China Ocean Shipping (Group) Company surges into new markets with IBM and SAP

Published on 14-Feb-2013

"The close relationship between SAP and IBM was an important factor in our decision to choose IBM DB2 over databases from other vendors." - Yongqi Liu, Deputy Director, Data Network Management Centre, COSCO Net (Beijing) Co., Ltd.

China Ocean Shipping (Group) Company - COSCO

Travel & Transportation

Deployment country:

Automation, Business Integration, Business Resiliency, Customer Relationship Management, Enterprise Resource Planning, High Availability , Information Management Foundation, Supply Chain Management

IBM Business Partner:


Established in 1961 and headquartered in Beijing, China, China Ocean Shipping (Group) Company (COSCO) is one of the largest specialists in global shipping, logistics and ship building in the world. COSCO employs a total of 130,000 people globally, and has assets exceeding $48 billion.

Business need:
COSCO, a global shipping organization based in China, wanted to stimulate business growth and boost its competitiveness against the backdrop of the worldwide economic slowdown. The group decided to diversify into the profitable door-to-door logistics market, which meant acquiring and merging existing logistics service providers into the group. In the past, COSCO lacked the standardized worldwide processes needed to facilitate these mergers.

COSCO Net (Beijing) Co., Ltd. implemented SAP ERP applications for finance at its datacenters in China, Europe, America and Japan – consolidating COSCO’s business operations to the company headquarters. To mitigate the business risk of an outage to its centralized systems, and to ensure strict regulatory compliance, COSCO Net deployed IBM DB2 for Linux, Unix and Windows with the high availability disaster recovery (HADR) feature. The solution replicates data from SAP ERP production datacenters in near real time to backup sites thousands of kilometers apart.

Introduced new offerings, increased revenues and accessed new markets cost-efficiently. Enabled high availability for the group’s mission-critical centralized systems. Supported growth and enhanced competitiveness in challenging economic conditions.

Case Study

To read a Chinese version of this case study, click here.

Established in 1961 and headquartered in Beijing, China, China Ocean Shipping (Group) Company (COSCO) is one of the largest specialists in global shipping, logistics and ship building in the world.

COSCO employs a total of 130,000 people globally, and has assets exceeding $48 billion.

To increase competitiveness and stimulate business growth in the wake of the global economic slowdown, COSCO wanted to diversify its business. This meant transforming itself from a shipping agency into a multinational enterprise for door-to-door logistics.

To develop the infrastructure and grow the customer base required to achieve this objective, COSCO needed to acquire and merge logistics service providers into the group.

Centralized financial systems
In the past, each of the group’s 1,300 subsidiaries used a range of different paper-based or electronic systems to manage financial processes. This decentralized way of working made it hard to identify and reduce costs, and very difficult to optimize business processes.

For support, management and maintenance of its electronic financial systems, COSCO uses expert managed IT services from COSCO Net (Beijing) Co., Ltd. (COSCO Net).

As Yongqi Liu, Deputy Director at the Data Network Management Centre, COSCO Net (Beijing) Co., Ltd, explains: “Without clear visibility of group finances, it would have been extremely difficult to mitigate the business risks associated with expansion and diversification. The first step on COSCO’s journey to becoming a multinational enterprise was therefore the creation of a central, group-wide financial system.”

Paving the way for transformation with SAP ERP and IBM DB2
To unify its heterogeneous financial systems, COSCO selected SAP® ERP applications, remodeling financial processes across the group according to best-practice approaches. To support the SAP applications, which would become the central business management solution, COSCO Net reviewed potential database options and selected IBM® DB2® for Linux, Unix and Windows.

The SAP ERP applications integrate the management of accounting, manufacturing and customer data within a single solution, providing one version of the truth across the group. By enabling high visibility and centralized control of core business processes, the SAP ERP solution represented an efficient method for reducing the cost, complexity and business risks of COSCO’s transformation.

“The move from multiple decentralized systems to a common, centralized SAP ERP solution gave us the ability to expand the business cost-effectively,” says Yongqi Liu. “Centralizing COSCO’s operations also presented challenges – especially for disaster recovery. With over 85 percent of the business using the centralized SAP ERP solution, it was essential to have the highest levels of availability for the group financial systems.”

Disaster recovery challenges
COSCO considered the potential disaster scenarios that could affect its centralized operations, and the effects that outages would have on its business. “The risks to COSCO’s centralized systems included natural hazards such as earthquakes, tsunamis and fires, as well as human factors like hacking,” says Yongqi Liu. “With an overwhelming proportion of COSCO’s business using SAP ERP, we calculated that the business disruption caused by an outage of its financial systems would be immense.”

