Quantifying Change: How Holly Corporation Makes SAP Optimization Count
Holly Corporation is a petroleum refiner with more than $8 billion in annual revenue and about 1,700 employees. The company installed a bevy of SAP applications in 2007, everything from the core ECC 6.0 system including SD, MM and FI, to SAP XI and SAP BW. A short time later, Nellson Burns joined the firm as Vice President of Information Technology. He has spent the last three years optimizing SAP while educating users on how best to employ it and introducing a series of policies and processes aimed at stabilizing the system. Burns talked to ERP Executive about what he’s learned and the results he’s seen.
Q: SAP had been in place only a few months when you first joined Holly Corp. What were some of the issues that needed to be addressed?
A: We had to work with the business so they could learn and understand the system, including not only how to go through a transaction but the theory behind it, understanding how the system processes information. We did not have a change control process in place so we had to build that up pretty quickly. Then just generally trying to stabilize the system in terms of the number of changes we were trying to make to basic business processes and ensuring adequate system performance in terms of response time.
Q: I understand you created process councils to help address some of these issues. How do they work?
A: The intent was to establish a cross-functional process council that had oversight on our order to cash process to improve our knowledge of this process, optimize it and report back through KPIs on the health of the process. The group included members from the tax department, accounting, contracts, master data group, marketing, IT and the credit group. We’d meet monthly and develop a list of priorities and optimization tasks, things like automating bills of lading that were being put in manually and reviewing all tax data. We came up with reports to help groups better manage the invoicing process, by looking for invoices that were late. At first this was a project but now it’s about 2 years later and this has been put into the normal everyday business routine.
Q: What’s the result been?
A: The two big metrics that we look at are bill of lading error rate and cancel/rebill percentage. We set targets for both to be less than 5%. When we started we were at 7% to 8% in terms of error rates. The average now is 3% to 4% for bill of lading errors and maybe 1% to 2 % for cancel and rebills. Given our success with that, we recently put in place other metrics for different groups and service level agreements.
Q: What kind of work have you done with respect to change control?
A: We implemented a lot of best practices. Before we didn’t have a good system or process for moving changes into SAP, including good enough testing, appropriate signoff, documentation and a standard schedule. The real goal is a more stable system where multiple sets of eyes look at every change at several intervals to make sure we’re adequately addressing the risk of that change before we move things into our production environment. We made sure both IT and the business perform some testing to make sure the change is working like it’s supposed to. We document the results in a change control tool with screen shots of the testing and we document approval from IT and the business. Previously we were getting change control exceptions from our internal and external audits. Since we put in this new process and tool, I don’t think we’ve had a single exception in terms of our change control to SAP.
Q: What tool are you using?
A: We use Mercury Quality Center, which is really designed as a testing tool. We plan to transition to SAP Solution Manager in 2011, which is really the SAP preferred solution for change control.
Q: Another focus has been educating your SAP users on how best to employ their applications. What kinds of things have you done in that area?
A: Part of it is changing the perception of what training is. We had to work with customers to understand that one-to-one training, even if it’s not in a classroom, is still training. We find that to be more effective. We tried a power user program in 2008 but it lost steam primarily because the IT department was pushing it. We’ll take another stab this year with the business being responsible for that. We’re also going to set up monthly sessions where we get 3 to 5 of our functional analysts together and just put them out there with our SAP users and just answer any questions they have as they go through processes for a couple of days.
Another thing we do is make sure our SAP functional analysts get at least 40 hours of external training every year so they stay current. Once they come back, they present an abbreviated version of the training to others in the department. Also, every week we pick two or three functional analysts to focus on the day-to-day support of SAP in an area other than what they normally do. So you’ll have a FI/CO person sitting with a supply chain person, managing all the support tickets. That’s improved cross-functional knowledge among our SAP analysts.
Q: I understand you’ve also put a focus on automation. What kinds of things do you automate and how do you do it?
A: We process a high volume of transactions from our terminals, where gas tank trucks go to fill up. That’s where most of our sales transactions come from, about 30,000 to 40,000 transactions every month. When we first started SAP, we probably automated 70% to 80% of them. Now 95% to 99% of those transactions are automated. In some cases, we had to build a special interface for a terminal because it had a different communications protocol. We had to go through buckets of tickets and look at what we could automate, then tackle the biggest buckets first.
There’s also been a lot of automation in terms of reports that people used to manually create, by taking data out of the system and putting it in spreadsheets and things like that. We’ve been looking at those opportunities to further automation. The objectives are to reduce errors, improve the productivity of employees and the speed of our processes.
Q: What have your experiences been thus far with some of the new analytic tools, such as the Dashboard tool (the former Xcelsius)?
A: We recently rolled out first BusinessObjects Dashboard using Xcelsius. It’s a dashboard that helps marketing reps determine what our daily terminal prices are. We had a marketing dashboard before but it was created manually every day in Excel, which took from 1 to 3 hours. But it wasn’t easy to manipulate and work with the data. For the dashboard we put all the cubes into SAP BW, then built the front end on top with Xcelsius. It’s been very well received. Not only is it not taking someone 1 to 3 hours per day to do it, but we get better analysis quicker. It’s really easy to see things that were difficult to see when it was on a spreadsheet. We plan to roll out several other dashboards this year, with a focus on our operational data, getting information from our refineries and getting that published.
Q: How would you assess your overall progress thus far?
A: We rolled two separate refineries into Holly last year, as a result of acquisitions. We increased head count by about 70% and doubled our throughput, which is how many barrels per day of crude we process at our refineries. In each case, we had about two weeks to prepare for the integration project, and we were able to integrate those two refineries into SAP within four weeks after that. With both refineries, on the very first day we owned them, we were processing all transactions in SAP. That’s really a testament to our team but also to the scalability inherent in SAP. Because we had done a lot of this process work, such as with the process councils, and because we had a stable system, we were able to just go through and update the master data, do some testing and then go live. To me that was the proof in the pudding in terms of whether we were stable.
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