For many enterprises the cost to operate and maintain complex ERP systems consumes a large part of the IT budget. Given security and application performance requirements, you wouldn’t think that ERP would be on the top of the CIO’s list for cloud migration. Domino Sugar thought otherwise, and successfully migrated their SAP ERP environment to a virtual private cloud with impressive results.
Domino Sugar, part of American Sugar Refining Inc., is the largest manufacturer and marketer of refined sugar in North America. In addition to Domino, the company’s brand portfolio also includes C&H and Florida Crystals. Domino has estimated revenues of approximately $3 billion, and operates sugar refineries, production facilities and distribution warehouses in the US, Canada and Mexico.
Domino had a traditional SAP deployment, which supported several thousand users across multiple countries from a single US data center. In addition to ERP, SAP was used for invoice and order systems, CRM, business intelligence, human capital management and payroll.
As an active acquirer, Domino was seeking ways to accelerate post-merger integration and to more easily add new SAP capabilities. Sugar is a classic commodity market with characteristic peaks and valleys, which places a premium on operational flexibility. Given ongoing fluctuations in demand, pricing and production, Domino was also seeking ways to variabilize fixed IT costs.
Facing these challenges CIO Don Whittington decided to migrate Domino’s SAP environment with over 20 TB of data to a virtual private cloud (VPC) environment provided by Virtustream. As part of the transformation, Domino also decided to shut down its existing data center and migrate Microsoft Exchange, Office and other 3rd party and custom apps to the new VPC environment. Manufacturing systems were the only major applications not migrated to the new environment.
The staged migration certainly didn’t happen overnight, but the benefits appear to be worth the effort, with Domino claiming:
- Nearly 40% reduction in TCO within three years of migration.
- Twofold application performance improvement
- Improved availability and uptime
- Reduction in overall IT spending to <1% of revenue, where typical CPG companies spend between 2 – 2.5% of revenue.
Domino hasn’t provided any more detail on the drivers of TCO reduction, though based on similar situations they’re likely due to:
- Improved infrastructure utilization and automation
- Streamlined application management and support
- Use of industry standard x86 hardware
Domino claims that it only needs three people now to support its SAP environment while peers likely require 90 or more support staff.
Domino Sugar isn’t the only example of SAP in the cloud. There are actually a surprising number of global enterprises, including Shell, Freeport McMoran, British American Tobacco and others that have migrated SAP ERP to private or community cloud environments. For manufacturing and distribution verticals, ERP migration may unexpectedly end up being a key catalyst for cloud migration and transformation.