Case: Versums ERP Transformation Versum Materials is an electronic materials company supplying premier specialty gases and products to the semiconductor industry chip manufacturing process. It merged with Merck in late 2019, is headquartered in Billerica, Massachusetts, and operates a network of offices, manufacturing sites, and research and development (R&D) centers in Asia, Europe, and North America. In October 2016, Versum was divested from its parent company, Air Products, and transitioned from a $10 billion industrial gas and chemical company that predominantly sold large volumes of inexpensive products such as cylinders of pure oxygen, nitrogen, hydrogen, and helium, to an independent $1 billion company selling highly regulated gases and chemicals for semiconductor manufacturing. After separating from Air Products, Versum continued to rely on its former parent companys information systems under a transition service agreement (TSA). This was only an interim solution, however, since Versum really needed its own IT infrastructure and enterprise system to support its new business model and plans for growth. The company was given a very ambitious deadline of 18-24 months to get off the TSA and have its own systems in place. When determining what ERP system to put in place, Versum Materials had a few options: The first was to copy Air Products existing 20 + - year-old SAP ERP system. The second was to bring the same customizations and functionality to a new SAP ERP system and the third was to start completely from scratch with all-new servers, software, and processes. Versum selected the third option because it provided an opportunity to wipe the slate clean and implement processes that worked for its specific business. The legacy ERP system had been heavily customized with various upgrades over the years, and most of those customizations were for the parent companys industrial gas division, which had very different information requirements than the new Versum. Versum Materials management didnt want to continue using that system when it was not really suited for the business. To find the new replacement system, Versum Materials looked at different ERP providers and products. Management ultimately elected to stick with SAP software because it had all the capabilities for satisfying the industrys legal regulatory requirements and because it appeared to be the quickest and easiest to implement in a short timeframe. If Versum had tried to put in a totally new non-SAP ERP system, employees and IT staff would have had to learn a whole new unfamiliar system, and this could not be easily accomplished in short order. The training and the issues with peoples understanding and knowledge for a new software package would have dramatically impacted the business. Versum Materials decided to make SAP S/4HANA the foundation of its new system. S/4HANA is an integrated ERP system that runs on SAPs in-memory database, SAP HANA. Instead of running the new SAP ERP system in a data center of its own, Versum Materials opted to implement the system in a private cloud, with a hosting provider that would manage the cloud SAP S/4HANA platform running in its own physical data center. This saved the company from making a large up-front capital investment in the new system and the responsibility for managing the system. Versum implemented its SAP S/4HANA system by taking advantage of SAP and industry best practices embedded in the software and creating consistent processes across business units. The typical SAP implementation is rolled out in phases, often country by country for global enterprises. Companies with global supply chains where materials or products are manufactured or shipped from one country to another must convert supply chain data from the old system to the new system quickly and cleanly to keep products flowing. Versum Materials has a global supply chain spanning more than 10 countries, so a phased rollout would have required putting temporary interfaces in place to feed data from the previous system to the new system to enable the new system to go live country-by-country. Versums transition services agreement (TSA) did not allow enough time for that option, so the new ERP system had to go live everywhere all at once. A big-bang system rollout also was advantageous because it forced Versum to keep the system simple, with fewer problems to address. Dragging the program out and rolling out Taiwan one month and Korea the next, for example, would have taken much longer and been much more complicated, notes Sally Giamalis, SAP Program Director of Versum Materials. Versum had anticipated that the new system would initially have problems taking orders, creating purchase orders, or shipping products to customers. Working with Accenture consultants, Versum found the implementation went smoothly with minimal disruption to its business. When Versum went live with SAP S/4HANA release 1610, it also rolled out other SAP solutions, including modules for SAP Business Warehouse optimized for SAP HANA, SAP Business Planning and Consolidation, SAP Global Trade Services, the SAP Advanced Planning and Optimization component of SAP Supply Chain Management, SAP Solution Manager, SAP Process Integration, SAP Data Services, and SAP governance, risk, and compliance (GRC), as well as some non-SAP applications. The entire implementation took just 15 months. During the course of implementing the new system, Versum did run up against some challenges, especially with converting the data from the old system. Versum had to run through three cycles of data cleansing to obtain sufficiently accurate invoicing, address, and contact information. The data structure in the old SAP ERP system was not the same as that for the new SAP S/4HANA system, which had a new hierarchical Business Partner structure. In the old SAP ERP system, the Customer structure (ship to, bill to, contact, and vendor) consisted of all different data objects. In the new SAP S/4HAHA structure, all those different data objects are part of a new object called Business Partner. In the old structure, a customer and the vendor could be the same thing, but they were two different entities. In the new structure, if the company sells to a customer but also buys from that customer, they are under a single Business Partner record. The new SAP S/4HANA system makes it easier for Versum to optimize operations, manage costs, and take advantage of real-time analytics. The company now has a solid foundation for operating as a standalone company specializing in specialty materials. Answer these questions

1. What management, organization, and technology factors contributed to the problem? 2. Was the SAP SI 4 HANA SaaS solution a good one for Versum? Explain your answer. 3. What challenges did Versum encounter implementing the new system? 4. How did the new system change the way Versum ran its business?