To walk the talk and stand out among competitors, SAP customers that offer services and solutions boasted as “integral and innovative” must have an internal focus on innovation and integration to ensure credibility. Grupo TDM, a Peruvian engineering organization that offers customers throughout Latin America a broad spectrum of specialized construction solutions, is one such company. Since its inception 25 years ago, Grupo TDM — operating in the five regions of Peru, Chile, Brazil, Colombia, and Mexico — has focused on integration while growing organically through its development of projects, commerce, and services for the sectors of road infrastructure, mining, energy and hydrocarbons, ports, airports, agriculture, sanitation, and more.

In offering complete solutions to engineering problems through these various sectors, the concept of integration is inherent in the way Grupo TDM is organized into construction, asphalt, and waterproofing and geosynthetics businesses among other engineering solutions — with the engineering division working side by side with project developers the commercial division selling products and services, the construction  division installing the products, and the production division fabricating products. On the distribution side, each of the five regions is required to operate its own warehouses and centralized storage facilities. And on the IT side, the central department located in Peru is constantly seeking to find new solutions that contribute to more efficiently solving customers’ business problems

“We started as a commercial company, then developed the installation services, and then moved into manufacturing as an engineering company,” says Hernán Arízaga, Chief Administration Officer at Grupo TDM. “And throughout it all, we were always supported across the business by technical support and innovation.”

Historically, Grupo TDM had two home-grown ERP systems that covered financials, logistics, and sales functionality. It also had in place custom-developed solutions for keeping track of budgeting, controlling, and manufacturing costs. On the reporting side, spreadsheets filled in the gaps where the systems fell short in functionality. While customers were still receiving quotes, placing orders, and experiencing quality service, this outdated system needed a significant upgrade to serve customers faster and more efficiently. The internal experience was also in need of improvement: The systems were slow and the manual processes required a great operational effort to complete, which allowed little time for analysis and other core activities. 

“Financial information and associated reports were available 25 days after the closure of a monthly period, mainly because we needed to validate the information recorded during this period — the applications did not offer much in the way of online information, reliability, robustness, and information security,” says Arízaga. “As a result, the need to cover more functionality led us to develop customizations that ended up further compromising the security of our applications, especially our ERP systems.”

So began the search at Grupo TDM for a world-class IT solution.

Looking to Partner in the Cloud

A philosophy at Grupo TDM is to orient its efforts to maintain culture and control within the organization in a way that minimizes risk, according to Arízaga, which includes recognizing areas that the business does not specialize in and then delegating those tasks to third parties that do. For example, Grupo TDM does not manage its own warehouses and storage capacity but rather puts those efforts in the hands of third-party specialists. The business decided to follow the same philosophy in how it would approach managing the physical infrastructure required to operate its new and improved IT landscape. 

“The growth of Grupo TDM and our desire to increase our customer service standards forced us to make faster decisions and larger actions, for which we needed robust and scalable support,” Arízaga says. “The option of hosting our IT systems in the cloud fit with our precision and also aligned with our modernity and future needs.”

According to Arízaga, working in the cloud aligns nicely with an old Spanish saying, “Zapatero, a tus zapatos,” which translates to “shoemaker, to your shoes” — meaning a person should stick to his or her realm of competence. “Organizations like ours have to focus on our core business and indispensable support entities, while leaving the very technical and complex non-core aspects to third parties,” says Arízaga. “Following that logic, it makes a lot of sense to abandon the possession of physical hardware and data systems, and replace those with a more secure and versatile reservoir — like the cloud.”

Whatever software Grupo TDM chose, it was required that the system would operate seamlessly in the cloud. “We consider the cloud to be a safer, more versatile, and more flexible fit for our current and future business model as we begin our digital transformation,” says Arízaga. When evaluating the options, the business defined several criteria such as cost, functionality, local availability of operational support, user friendliness, appearance, and duration of the implementation — and quickly narrowed the list down to three software providers.

While leadership at Grupo TDM had an immediate preference for SAP software, the evaluation team wanted to ensure that the decision was based on the objective analysis of the options. “Senior management saw SAP software as a tool for continuous improvement, starting with obtaining online and accurate information, which allows us to make good decisions and, as a result, will generate better customer satisfaction and operational excellence for the whole group,” says Arízaga.

After the laborious task of defining the mechanisms to qualify the options in each criterion and providing specifications for a final decision — analysis that involved evaluating software providers as well as implementation partners for the project — SAP was the undisputed winner for the solution and IBM was chosen for implementation and hosting, according to Arízaga. “Once the decision was confirmed to go with SAP, we decided that we should deploy SAP HANA,” he says. “We consider that it is the logical tendency and therefore wanted to align with it for the future.”

