Cox Automotive Australia moves from SAP R/3 to SAP S/4HANA through RISE with SAP
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Key Takeaways
⇨ Cox made the upgrade after it was pitched as a business transformation rather than just a technology upgrade
⇨ Implementation ran for two years, which also involved significant data work
⇨ Pivoted to a brownfield implementation as the existing logistics and vehicle processing systems had been heavily customised
Automotive services and technology company Cox Automotive has adopted RISE with SAP to upgrade its Australian business’s legacy SAP R/3 system directly to SAP S/4HANA.
Headquartered in the US, Cox Automotive provides vehicle remarketing services and digital marketing and software for automotive dealers and consumers.
Tony Grooby, Chief Information Officer of Cox Automotive Australia, shared the company’s journey from SAP R/3 to SAP S/4HANA at the SAP NOW conference in Sydney earlier this month.
Speaking with Mastering SAP, Grooby said Cox recognised its need to upgrade its SAP R/3 system when he joined the company in 2019, and that previous attempts to justify the upgrade failed.
“Cox had tried three times to build a business case to justify the change, but they were not able to do so because it was treated as a technology change and they could not justify the benefit of the IT upgrades,” Grooby said, adding that he reframed it as a business transformation instead.
Cox also explored alternatives like Oracle, Microsoft Dynamics and Salesforce, but ultimately stuck with SAP to retain the investments the company made on its operations and logistics systems.
“We were going to replace what was already there, so the decision to move to SAP S/4HANA was mostly because the legacy system no longer supportable,” Grooby added. “It was becoming more expensive to support the SAP R/3 system.”
Grooby added that Cox’s management were convinced by the business case that focussed on hard benefits – dollar savings from relying on less support and paying for an annual license instead of a perpetual licence. “The soft benefits like customer satisfaction and employee experience were positive and valued highly but did not form part of the financial business case.”
Cox also did not want to make an incremental upgrade to SAP ECC first and then to SAP S/4HANA, this added to the project complexity and resulted in SAP taking over the project from a third-party integrator.
The company also initially planned for a greenfield implementation of SAP S/4HANA, but ultimately pivoted to a brownfield approach.
Grooby said Cox initially wanted to standardise the finance side with a standard chart of accounts and manage specific legal requirements for trust accounts in the automotive sector. However, the logistics vehicle handling processes had been heavily customised in the SAP R/3 system and rebuilding them from scratch would have been more expensive and time consuming.
The contract was signed in 2019 and SAP S/4HANA went live in 2022, spanning just over two years including adjustments to the ways of working in the early stages of the COVID-19 pandemic.
Grooby said the data work involved was challenging in that there was only one way to do it. “You basically had to take every piece of data, cleanse them, move them and then transition them.”
“I found it to be a very rigid process that was expensive, time consuming and resource-heavy, but ultimately the data ended up perfect for the new system.”
Cox kept its finance system with SAP S/4HANA standard, and SAP Cloud for Customer (C4C) was on the public cloud and kept standard. SAP Materials Management remains customised but able to interoperate with other products.
“We fully expect our upgrades will be significantly easier, so that’s why it won’t be another 23 years until we do another upgrade,” Grooby said.
“Even though we still do have customisations, they have been housed within a much more interoperable environment.”
Grooby said one benefit with RISE was the ability to meet our security requirements. “My concern was if we went for a third party for our SAP Basis support or that support sits below RISE, that becomes a weak link in the armour and we become vulnerable to any attacks the third-party may face,” he said.
“With RISE, SAP does our Basis work for us, so we have a relationship with them, and we pay for a resource, so that way we are only limiting it to either Cox accessing the system or SAP.”
The two major benefits Grooby identified with SAP S/4HANA were automated processes, with the processing for vehicles up for auction from 45 minutes to 20 minutes and reducing invoice queries from 5000 a month to just 1000.
“That’s not just the customers being happier, but we don’t have to have admin people who are just dealing with calls and queries,” he said.
Grooby added Cox’s office of the CFO reported a 50 percent increase in accounts payable processing with one less staff member.
“The improvements are just across all the different levels – the ability to do the work is quicker and easier, and also you can attract and retain staff better,” he said.
“No one wants to work on a system that’s 23 years old, they want to be working on the latest system. And that’s what we have with our S/4HANA solution.”
