Lumileds lights the way with world-class SAP deployment
With more than 100 years of innovation, Lumileds is a leader in LED lighting solutions for the automotive, camera flash and general lighting markets.
As part of a divestiture agreement with Philips Lighting, Lumileds needed to separate its extensive SAP enterprise resource planning (ERP) and treasury systems from Philips on an aggressive deadline or face significant financial penalties.
The company worked with NTT DATA to manage the SAP separation, including design, test and deployment, in a 14-month global effort delivered on time with enhanced functionality and performance.
Business Needs
Lumileds was a business unit operating within the Philips Lighting company until July 2017, when it was spun off as part of a divestiture agreement. That agreement dictated that Lumileds separate its SAP systems completely from Philips within an aggressive time frame or face significant and ongoing financial penalties.
Lumileds relies on SAP solutions to support the manufacture of its high-performance products and the global operations of its business. The IT team understood the ambitious nature of the SAP systems separation, which they dubbed Project STAR, an acronym for SAP, Transform, Accelerate, Realize.
Outcomes
- Completes SAP separation on schedule in 14 months
- Migrates 47 applications and 2,500+ ERP users
- Accelerates general reporting by 50%
- Reduces inventory on-hand to improve profitability
Solution
Selecting the best partner — flexibility and fit
The Lumileds team reviewed proposals from leading IT solutions providers to undertake Project STAR. When it came to the final selection, Josh de la Cuesta, Lumileds’ vice president of IT and chief information officer, said “Alignment with our business partners was important to me.
“We knew that there was a lot of unknown, and so we were looking for partners that could accommodate that. We had talked to several other solution providers. They seemed to have their own agenda. We had great alignment from the beginning with NTT DATA. At the end of the day, it really came down to their ability to connect and build the relationships between our two companies.”
“The task was daunting,” continues de la Cuesta. “Running a company the size of Lumileds with global operations and 9,000 employees, you could imagine the ramifications of having to do a whole company system separation. Our ability to book, bill, ship and accurately report financials — all those key aspects run around ERP systems. In addition, we had several new peripheral systems that we had to bring up related to planning, supply chain, reporting and new components.
“In terms of a whole company systems separation, it doesn’t get any more difficult than that. Shortly after the divestiture, and in our early planning, we started engaging with NTT DATA.”
Minimize time, costs and business disruption
Once underway, Project STAR required extensive collaboration around the globe. De la Cuesta says, “The scope was 47 applications, which includes three SAP kernels. Six-hundred people were involved in testing the solutions and systems. We had 150 interfaces, all of which had to be tested and working properly.”
According to de la Cuesta, NTT DATA filled several unanticipated gaps during the project, “Some of the infrastructure components were behind schedule and NTT DATA was able to build out a parallel infrastructure environment to keep some critical testing on schedule.”
De la Cuesta notes the contribution of NTT DATA Quality Assurance & Testing services to keeping Project STAR on track, “We had about 3,700 test scripts which was bigger than planned. NTT DATA did a great job of automating several test scripts, which was a huge help and another great example of business agility.”
Separation accomplished
Fourteen months into Project STAR, it was time to cut over from the legacy Philips SAP system to the new standalone system at Lumileds. De la Cuesta says, “The cutover was actually a very exciting time. Very similar, I think, to a moon landing scenario. We built out a command center in Amsterdam. We had everybody there from Lumileds IT and NTT DATA. We ran the cutover for four days continuously and when we cut over on Monday, we had all our employees working in the new systems. That was the plan, we did it, and it was a major accomplishment.”
Build, manage and innovate
Beyond the successful systems separation, de la Cuesta is pleased with several additional benefits of the new SAP system compared to the prior environment. One benefit is a 40% reduction in financial closing times. Per de la Cuesta, “Prior to the completion of the STAR project, it took about five days to close the books. And now with our new systems, we can close the books in about three days. That’s a major improvement.”
The new system has accelerated general reporting performance by 50%. “The time it would take to run 60 reports,” says de la Cuesta, “we can now run 90 reports and that gets back to helping improve productivity in the business.”
As a manufacturing business, minimizing the amount of inventory on hand is critical to profitability. According to de la Cuesta, “We have been able to reduce the number of days of inventory based on better visibility that we now have with enhanced reporting.”
As de la Cuesta sees it, the relationship that Lumileds built with NTT DATA doesn’t end with Project STAR. De la Cuesta says, “Our experience with NTT DATA has been really great. I could see from the beginning that they were going to be able to accommodate our special needs, be flexible and have all the different solutions and components that we needed. We've started a number of NTT DATA Application Management services around productivity enhancements and cost, post cutover, and NTT DATA is a big part of that.”