S/4HANA leads Sabre's digital business transformation
Sabre Corp. selected SAP S/4HANA as the platform for changing the very nature of its business. Here are some lessons from the vice president who led the transition.
Sabre Corp. is a poster child for digital business transformation, as almost everything about it has changed since it was started.
It began as a ticketing reservations system for American Airlines, but it is now an independent software developer that provides a wide variety of products and software-as-a-service (SaaS) offerings for the travel industry. The company, based in Southlake, Texas, is now completing the transition from its aging SAP ERP system to S/4HANA, which forms the technological core of the digital transformation.
The integration of technology and business processes
Sabre had implemented SAP ERP Central Component (ECC) in the early 1990s when it was still a part of American Airlines, and a system upgrade was inevitable. This became an opportunity to undergo a fundamental transformation, according to Steve Strout, Sabre's vice president of corporate technologies, who was brought into the company in May 2015 to lead the transformation, which eventually led to implementing S/4HANA.
Before the technical upgrade could begin, Strout saw the need to examine and change the company's business processes. "In many large corporations, you do technical upgrades, but you don't always upgrade all your business processes," Strout said. "Sabre had gotten into that same kind of mindset of doing technical upgrades, but never really going back and looking at how processes work end to end, [and] how new best practices could be employed to improve the operations."
Regardless of the technology at this point, Sabre was transforming from a company that made travel-related transactional products to one that produces a much wider range of software products for the travel industry. The transition required a back-end system to support an entirely new business model, with requirements like introducing new product masters into the system, setting up new pricing mechanisms and developing new contract schemes.
Strout said it was immediately evident that this couldn't be done easily with the entrenched SAP system, and there was no way the system could scale up to meet the growing demands from the product side. The upgrade then became a chance to take advantage of the digital transformation and a new integration of process and technology.
"For years, we've all been taught, 'People, process and technology.' But what's emerging is that the process is the technology, and the two are so intertwined that what we are now looking at is people, data, and the process and technology together as one kind of entity," he explained. "We started looking at some of the platforms that could support the growth for the future."
Evaluating a future-proof system
Even though Sabre was running SAP ECC, it was not automatic at first that S/4HANA would be the chosen technology for the new digital business. Strout noted that he had come from BlackBerry, where he had overseen a project to replace SAP with the Workday cloud ERP platform. One of the prime requirements was to implement a system that was built for the long haul.
"I wanted to make sure that the technologies that we put into Sabre were going to grow with the company, so this wasn't a three- or five-year kind of event; this was a 15-, 20- or 30-year event," Strout said. "We looked at Oracle and Workday, but what we really wanted was for the process and the technology to be completely integrated, and I wanted to create a more prominent focus on the data."
Strout said data is the key to driving all business in the future -- how to access it and how to leverage it. "We really needed a system that could both process that data faster, as well as providing a center core to connect it to everything else," he said. "I don't know what the everything else is yet. I know what I have today, but I don't know what it's going to need tomorrow, so I needed to future-proof that."
After a three-month evaluation period in the summer of 2015, Strout determined S/4HANA was the best system to take Sabre into the future.
Moving swiftly and with purpose to S/4
Once the decision was made to move to S/4HANA, Sabre wasted no time in getting the process underway, according to Strout. Contracts were signed with SAP at the end of September 2015, and the transitional work began.
The process started with integrating acquisitions Sabre had made in August 2015 in the Asia-Pacific region. "We had acquired 12 businesses in the APAC region, and we used this process as the starting point for building the new future," Strout said. "I created a greenfield S/4 environment, created a brand new hierarchy, cleaned up some of the data and then migrated the acquisitions first. They went live in April , and what we call the rest of Sabre goes live in September."
For the most part, Sabre has performed the implementation on its own, Strout said.
"We did not hire a traditional systems integrator, but we hired a boutique firm, called Norstar, to bring in some very specific skills around S/4 and data integration," he explained. "We did that on purpose because I wanted to make sure that we owned the knowledge and the skills of how to operate this thing after the end of the implementation, so we have been doing this all ourselves."
Because Sabre is a services company, it doesn't have much use for the logistics functions in ERP, so it primarily uses S/4HANA Finance -- formerly Simple Finance. This has allowed it to consolidate and streamline accounts, and have one source of financial truth, Strout said. The company pared down more than 16,000 profit and cost centers, as well as 36,000 general ledger accounts, many of which were obsolete, dating back to Sabre's life as part of American Airlines.
The company is running S/4HANA version 15.03 on a private cloud hosted by Virtustream, which was selected because Strout did not think HANA Cloud Platform was ready for prime time when the process began. However, the move to the cloud was entirely intentional, because it fits perfectly with Strout's vision of the company being able to constantly change, innovate and absorb new technologies.
"As time goes on, what I want to make sure what we move to is a SaaS model, because it forces us to continually absorb change, and we're doing that with Ariba, SuccessFactors, Fieldglass, and even Salesforce and some of the other technologies," he said. "The whole intent for me is to drive a different cultural change inside our organization to continuously look at how we improve, and that's a big cultural change, at least for a company like Sabre."
Think about the future of data before implementing
Using S/4HANA as the core of a digital business transformation is not for everyone, and you need to think carefully about how you use data -- not only now, but several years down the road, Strout advised. The way you use it today may not be the way you use it in five years.
"If you think you're only just going to do transactions and data is only the result of a transaction, and you're not really going to use it to manage your business or to look forward, then you're probably just as good to stay on ECC," he said. "But if you're really looking at how to drive both the data side of it, as well as the technology -- how to allow the technology and process to get deeply integrated, and you become a digitized company -- then S/4HANA helps you to drive all of those pieces."
Companies that are preparing for digital transformation need to focus on all the business processes that will happen in newer technologies, rather than older ones, Strout said, like doing transaction approvals via a Twitter feed.
"It's going to help you to be prepared for those kinds of things today," he said. "And the thing to look for is how good your data is today, how all the systems are integrated and if you have an end-to-end automated process for everything in your business that you can get away with. You need to optimize every single process, not just major ones, as the more you can automate, the more efficient things are."
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