S/4HANA, this will negatively affect the implementation duration of S/4HANA projects.

Some SAP-focused people have recommended that if companies are unsatisfied with the support, they can move to MaxAttention. However, MaxAttention is exorbitant. Furthermore, the feedback from companies that use the program indicates that MaxAttention is, in part, a program for consultants to market even more expensive services. Gartner recommends companies that implement S/4HANA use MaxAttention. However, if that is done, it will be hard to see how S/4HANA will come in with a “lower TCO,” which is something promised by SAP.

Development, Integration, and Customization Adjustments to S/4HANA

“I have to say that the scope in which went into this project is huge. Imagine 15 years of developments and/or customization’s being crammed into 1 year. At the time of Go-Live we went live with those customization’s and enhancements which were in dire need in order for the business to function. A lot of those requirements included things like controls, reports, enhancements, and applications. Once live we extended our support contract with the vendor for 3 more months and in this time, we are including all the nice to haves and wish list items which the users identified early on in the project kick-off phase. These mostly consists of Gaps which were faced in the old SAP, and also audit observations from the old system.”

This is the reality of S/4HANA. All developments, interfaces and customizations must be evaluated and rewritten.

“Going back on reflections, if you were to ask me if it is worth moving to 1511 version after knowing what I know now, I would say no. Reason is easy this is not a stable product there are many bugs and a lot to be improved which SAP is doing in its new releases. Is SAP S/4 Hana a good switch? Yes, it is, knowing the road map SAP is following it is definitely getting more stable day by day. The good news is for those companies that have waited or is thinking of going for SAP S/4 Hana you now have other options. At the time of writing this article you now have the option of version 1610 which seems to be a more stable product from what I have heard and read on-line. It’s also thanks to those companies like ours who have implemented version 1511. They are a lack for a better term the guinea pigs.

Through some of our trials and tribulations, some SAP notes were published to the public to help them with similar type issues. So, one can humbly say SAP is a more stable product today thanks to all those first implementers of SAP S/4 Hana 1511.”

Conclusion

And this highlights one of the issues in getting information about S/4HANA implementations. If one reads the press releases on S/4HANA implementations written by SAP or a consulting company, one hears only one side of the story. My reading of Muhammad’s experience with S/4HANA is that if they had the decision to make it over again, they would have stayed with ECC. With that is Muhammad’s statement that S/4HANA is considerably easier to implement now than when Toyota Indus Motor Company engaged in the project.

This article is part of The S/4HANA Implementation Study. Please see that study for the overall conclusions.