Implementing S/4HANA for enhanced standardization and stronger governance
Kobe Steel has been operating individually optimized business processes and core systems for each department in its diverse business operations, including steel, aluminum, forging, welding, machinery, engineering, construction machinery and electric power.
Although SAP ERP was introduced in the head office accounting department, the system became complicated due to approximately 400 add-on developments in the head office accounting area alone. As a result, there were issues with version upgrades and maintainability, which hindered modernization. Also, accounting processing was distributed across multiple systems, and paper-based forms were being output, making operations specialized and inefficient.
As SAP ERP maintenance deadlines approached, it was difficult to respond quickly to business changes and scale toward the future with existing aging systems. There was an urgent need to build a new common ERP foundation to accelerate digital transformation (DX) across the company.
Kobe Steel revamped its aging and fragmented core systems to build a company-wide ERP platform called KOBELCO-SAP. IBM provided support throughout the entire process from conception to implementation and adoption, and also played a central role in project management. The arrangement of business processes and system functions was completely redesigned around S/4HANA, which is SAP's latest product. Business transformation was led by utilizing standard functions based on the Fit to Standard (F2S) principle.
Initially, there were plans for each department to proceed with the SAP implementation project individually, but from the viewpoint of implementation and maintenance costs, it was decided to proceed with the aim of simultaneous operation in a one-instance configuration where the three engineering, power and headquarters business divisions shared a single SAP environment. As a program manager across vendors, IBM promoted the unification of implementation policies, management methods and master design/operation systems, contributing to consensus building between business divisions and successful operations.
In terms of infrastructure, core systems were built on AWS with servers installed in two regions to achieve both security and disaster prevention. By outsourcing server management to AWS, operational load and IT costs were also reduced.
This project was Kobe Steel's first cross-divisional ERP standardization project, and the production operation of the new system using KOBELCO-SAP went smoothly, successfully solving the core structural business issues that Kobe Steel was facing.
Specifically, the usage rate of SAP standard features increased significantly from the previous 6% to 82%. In head office accounting, the number of add-ons, which had risen to about 400, was reduced to 100. Due to this thorough standardization, costs for new development and maintenance were drastically reduced, and flexibility was increased for future version upgrades and expansions.
At the same time, due to the digitization of forms and online settlement operations, the company moved away from its paper-based culture and saw increased support for flexible work styles. Departmental cooperation and confirmation tasks became unnecessary, thanks to the integration of previously separate headquarters systems, and real-time data access was achieved, reducing waiting times. Further, the strengthening of governance and business control was promoted through the introduction of workflows and redesign of master management.
A noteworthy point throughout this initiative was that even at Kobe Steel, which has a business division system, the IT planning department played a central role in maintaining and operating a company-wide common infrastructure in the application area. The department supported transformation while cooperating with the accounting department and each business division. Until now, the company supported common infrastructure in the areas of information infrastructure and information security, but establishing a new governance system in the wake of this project has led to results that Kobe Steel recognizes among its most important achievements.
Further, with the development of a core business infrastructure, a system is now in place that can smoothly respond to next-generation DX policies such as future use of AI and advanced data analysis. As Kobe Steel's DX promotion partner, IBM will continue to support transformation by applying IBM program management methods to application areas other than SAP in addition to continuing support for operation and maintenance.
Kobe Steel, Ltdis a comprehensive Japanese manufacturer founded in 1905, and has three pillars: material businesses such as steel and aluminum, mechanical businesses such as machinery, engineering, construction machinery and more, and electric power businesses. Through these businesses, the company contributes to the resolution of social issues and the development of industries, with many bases in Japan and overseas for global business development. Further, the company's view of the future is: "We envision a world in which people, now and in the future, can fulfill their hopes and dreams while enjoying safe, secure, and prosperous lives." This is a core corporate principle as the company actively works to realize a sustainable society.
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