To become a standalone company, LiquidPower Specialty Products Inc. (LSPI) needed to establish independent back-office services. How could this happen with zero business disruption to customers?
Working with IBM Services, LSPI migrated its SAP® ERP applications from on-premise to IBM Cloud for SAP Applications, delivering speed, agility and scalability.
Zerobusiness disruption during a complete solution migration
EfficientIT operations with lean in-house IT personnel
Scalablesolutions able to manage business growth
Business challenge story
Smooth transitions for smooth-flowing business
When you fill up your car, maybe a LSPI drag reducing agent (DRA) product was used to help bring that gasoline to the pump. LiquidPower Specialty Products Inc. (LSPI)’s drag-reducing agents are designed to help improve the flow of oil in pipelines, reducing the energy required and increasing pipeline capacity. This specialized technology of DRA delivers big benefits to many industries around the globe.
LSPI developed its first drag-reducing agents in the 1970s. When Berkshire Hathaway acquired LSPI in 2014, the business relied on its parent company to provide back-office services, such as finance and IT. Berkshire Hathaway chose to adopt the same model, and nominated its own large chemicals company, Lubrizol, to host LSPI’s services.
Darren Wyatt, Chief Financial Officer at LSPI, explains, “With expert assistance from IBM Services, LSPI joined the Lubrizol instance of SAP solutions on October 1, 2014. Fast forward to 2016, when company leaders decided that it would better serve both Lubrizol and LSPI to end the support services agreement. This meant that LSPI would need to develop independent systems.
“For LSPI to operate as an independent company within the Berkshire Hathaway portfolio, we needed to establish back-office systems and processes capable of supporting our growth ambitions. Once we had built the new capabilities, how would we migrate our entire business without impacting customers?”
Darren Wyatt continues, “Rather than invest heavily in back-office systems and personnel, we decided that we would look at outsourcing where it made sense. Our very favorable experience with IBM made them a natural choice; a number of IBM consultants knew our business, and IBM was already providing support for the existing systems.”
At this time, LSPI had committed to building a new manufacturing site, and the team was keen to avoid the distractions that often arise during and after a major migration. To minimize business risk and reduce the impact on users, the LSPI team chose to replicate Lubrizol’s SAP application environment, which includes core SAP ERP solutions including applications for Materials Management, Production Planning, Sales & Distribution, and SAP Business Warehouse. This strategy would ensure operational continuity while retaining the option to customize and optimize the solutions to LSPI’s specific needs at a future date.
In essence, the process entailed a divestiture from an existing production SAP system. First, the LSPI SAP transactional system had to be ‘carved out’ from Lubrizol’s production system. This process required removal of all Lubrizol data, leaving only LSPI data. Subsequently this clean data could be migrated, which included many of the SAP instances that constituted the LSPI SAP landscape.
LSPI chose to migrate from the on-premise solutions at Lubrizol to a fully managed cloud solution for its new environment, and using related support from IBM Services wherever possible. This includes IBM Cloud for SAP Applications to host the core SAP solutions, and IBM Application Management Services to take care of application administration and maintenance.
“We wanted our business to focus on servicing customers and the completion of the new manufacturing site, and not be distracted by rolling out an entirely new SAP system,” continues Darren Wyatt. “The best way was to clone the system in Lubrizol’s environment, carve out all the LSPI data, and migrate it to the cloud.
“IBM Services worked with LSPI, Lubrizol and SAP to replicate the SAP environment and migrate the data. The IBM team did the bulk of the work and managed the project. Naturally there were a few bumps in the road as we learned about our data, but once the migration was complete, we started testing and ramped up the speed. We took four days offline for the cutover, and went live on Saturday morning.”
The IBM Services and IBM Application Management Services teams delivered the SAP technical and functional expertise to test the resulting carved-out system, performed integration and regression testing, and completed validation of the migrated system and associated SAP systems that were new builds. IBM deployed consultants onsite at the LSPI office in Houston, and a remote team in India.
The IBM Cloud team built out the SAP infrastructure, SAP instances and network connectivity to both Lubrizol and LSPI. IBM Services created and managed the overall project plan and teams, and provided assistance with project governance. Since LSPI operates a lean IT team, IBM Services also played a very active role in managing the IBM cloud operations.
