Freescale climbs into the cloud and cuts IT costs by around 20 percent with IBM and SAP

Published on 18-Nov-2013

"Moving to IBM SmartCloud for SAP Applications has reduced the total cost of operation for our SAP ERP landscape by approximately 20 percent annually." - Jerry McClean, IT Director – Enterprise Resource Planning, Freescale

Customer:
Freescale

Industry:
Electronics

Deployment country:
United States

Solution:
DB2 for Linux, UNIX and Windows family, IBM SmartCloud for SAP Applications, Cloud Computing, Cloud & Service Management, Enabling Business Flexibility, Enterprise Resource Planning, Information Management Foundation, Virtualization, Virtualization - Server

IBM Business Partner:
SAP

Overview

Freescale designs and produces embedded processing and semiconductor solutions (commonly known as computer chips) for the automotive, consumer, industrial and networking markets. Originally founded as part of Motorola Inc., Freescale became an independent company in 2004, and today maintains a global presence in more than 95 countries, selling some 11,000 different products to more than 10,000 manufacturers and distributors.

Business need:
In the fast-paced semiconductor industry, Freescale must cope with dynamic business cycles and strong cost pressures. Without the ability to react quickly to changing conditions and optimize production output to meet demand, the company risks failing to meet operating margin targets. To keep business on track, Freescale must use available manufacturing capacity as efficiently as possible.

Solution:
Freescale migrated its global SAP ERP instance from a dedicated hardware environment to the IBM SmartCloud for SAP Applications platform, working with IBM Global Technology Services to complete the move in just eight hours. The company also upgraded to IBM DB2 version 10, using advanced compression tools to reduce database volumes from 3 TB to 1 TB.

Benefits:
Increased flexibility helps Freescale react faster to changing conditions and demand, maximizing opportunities for growth. Reduced the total cost of ownership for SAP ERP applications by approximately 20 percent per year. Improved scalability gives the global business more headroom for expansion, enabling Freescale to grow more efficiently.

Case Study

In the semiconductor market, demand can shift surprisingly quickly to support new technologies. How does a global manufacturer benefit from economies of scale and respond rapidly to sudden market changes?

To manage the swings in workload generated by this volatile industry, Freescale moved its SAP® applications to the IBM® SmartCloud® platform, bringing super-responsive capabilities to its business operations.

The increased flexibility helps Freescale react faster to changing conditions and demand, maximizing opportunities for growth. Along the way, Freescale has reduced the total cost of ownership for SAP ERP applications by approximately 20 percent per year, improved scalability, and provided greater headroom for expansion, enabling the business to grow more efficiently.

Keeping pace with market demands
Freescale designs and produces embedded processing and semiconductor solutions (commonly known as computer chips) for the automotive, consumer, industrial and networking markets. Originally founded as part of Motorola Inc., Freescale became an independent company in 2004, and today maintains a global presence in more than 95 countries, selling some 11,000 different products to more than 10,000 manufacturers and distributors.

The semiconductor industry is highly cyclical – Freescale must keep pace with constant and rapid technological change, product obsolescence and shifting demand. The company needs to carefully manage its manufacturing operations to make the most of valuable opportunities for growth.

Jerry McClean, IT Director – Enterprise Resource Planning at Freescale elaborates, “Staying competitive means meeting customer demand for lower prices, but at the same time we need to be mindful of boosting our margins. This puts all areas of the business under more and more pressure to use every bit of our available capacity as efficiently as possible in order to hit target profit margins.”

Freescale’s objective was to keep its global business on track for growth and counterbalance industry volatility with solid business performance. The company wanted to adapt faster to changing demand, all while keeping a tight rein on operational costs.

Moving to a more agile IT infrastructure
For many years, Freescale has taken advantage of integrated SAP ERP applications to support core business processes such as financials, procurement, human resources and inventory management.

Since 2005, the company has trusted IBM to provide hosting services for these SAP applications at its data center in Sterling, Virginia, building on a longstanding relationship with IBM that stretches back more than 30 years.

“We have been working with IBM for decades, and they have been an excellent partner, delivering the leading-edge technology we need to support our business as it evolves,” comments Jerry McClean. “Hosting our SAP applications on dedicated IBM hardware has given us top levels of performance and reliability, and has taken a lot of the day-to-day effort out of infrastructure management.

“When the existing hardware systems were due for a refresh, we saw an opportunity to take IT operations to the next level. This was when IBM suggested that we move to IBM SmartCloud for SAP Applications. The platform would give us the same benefits that we were already enjoying in our dedicated hardware environment, with the added bonus of greater scalability, flexibility and cost-effectiveness.”

Taking application hosting to the cloud
IBM SmartCloud for SAP Applications delivers SAP applications through a managed cloud infrastructure – based on the IBM SmartCloud Enterprise+ platform.

The virtualized, shared cloud infrastructure addresses the twin challenges of cost and complexity by practically eliminating the need for hardware refreshes and reducing the server sprawl typically associated with traditional physical architectures.

Convinced by the cost savings and enhanced flexibility of a fully managed cloud environment, Freescale moved ahead with a migration to IBM SmartCloud, working with IBM Global Technology Services® to manage the transition. As Freescale maintains near 24/7 manufacturing operations, the team needed to work within a tight migration window of just 12 hours to ensure minimal disruption to the business.

