American Crystal Sugar beats out costs with SAP and IBM

American Crystal Sugar, based in Moorhead, MN, specializes in the production of sugar from sugar beets. Formed as a co-operative, the company is owned by almost 2,800 shareholders, who raise approximately 420,000 acres in the Red River Valley of Minnesota and North Dakota. In 2010, American Crystal Sugar purchased approximately 9.9 million tons of sugar beets, producing more than 27 million hundredweight of sugar.

The US market for sugar is controlled by regulated producer marketing allocations. For American Crystal Sugar, the consequence is that the only way to improve profits and margins for its shareholders (beet producers themselves), is to increase productivity by reducing operational costs through efficiencies and straight dollar savings.

The agricultural cycle of sugar beets starts with spring planting and ends with fall harvest, when extraction plants start to work their way through the millions of tons, brought by truck from thousands of farms. Using refrigeration techniques allowed by the cold winters to store the beets, the crop is processed over course of 9 months, with a short window for maintenance and administration before the cycle starts again.

Marty Erbes, Systems Manager at American Crystal Sugar, explains the business pressures, “Recently, many American food companies have switched from corn-derived sweeteners to sugar beet-derived sweeteners, fueling demand. With larger crop volumes, the maintenance window is being squeezed as our factories start earlier and finish later in the season.

“At the data center, our aim is to provide the information services that help to keep the costs down – for example, by using SAP solutions to help keep operating at maximum efficiency. For example, with the SAP plant maintenance application we are able to improve the scheduling of maintenance, monitor and manage costs, and ensure that we can complete extraction in the time available even as the beet tonnage rises. SAP gives us the tools to become more cost-efficient, which is essential in our marketplace.”

Shared services, shared challenges
American Crystal Sugar was using a combination of IBM Power Systems servers and IBM System Storage, running a wide range of SAP ERP applications for 900 users, supported by Oracle databases.

The data center also hosts SAP applications for other sugar co-operatives, for the United Sugars Marketing Corporation and Midwest Agir-Commodities who all benefit from the shared services cost model.

Demand from both American Crystal Sugar and the hosted companies were leading to continuous requests for more storage capacity. The storage hardware was expensive to procure and slow to deploy, a process typically absorbing months to implement.

As American Crystal Sugar moved to the latest version of SAP software and extended its own functionality, it became clear that demand for storage would continue to rise, and the associated costs of procurement and management would impact the business.

“Having to add storage drawers to our existing systems really slowed us down,” says Marty Erbes. “From start to finish, it could easily take three months to add storage capacity, allowing for procurement, configuration and deployment.”

At the same time, United Sugars Corporation was planning to make greater use of SAP NetWeaver Business Warehouse (SAP NetWeaver BW) and SAP NetWeaver Portal for marketing purposes, which had an immediate impact on both processor capacity and storage needs. The existing servers did not have the processing capacity to support the simultaneous workloads.

More power, reduced costs
The first step was to ensure that the total processing capacity was increased. American Crystal Sugar replaced its previous system, which contained 16 processors and 192 GB memory, and implemented an IBM Power 770 server featuring 32 active POWER7 processors and 512 GB memory.

“The Power 770 server, though it is enormously more powerful and has more memory, actually cost less than the previous server,” says Marty Erbes. “This is a perfect example of how we can take advantage of new technology to reduce our costs.”

American Crystal Sugar uses IBM PowerVM to divide the Power 770 server into separate logical partitions (LPARs). The company runs its own SAP applications in separate LPARs for production, test, development and non-SAP applications, and a further LPAR for Tivoli Storage Manager.

PowerVM allows American Crystal Sugar to define the total processing capacity for each LPAR, sharing CPUs, bandwidth, memory and storage. This offers considerable cost saving, as multiple organizations are supported by just one SAP IT Technical Team, maintaining a single physical machine for the SAP landscapes.

More storage, reduced costs
As part of its ongoing cost-performance review, American Crystal Sugar reconsidered its storage strategy in the light of new technologies. The company chose to implement an IBM XIV Storage System to replace its mix of storage servers and direct attached disk systems. The XIV offers 27 TB of storage, expandable to a total of 79 TB. At present, the SAP landscape is approximately 12 TB, with another 10 TB for other applications and data.

“The XIV gives American Crystal Sugar the ability to store all its critical business data in one easily managed location. Once again, the disk cost per gigabyte for the XIV is considerably lower than the previous systems, delivering immediate savings,” says Marty Erbes.

The company is consolidating all its data to the XIV, taking advantage of the lower operational costs and the ease of management. Existing storage systems are planned to be moved to a secondary data center to act as backup devices for the production site. IBM Tivoli Storage Manager handles backup, archive and restore processes for POWER and Intel systems.

In addition to its SAP applications, American Crystal Sugar runs Microsoft operating systems and applications such as SAP Business Objects in VMware virtual machines on IBM System x3950 M2 Intel processor-based systems. The company is migrating the systems and data from older SAN systems to the XIV, using VMware vMotion. Some legacy and in-house applications designed for the agricultural sector are also due to be migrated to the XIV, saving costs on proprietary disk storage.

“In the past, providing additional storage capacity could take up to three months, from the start of the procurement process to deployment. With XIV, we have cut this to one week,” says Marty Erbes. “Our business strategy is to be a low-cost producer, and savings on IT operations and time to delivery are a major benefit for American Crystal Sugar.”

Meeting business objectives
American Crystal Sugar employs Erbes, Kevin Miller, Senior Technical Analyst, Dale Anderson, Senior SAP Technical Analyst who share responsibilities for SAP Basis, Oracle database administration, AIX administration, procurement and data storage.

American Crystal Sugar relies on Evolving Solutions in Hamel Minnesota as their premier IBM Business Partner solution.

“The XIV appealed to us because it is so easy to manage,” says Marty Erbes. “We are able to assign, create and delete volumes quickly and easily, and it takes so little time to understand the user interface that we were in production within a couple of days.

“The SAP applications, such as plant maintenance, are critical to our success, and the combination of the IBM Power 770 server and IBM XIV storage delivers high-efficiency, low-cost operations, exactly in line with American Crystal Sugar’s business objectives.”