One specific advantage of the cloud route was the ability to somewhat over-engineer the solution, with additional processing power at the outset. With migration and testing complete, early production data then enabled IBM to re-configure the cloud configuration for optimal performance with the most cost-efficient compute resource allocation.
“The migration to our own SAP solutions was, by far, the best implementation we have had. We came to work on Monday, and everything was working as it was supposed to work. While a typical migration process would have a laundry list of issues needing repair, that was not our experience. A few minor issues arose, and were resolved quickly. Throughout our organization, we heard that the transition was smooth – the smoothest implementation they had experienced, and that the team exceeded expectations.
“From a user perspective, integration was seamless. Our employees were using one system one day; a few days later, they were using the new system. The cloned system, while operating independently, left employees confident in use. It was like no major change had occurred. Only from my view behind the scenes do I understand how much effort went into the planning and execution of launching the system.”
To operate its new SAP solutions, LSPI relies on an internal IT Manager, who oversees outsourced IT solutions and support teams. To maintain such a lean IT function, it was essential that the company did not need to purchase, refresh and maintain on-premise infrastructure, or perform day-to-day application management.
Darren Wyatt explains, “Once we decided the migration was going to happen, I had conversations with several IT professionals and picked their brains. My key question was, ‘If you were designing a system from scratch and you could build it however you wanted, would you be on premise-based or would you be cloud-based?’ They said ‘cloud,’ because that’s where the industry is going in terms of cost, flexibility and scalability.
“Furthermore, when I started looking at the costs, resources and expertise that LSPI would need to acquire for an on-premise deployment and in-house management, and benchmarked those figures against the fee we were paying for back-office support and services, I realized that cloud was the superior option.
“Additionally, cloud made sense for our business and our culture. What do we want people to focus on around here? Running a SAP system takes a lot of effort and people, and I didn’t want to worry about that. Ultimately, it would cost us more to acquire the knowledge than I can lease, so to speak, through IBM.”
The perfect order
LSPI has begun the journey to add new capabilities, including SAP governance, risk and compliance (GRC) solutions. Lubrizol managed governance processes using non-SAP applications, and these were not replicated in the LSPI migration.
“The advantage going forward is being able to customize and optimize a system based on what we need,” says Darren Wyatt. “Enabling SAP Governance, Risk and Compliance solutions will give us internal controls and help us with issues such as segregation of duties. As a relatively small company, people often wear multiple hats. The access management capabilities will allow us to continue with flexible working even as we control access and maintain a complete, documented record of actions.”
The LSPI all-cloud, as-a-service IT operation removes technical barriers; the team is free to develop business excellence, looks at what could add value to the business process, and simply assesses the costs and the potential returns.
“IBM Cloud for SAP Applications means adding new features is a question of value, not technology,” said Darren Wyatt. “We now have the flexibility and capacity we want. If an enhancement makes sense it simply becomes a dollar and cents issue.
“We strive for the perfect order. From the customer standpoint, orders should go through flawlessly, from the quality of the product, the manufacturing process, and timely delivery of the product, all the way through to invoicing and receipt of funds, it should just be perfect.
“From my standpoint in this migration to our own SAP solutions and IBM Cloud for SAP Applications, the key was that there were no disruptions to ongoing business. The ‘ah-ha’ moment working with IBM and SAP was that we seamlessly integrated into this new environment with zero impact to the customer experience, and that’s what’s important to us.”
About LiquidPower (LSPI)
LiquidPower Specialty Products Inc. (LSPI), a Berkshire Hathaway company, specializes in maximizing the flow potential of pipelines, increasing operational flexibility and throughput capacity, and substantially increasing bottom-line profit potentials. LSPI developed its pioneering technology in the 1970s, and remains the global market leader, working with customers in over 40 countries on six continents, and treating over 50 million barrels of hydrocarbon liquids per day. LSPI’s business model is a full-service solution, ensuring that customers receive “best in class” service.
- GBS AD&I - EA - SAP
- IBM Global Business Services
- IBM Services for Managed SAP Applications
- IBM-SAP Alliance