INEOS O&P USA wanted to simplify and improve the reliability of its SAP landscape to improve key business processes.
INEOS O&P USA is building a fully flexible IT landscape by adopting IBM Cloud Managed Services for SAP Applications, gaining the ability to develop new functionality rapidly and cost-effectively.
20% cutin total cost of ownership for the SAP operations
Continuedimprovement in “Perfect Order” metric
Increasedsystem flexibility, scalability and resilience
Business Challenge Story
Creating a simpler, more agile IT infrastructure
INEOS O&P USA’s main products – ethylene, propylene, butadiene, mixed butenes, crude benzene, polyethylene and polypropylene – are manufactured from hydrocarbons derived from oil and gas. Hydraulic fracturing (or “fracking”) techniques have been developed that enable previously inaccessible hydrocarbons to be extracted from shale oil deposits – providing an abundance of raw materials at a much lower cost.
The reduced cost of the raw materials has led to a resurgence in the US petrochemical industry, creating new opportunities for INEOS O&P USA to grow its business. Steve Vice, IT Manager at INEOS Olefins & Polymers USA, explains: “In a commodity marketplace like the chemicals industry, customer service is a critical factor in retaining and winning business.
“When margins are tight and our customers’ production lines are operating around the clock, it is vital to be able to deliver the right products to the right plants at the right time. To get ahead of the competition, we need to continuously improve in the ways we conduct our business – our business processes and IT systems had to become more flexible and responsive to customers’ needs. This will help us in one of our core values: to become the supplier of choice for our customers.”
For several years, INEOS O&P USA has been relying on SAP® ERP applications to support core business processes such as sales and distribution, financial accounting and cost controlling, materials management, plant maintenance and project management.
The SAP applications are also integrated with a wide variety of complementary systems, such as IBM FileNet® Capture, which is used to scan and process incoming vendor invoices. The applications were running on a large number of dedicated servers, and over time this grew into a complex landscape that was relatively costly to operate.
“Traditional architectures based on dedicated servers for each application tend to sprawl, and gradually become more and more difficult to manage,” says Steve Vice. “When you are looking for a flexible, agile infrastructure that can adapt quickly to new demands, this is less than ideal.
“So when our first generation of hardware began approaching the end of its life, we began considering whether there was a better approach. We had experience moving some of our smaller applications into the cloud, and when IBM came to us with a proposal to move the whole SAP landscape too, we saw the benefits immediately.”
Moving into the SmartCloud
By rationalizing the structure of its SAP landscape and moving to a cloud environment, INEOS O&P USA calculated that it would be able to reduce the total cost of ownership for its SAP applications by 20 percent per year. This significant cost saving, combined with the greater scalability and resilience of a cloud-based solution, encouraged the company to go ahead with IBM Cloud Managed Services for SAP Applications.
“The IBM team did an excellent job of sizing the solution, so our users are seeing the same excellent performance from IBM Cloud Managed Services for SAP Applications as they did from the dedicated hardware,” comments Steve Vice. “At the same time, we benefit from the much greater cost-efficiency of a virtualized infrastructure.”
The advantages of a cloud-based landscape for SAP are significant, particularly for companies like INEOS O&P USA, where there is a major focus on development and innovation.
When additional SAP functionality needs to be developed or moved into production, a new virtual server can be created using IBM Cloud Managed Services for SAP Applications, and the memory and CPU requirements can be adjusted to meet the specific requirements. This virtualized approach increases agility by eliminating the delay of purchasing a physical server, installing, connecting and configuring it, and then deploying the operating system and software.
Because moving to the cloud can be perceived as a business risk, a central aspect of the solution is system resilience. The solution is split between two IBM data centers: Raleigh, NC (which hosts the production, development and QA instances), and Phoenix, AZ (which is used as a disaster recovery site).
The two data centers are connected to each other and to the INEOS O&P USA sites in the Houston, TX, area and Los Angeles, CA by MPLS network connections at a speed of 3 Mbps. If one of the three connections fails, INEOS O&P USA users can still route through to the SAP systems via the other two – so the solution offers a high level of network resilience. In case of failure, INEOS O&P USA is able to recover full operations within 12 hours, falling back to transactions no older than four hours.
Developing new services and more automation
With the SmartCloud solution in place, INEOS O&P USA has the flexible infrastructure it needs to support the creation of new and enhanced processes that will improve the levels of service it offers to its customers.
Support and development for both SAP and auxiliary applications is provided by IBM Services. The eleven-person IBM SAP consulting team worked closely with INEOS O&P USA business analysts, functional specialists and project managers to design and implement new functionalities.
Steve Vice comments: “There is a great deal of integration between our SAP applications and our other systems, and with the IBM team’s help we are increasingly extending that integration to our customers’ systems too. For example, we recently implemented a solution for automated data exchange that takes orders from customers automatically, and integrates our logistics operations with our transportation and warehousing partners. This new level of automation and connectivity means fewer mistakes, and contributes to improving the overall quality of service.”
To measure its progress in improving customer service, INEOS O&P USA uses a metric called “Perfect Order” – an index of various key performance indicators such as accurate invoicing, on-time shipment, and correct completion of orders. “As we work with IBM to automate more and more of our processes, including SAP applications and our other systems, we have seen the Perfect Order metric rise consistently,” says Steve Vice.
“This indicates that we are succeeding in our goal of continuously improving our business processes – and we are confident that this will translate into increased customer loyalty and an excellent reputation in the industry.”
Commenting on IBM’s contribution to this transformation, he adds: “The IBM team is part of our team. We see their commitment to our success every day. The teamwork between INEOS O&P USA, IBM and SAP helps to foster innovative thinking, combining our insight into the unique needs of the chemicals industry with best practices drawn from IBM’s experience with SAP across many sectors. Together we are much stronger than we would be individually.”
INEOS O&P USA and IBM have completed a major upgrade of the SAP environment, moving the company to SAP ERP 6.0. Initially, the team focused on the technical upgrade, and in the longer term expects to exploit new functionalities. INEOS O&P USA will continue to work with IBM Services for SAP BASIS and SmartCloud support.
Steve Vice concludes: “When we need support, it does not matter whether the issue is on the SmartCloud side or the SAP side. We just have one pathway for support, and the IBM teams work together seamlessly to provide a solution. It’s an exciting time to be working in our industry, as the shale gas technologies change the way petrochemicals companies operate.
“We know there will be risks, and we know there will be opportunities – so the important thing is to be as agile as possible and respond rapidly to customer demand. With SAP ERP and IBM Cloud Managed Services for SAP Applications, we have the right infrastructure in place to build the customer-centric processes that will help us differentiate our business and stay a step ahead of the competition.”
About INEOS O&P USA
Part of the global INEOS group, INEOS Olefins & Polymers USA (INEOS O&P USA) is North America's third largest producer of high-density polyethylene and polypropylene, and its second largest merchant marketer of ethylene. It produces 7.5 billion pounds of olefins and polymers per annum from five sites in North America, employs nearly 1,000 people, and generates revenues of USD 5 billion per year.
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