SAP recently marked its two year anniversary of RISE with SAP, SAP’s comprehensive solution of products and services to help customers successfully move to the cloud. So far, more than 2,500 customers have put their trust in SAP and its partners to guide them on the journey.
Delek US – a North American energy operator with midstream, downstream, and retail oil and gas assets in the Southwest United States – is one such customer as well as one of the earliest adopters of RISE with SAP.
I recently had a chance to connect with the leadership team at Delek US to get an update on how their RISE with SAP journey is going.
Drowning in Complexity
Over the past 20 years, Delek US has made a number of strategic acquisitions, always with the goal of positively impacting its shareholders, employees, customers, and the communities in which it operates. With each acquisition came a new enterprise resource planning (ERP) system to integrate – and technical challenges.
Delek US found itself with more than 6,000 customizations – or code modifications that change the way an ERP system works – and the volume and complexity of these customizations made it virtually impossible for Delek US to get the most value out of its ERP.
“We were previously at a point where every change had the potential to create an unwanted impact due to the modifications that had to be done,” said John Paul Palelil, senior director of ERP & Business Applications at Delek US.
Its complex ERP environment was also creating roadblocks and leading to a lack of utilization. Some employees were unaware of how to use the system for certain data management tasks. Others took to relying on Microsoft Excel spreadsheets to track information. Delek US knew it had to change, but how best to do that with such a highly customized ERP landscape?
“To me, the biggest story of this project is how a company can go from 6,000 modifications to zero,” said Nir Yatziv, CIO for Delek US. “That’s what Delek US brings to the table, the understanding that we needed to listen, evaluate, and ask how we can make it work.”
In working with SAP to assess the situation, Delek US realized it had an opportunity to leverage the RISE with SAP solution to standardize on SAP S/4HANA Cloud and also demonstrate its commitment to change management by adopting SAP standard content activation best practices.
“I don’t think of SAP as just an ERP,” Palelil said. “I think of it as an all-encompassing solution.”
Standardizing with SAP S/4HANA Cloud and SAP standard content activation represented a technology and process game changer for Delek US. It would give the company a unified ERP with a single instance of SAP, digitally transform all in-scope processes to best practices, and improve maintainability. This prize outweighed the required change management, which Delek US addressed head-on.
According to Delek US’s executive sponsor and CFO Reuven Spiegel, “The keys to success were detailed pre-project preparation, ‘out-of-the-box’ implementation, and a strong change management program.”
Managing through Change
Digital transformation is a complex puzzle of people, processes, and technology. Delek US found that SAP S/4HANA Cloud and SAP standard content activation provided the base technology and process pieces, which allowed Delek US to focus on its people.
Employees can be reluctant to change the way they work, leading to potential conflict among workers and management. There are also times when an organization adopts new technologies, only to find that its workers continuously go back to the systems and processes they’ve grown accustomed to using.
Delek US’s leaders, though, understood the challenge and developed a robust set of project controls and tight governance to maximize adoption and readiness. In addition, a heavy emphasis was placed on business function ownership – they didn’t want this to be viewed as merely an “IT project.”
Marie Sutton, senior director of Technology Strategy and Delivery at Delek US, shared: “We were very intentional with all elements of our project plan and execution to maximize our probability of success. Beyond the ‘what,’ we focused on culture to maintain an attitude of ‘how can we make this work.’”
Delek US completed its implementation of SAP S/4HANA Cloud in October 2022 on time, on budget, and on scope – a total of 13 months from initial assessment to go-live for delivery of a full ERP solution.
“The day before go-live I sent people home at noon,” Palelil said. “Never in seven projects have I had that much breathing room.”
Delek US is already seeing benefits and has a clear path to capture more value leveraging its modern cloud ERP. Immediate benefits beyond full standardization were recognized in areas such as order processing, inventory management, and bank reconciliation.
“Previously, we had to review multiple systems to receive an accurate count on things like how much equipment we had in the warehouse,” Yatziv said. “Now with our SAP system, we have the data presented in real time.”
Ready for What’s Ahead
Delek US is expecting bigger and better things from SAP S/4HANA Cloud in the foreseeable future. For instance, the company is using it to gather data and intelligence that further support its corporate governance and stewardship initiatives. It’s also continuing to look for new opportunities to integrate SAP S/4HANA Cloud advanced tools and technologies into its operations.
Delek US is also committed to improving its social and environmental performance, having recently launched its first greenhouse gas reduction targets, and maintains high standards of corporate governance. It’s also dedicated to finding ways to listen, evaluate, and understand how to make digital tools and transformation truly work.
Companies in every industry that are struggling with the complexities of their ERP system can learn from Delek US’s RISE with SAP journey to start a cloud ERP journey of their own.
“We did it,” said Yatziv. “It was not easy, but we accomplished it.”
John Tully is senior vice president and managing director of the NA South Market Unit at SAP.