CTE wanted to simplify its existing IT environment to gain a unified view of its operations and accelerate data analysis, in order to reduce manual administrative work and free up staff to focus on value-added tasks.
The company engaged IBM Services to replace three disparate legacy systems with SAP S/4HANA applications, deployed in the cloud, forming a single pool of operational data.
Cutsmanual administrative workload, enabling staff to concentrate on value-add tasks
Unearthsdetailed operational data to fuel powerful analytics
Reducedset-up time with the IBM IMPACT solution for SAP S/4HANA
Business challenge story
Fighting erosion of market share
Even the heavy machinery industry is not immune to the e-commerce revolution. Distribution businesses have been particularly affected, with customers increasingly tempted by internet-based sellers of spare parts and third-party service organizations.
One company was determined to halt the shift: CTE, which supplies Caterpillar Inc. construction equipment, spare parts and servicing to customers across Western North Carolina. To inspire loyalty among its construction clients, the company needed a game-changing competitive differentiator.
CTE realized that its historical sales and service data could contain valuable insight into equipment maintenance, costs and operations. If the company could analyze the information and offer it to customers in services such as cost comparisons, this value-added facility could bind them closely to CTE and help reinforce loyalty.
At the time, CTE ran three separate business systems, inherited from previous acquisitions and earlier corporate history. Precious data was effectively trapped in these system silos, which depended on legacy technologies not able to support modern app-based ways of working. To complete tasks such as financial reporting and operational planning, employees spent considerable time manually extracting data from each system, collating and validating the results before being able to present accurate reports. The time and cost of merging data from the legacy systems presented a significant barrier to CTE’s ambitious plans for customer-centered information.
Matt Nazzaro, VP and Chief Financial Officer, comments, “The environment for maintenance suppliers and dealerships like us is changing, and CTE is determined to stay ahead of the curve. As the internet threatens to disintermediate many distributor or ‘middleman’ companies, we must look for ways to add value to our services, to continue evolving in a challenging digital economy. First we needed a solid financial infrastructure on which to base this evolution.”
When considering possible software solutions, CTE reviewed choices made by fellow Caterpillar distributors in North America, and assessed which ERP platform would best suit each company division.
CTE’s own experience included operating earlier versions of the SAP ERP application in two of its business units. Based on its experience of the SAP software’s reliability and capabilities, CTE chose to implement SAP S/4HANA as its core financial and enterprise management solution. Business operations would migrate to SAP S/4HANA, starting with core financials solutions to support sales, service and maintenance.
Matt Nazzaro elaborates, “With an IT department of 30 people, we were looking for a system implementation partner with the depth of expertise able to fill our knowledge gaps and complete the implementation while we focused on the business. We selected IBM Services because they demonstrated successful experience of SAP S/4HANA deployments, with excellent references and absolute commitment to achieving results.
“We wanted a strong, hard-working team that our staff could work well with, as well as consultants with real-life implementation experience. This project would involve collaboration with a broad cross-section of our employees, and we looked for people who were easy to work with. IBM Services fit the bill perfectly: its team offered the expertise and resources to do the job, and they were enthusiastic, helpful and committed to delivering value for our company.”
New building techniques
Based on the IBM IMPACT solution for SAP S/4HANA, IBM Services achieved accelerated deployment, with a live solution delivered in eight months. The IBM IMPACT solution is a pre-configured SAP S/4HANA instance, tailored to meet the needs of specific market sectors. Based on the configuration, implementation teams can move swiftly ahead to focus on tailoring SAP S/4HANA to maximize the benefits for each client, delivering fast time-to-value.
The team worked in three-week sprints, using the IBM Ascend methodology powered by SAP Activate, which formalizes the Agile process. The results of each sprint were presented to CTE stakeholders, with opportunities for evolving feedback to ensure that the project met expectations, delivered on functionality, and achieved timelines. IBM also offered advice on best-practice approaches, mapped interfaces from existing systems to SAP S/4HANA, and helped ensure that the project stayed on budget and on time.