Implementing SAP HANA

The SAP implementation was conceived as a two-phased project, initially limited to six Grupo TDM companies located in Peru. The first phase kicked off in March 2016 and involved implementing functionality for finance, accounting, logistics, and sales, as well as using SAP Fiori for mobile approvals, which started live production in August 2016. The second phase, which began in January 2017, included the functionality for production and cost planning and went live in May 2017. Both phases of the project were concluded by June 2017.

The implementation strategy chosen was to reengineer business processes using the IBM-designed methodology that consisted of progressive blueprint development (from present to future state), an implementation phase, and a final preparation stage that culminated with the cutover of the solutions implemented. For the strategy to be successful, it was essential to include employees from the involved areas and get validation from responsible managers, as well as to integrate between the different work fronts, according to Arízaga. “The goal of change management was to build a solid, integrated, and motivated team. This included both IBM and Grupo TDM collaborators,” he says. “To that end, we worked on conflict resolution through assertive and dynamic communication tools to develop leadership and tolerance.” These activities included workshops outside the office environment that were conducted at the end of each stage of the project.

The selection of the project team was done jointly between Grupo TDM and IBM. In this way, designated collaborators were assigned according to who knew the business processes and operations, ensuring that the necessary analytical skills were present. “Collaborators not belonging to the project team assimilated changes and new practices in a positive way,” says Arízaga. “They emphasized the traceability and reliability of the system, as well as the standardization in the processes of the organization. This allowed them to work more effectively by eliminating double effort. To consolidate change management at the level of the entire organization, the contribution of the key users and managers involved in the implementation team was fundamental.”

Benefits of the Cloud

As part of the SAP HANA implementation, Grupo TDM elected to deploy the solution on IBM Cloud for SAP applications. (refer to the sidebar at the end of the article for more information about IBM’s cloud platform). According to Arízaga, the cloud platform helped to optimize the use of resources because it responds to the company’s specific server requirements required to operate SAP HANA. “Specifically, the cloud platform generates savings of around 15% as opposed to the internal management of a server by the IT area,” he says.

“Additionally, through scalability and flexibility, it allows us to obtain a solution proportional to each increase in our needs by volume of use, increasing the server’s benefits almost immediately after each request.”

With SAP HANA running on the cloud platform at Grupo TDM, there are fewer people involved in operational processes, and there is more time for core activities and analysis. “The SAP implementation has also allowed us to initiate the development of processes oriented to offer our existing and potential customers faster and more effective ways to contact us and receive better service,” Arízaga says. “This way of working together with SAP and IBM allows the necessary support for capacity expansions associated with the increase of documents generated, implementation of new modules, opening of new companies, and even the internationalization of SAP software within Grupo TDM.”

By eliminating error-prone, paper-based, and manual processes at each warehouse for stock management and product dispatch, Grupo TDM has seen improvements such as better visibility into stock inventory levels and fewer delays to customers. Response times have been reduced by 42%, and information access became 50% faster — enabling quicker service delivery and decision making. “By deploying SAP HANA, we now have a single, unified way to manage our inventory and the underlying financial data. We can easily plan and manage stock requirements in each location, and, as a result, we have dramatically improved our shipping process,” Arízaga says. “For example, shipping staff now have direct access to order information, enabling them to be faster, more precise, and more efficient. We have also achieved full control over product delivery and shipping times, ensuring customers get their materials on time, every time. By knowing exactly what we have in our warehouse at all times, we have eliminated the risks and costs of under- or over-stocking, helping us create savings that we can pass on to our customers.”

The implementation team at Grupo TDM followed some key strategies that helped ensure the success of the project, according to Arízaga, such as carrying out adequate analysis of the business requirements at the onset — while contrasting the cost and benefits of the solution — and then translating those results into exact specifications of the components to implement. In addition, he stresses that a crucial step is sizing the necessary space in the cloud and optimizing the opening of the development, quality assurance, and production environments in a timely manner. “Complementarily, documenting the progress and validation of the deliverables during the development phase is another critical point, as well managing change requests,” he says. “SAP implementations generate great expectations in the organization, so it’s very important to keep stakeholders satisfied — and, of course, all of this should be completed within the established parameters of cost, time, scope, and quality.”

What’s Next?

Future objectives of Grupo TDM include consolidating the use of SAP software throughout the organization’s operations to selectively implement reports, enhancements, and functions that allow improvements in the processes and the performance of the collaborators, according to Arízaga. “We will also evaluate the inclusion of new functionality that gives good management practices to leadership and collaborators not included in the first phases of the SAP project, such as in project management, maintenance, human resources, fixed assets, and business intelligence, among others,” he says. “The expansion of the SAP implementation will continue in future phases to the company’s international subsidiaries in Chile, Brazil, Colombia, and Mexico — as long as we can be sure to offer the levels of quality that the client demands and those that we impose on ourselves.”