“The IBM team did a stellar job preparing for and managing the migration to the SmartCloud platform; they put a lot of effort into testing and sizing the new environment to meet our requirements,” notes Jerry McClean.

“The execution of the cutover was flawless – IBM was able to meet and beat our aggressive timescale and complete the migration in just eight hours. They went above and beyond our expectations for the project, and we were highly impressed with both the speed of execution and quality of work.”

Supporting worldwide operations
Freescale connects to the IBM SmartCloud platform from multiple locations around the globe. The solution supports a global SAP ERP instance, accessed by practically every single one of the company’s 16,000 employees globally.

For optimum availability and resilience, the SmartCloud solution is split between two separate IBM data center locations. Production, development and quality assurance environments for SAP ERP applications are hosted at an IBM data center in Raleigh, North Carolina. Data from these main SAP instances is replicated to Freescale’s existing disaster recovery site at an IBM data center in Phoenix, Arizona.

In the unlikely event of downtime at its main production site, Freescale can recover full operations within hours, and fail back to transactions no older than two hours, ensuring that business continues as usual, no matter what.

Reducing data volumes, accelerating backup times
During the migration to IBM SmartCloud, Freescale took the opportunity to upgrade to the most recent version of the IBM AIX® operating system and IBM DB2® database software.

The company also worked with the IBM team to optimize database performance, taking advantage of advanced compression tools in IBM DB2 version 10.1 to considerably reduce the size of its SAP ERP database.

“We were able to shrink our SAP production database from around 3 TB to 1 TB using index and table compression in IBM DB2,” states Jerry McClean. “The compression has had a ripple effect across our testing and development and disaster recovery environments, where we replicate our production data, so the total savings have actually been in the area of 8 TB.”

The reduced data volumes have had a measurable impact on database backup and restore times, as Jerry McClean explains, “In the past, we had so much data that backups would often time out after running for more than 20 hours, posing a significant business risk.

“We can now complete backups in around three to five hours, a saving of around 80 percent on average. We have also been able to cut SAP system restore times down from more than 20 hours to between four to six hours.”

Database compression is also helping Freescale to keep tighter control over costs and complexity in its managed cloud environment. While in the past, rapidly rising data volumes required the company to regularly add more disk space to its dedicated hardware environment, IBM DB2 compression allows Freescale to keep storage capacity in check, even as business volumes increase.

“Previously, we had to go back to IBM every few months to request more storage space,” says Jerry McClean. “The compression that we have achieved with IBM DB2 has really helped us to get a handle on information growth.

“Our business data is expanding at the same rate as before – the difference is that DB2 gives us much more headroom to manage that growth, so we spend less time worrying about whether we have enough storage space and less money adding additional capacity.”

Cutting IT costs by roughly 20 percent
By transitioning from a dedicated hardware environment to an enterprise-class, managed cloud infrastructure Freescale has cut back on physical server and storage sprawl, achieving impressive cost savings.

“Moving to IBM SmartCloud for SAP Applications has reduced the total cost of operation for our SAP ERP landscape by approximately 20 percent annually,” remarks Jerry McClean. “We are always looking for ways to keep IT costs down as much as possible, and the savings we are seeing with SmartCloud translate into improved margins and more efficient business operations.”

Boosting business agility
IBM SmartCloud for SAP Applications provides Freescale with a dynamic infrastructure that makes applications and computing power available on demand, helping the company to respond much more quickly to the needs of the business. When additional SAP functionality is needed, a new virtual server can be rapidly created in IBM SmartCloud for SAP Applications, and the memory and CPU requirements can be adjusted to meet the specific requirements.

“IBM SmartCloud for SAP Applications provides us with a major boost when it comes to flexibility and speed,” remarks Jerry McClean. “For example, if senior management sends a new project that needs to be started immediately, we can turn to IBM and they can bring up a development environment much quicker than we ever could before.”

Freescale is currently evaluating the automation capabilities delivered by IBM SmartCloud for SAP Applications to accelerate service delivery with on-demand provisioning of systems. This would help the company to run a number of processes in SAP ERP, including procure to pay, more quickly and accurately. Automated, standardized workflows will allow Freescale to optimize order handling, ensuring that customers are served efficiently and encouraging repeat business.

With the SmartCloud solution in place, Freescale is better placed to meet changing conditions in an ever-evolving industry and support its global business as it continues to grow.

Jerry McClean concludes, “IBM SmartCloud for SAP Applications gives us the flexible infrastructure and strong performance that we need to run a more agile business, and all in a more cost effective way.

“With IBM providing full management for the platform, we have a rock-solid backbone for our most critical business applications and information. The SmartCloud solution has really improved our ability to respond faster to changing circumstances, stay ahead of competition and keep the business on track for strong growth.”

Products and services used

IBM products and services that were used in this case study.

Software:
AIX, DB2 for AIX, DB2 for Linux, UNIX and Windows, DB2 for Linux, UNIX and Windows for SAP Applications

Operating system:
AIX

Service:
GTS ITS BCRS SmartCloud Application Resiliency, IBM-SAP Alliance

Legal Information

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