For the first phase, CTE and IBM focused on implementing financial solutions such as Financials, Controlling and General Ledger, and creating a unified view of the company’s operations. IBM Services delivered a first Proof of Concept within ten days, providing solid evidence of what was possible.
Matt Nazzaro remarks, “At first I was skeptical about using the Agile approach; I could see its value in small, startup-style projects, but I didn’t think it belonged in an established environment where operational systems are under extreme pressure. But once we began IBM soon showed us the advantages. Rather than coming to the big reveal and realizing we had missed something, the IBM Ascend methodology helps us to develop solutions collaboratively and responsively, with incremental improvements that deliver a result that works for everyone.”
From earth to cloud
CTE ran its former SAP ERP solutions using on-premises infrastructure. The migration to SAP S/4HANA opened up the opportunity to examine the advantages of switching to cloud operations. The company was attracted by the flexible scalability offered by cloud services, and had already started using cloud services elsewhere in the business, and therefore asked IBM Services to implement the new SAP S/4HANA applications in the cloud.
Matt Nazzaro continues, “Cloud operations helps us retain a lean balance sheet, and reduce our capital expenditure. At a technical level, after choosing to move from on-premises to cloud operations, IBM Services helped us to create our own secure cloud environment that meets our business requirements, and completed a rapid, successful deployment tailored to our business needs. Cloud provides the scalability and manageability we need, and offers the first step on our road to becoming a data-driven company.”
Improved administrative foundations
With the core financial applications now running on SAP S/4HANA, CTE gains a unified, integrated view of all its operational divisions. By moving to the cloud, CTE can reallocate staff formerly dedicated to server administration and maintenance to value-added tasks.
CTE has recovered the time spent on reconciling data generated by separate systems, and the consolidated ledgers on the single instance of SAP S/4HANA enable the company to generate standard reports for any business unit. CTE’s analysts can now rely on validated data from a single source to review budgets and create forecasts, and perform all-important customer analysis.
Matt Nazzaro explains, “Previously we might have struggled to identify that a customer whose details were held in the lift truck division was also a Caterpillar equipment customer. With a single ledger and a unified chart of accounts, we can easily see who buys what, and whether there may be additional services we could offer that customer. Similarly, we can use financial data to examine the patterns of spend by each customer, helping us and them understand their expenses, and enabling us to offer them better services in future.”
SAP S/4HANA helps build the next capabilities
In the past, many apparently simple tasks were relatively complex, requiring manual consolidation and merging of data across divisions. Reports that relied on multiple data sources would require continuous updates. By introducing SAP S/4HANA, not only has Caterpillar CAT enabled consistent, rapid reporting from a single data source, but the background report maintenance workload has also been removed. Additionally, users much prefer the tile-based SAP Fiori interface, giving them easy access to modern applications.
With assistance from IBM Services, CTE now plans to extend the solution with data security, materials management and profitability analysis applications, starting the journey towards the predictive analytics that will drive customer loyalty.
“The SAP S/4HANA solution delivered by IBM Services, positions CTE to defend its strong market position,” continues Matt Nazzaro. “IBM Services has helped CTE to deploy an SAP S/4HANA solution that can easily meet rising workload and support additional functionality, making us a highly responsive, data-enabled company. With the new solutions, CTE can take advantage of a host of exciting new capabilities, including IBM Watson®, and exploit huge reserves of data at our disposal."
Matt Nazzaro concludes, “Ultimately, as we extend SAP S/4HANA to link financial to operational and product data, CTE will be able to draw deeper insights and form new conclusions, helping our customers gain the maximum value from their investments. IBM Services is a central part of CTE’s journey to becoming a data-driven, digitally enabled business.”
Founded in 1926, CTE made a commitment to support the growth of North Carolina by supplying and supporting Caterpillar equipment to the construction, road-building, utility and mining industries. More than 90 years later, CTE has served the equipment needs of the Carolinas. In addition to offering a full line of construction, forestry and paving products, the company also offers a complete line of material handling equipment, engineered systems, truck engines and power generation systems as well as superior product support.