To mitigate the group’s business risk during the crucial transformation period and beyond, COSCO required strong disaster recovery capabilities. Based on a thorough risk assessment, COSCO Net determined that a recovery point objective (RPO) of one hour and a recovery time objective (RTO) of one day would be essential to minimize disruption in the event of a disaster scenario.

“Our previous disaster recovery solution required a great deal of manual effort to fail over from the SAP ERP production servers to the backup servers in the event of an issue at the production datacenter,” says Yongqi Liu. “Furthermore, it was also not possible to easily switch back to the production servers after issues at the production datacenter were resolved.”

COSCO Net wanted to meet its RTO and RPO objectives for its centralized financial systems, which were essential to mitigate the risk of business disruption in a disaster recovery scenario. “In addition to meeting new RTO and RPOs, we needed to meet strict new regulatory requirements for electronic financial systems,” says Yongqi Liu. “We have a number of business, financial and IT audits each year, so ensuring full regulatory compliance was also an important objective.”

Cost-effective disaster recovery solution
To address its disaster recovery challenge, COSCO Net decided to implement IBM DB2 with high availability disaster recovery (HADR) feature.

“The close relationship between SAP and IBM was an important factor in our decision to choose IBM DB2 over databases from other vendors,” says Yongqi Liu. “Because DB2 is developed in collaboration with SAP ERP, we were confident that the deep compatibility of the two solutions would offer us optimal availability, reliability and performance for group financial processes.”

In combination with IBM Tivoli® System Automation for Multiplatforms, included as part of the HADR solution at no additional cost, IBM DB2 HADR protects against data loss by automatically replicating data from a primary database to a standby site, which in COSCO’s case is at a different geographical location. “We recognized that the HADR replication feature would help us to reduce COSCO’s business risk in the event of a disaster scenario affecting the SAP ERP group finance platform,” says Yongqi Liu.

“The HADR feature is available in IBM DB2 with no additional license costs – offering the high SAP ERP availability we needed, while keeping operational expenditure flat.”

COSCO Net implemented HADR for COSCO’s SAP ERP systems at six of its datacenters in China, Europe, America and Japan – offering almost real-time replication over distances spanning thousands of kilometers.

“The installation tools developed jointly by SAP and IBM simplified the process of deploying and configuring HADR and Tivoli System Automation,” says Yongqi Liu. “The tight integration between HADR, Tivoli System Automation and SAP ERP made the implementation smooth and straightforward, and the high-availability solution went live on time and within budget.”

Choosing a high-performance platform
To enable maximum availability of COSCO’s SAP ERP solution, COSCO Net wanted to ensure that it selected an appropriately reliable hardware platform.

“Without a stable platform for all of COSCO’s centralized SAP ERP systems and DB2 databases, its critical business transformation process would have been threatened by outages,” says Yongqi Liu. “To cut out this business risk, we chose high-performance IBM Power Systems servers running the IBM AIX® operating system. The rock-solid reliability and high-performance of the POWER® processor architecture offered us the ability to create an optimally balanced platform for the SAP ERP solution.”

COSCO Net deployed SAP ERP production services on IBM Power Systems™ servers, connected to IBM System Storage® DS8000 storage devices, and for test environments selected IBM System x3850 X5 servers.

“Establishing a testing platform was important to ensure that the rollout of the new solution ran according to schedule, and that the solution provided the levels of availability that we expected,” says Yongqi Liu. “To accomplish this, we created a test environment based on IBM System x3850 X5 servers. The x3850 servers matched the performance and reliability of the target IBM Power Systems environment – giving us confidence to use lessons learned from the testing environment to de-risk the final implementation.”

Rapid recovery, minimal disruption
HADR offers COSCO Net the ability to rapidly and automatically switch COSCO’s SAP ERP production services between servers at its datacenters around the world. Together with IBM Tivoli System Automation for Multiplatforms, HADR enables the high-level of automation needed to meet the new recovery objectives – supporting COSCO as it diversifies and expands its operations.

“Shortly after the solution went live, our datacenter in Beijing experienced a loss of power lasting five days,” says Yongqi Liu. “The outage happened in September – the busiest time for COSCO’s financial systems – when employees were in the middle of completing monthly, quarterly and annual financial reports.”

Using HADR with Tivoli System Automation, COSCO Net quickly switched production services to its datacenter in Shanghai – allowing users to complete the reporting tasks on time.

“Timely and accurate financial reporting is extremely important to maintain stakeholder confidence,” says Yongqi Liu. “Without the DB2 HADR solution in place, the disruption caused by the outage could potentially have caused delays in publishing COSCO’s financial reports, damaging its reputation. In fact, the HADR solution has helped us to exceed all of the SAP EPR availability targets we set at the beginning of the implementation project.”

Earthquake-proof recovery solution
In 2011, COSCO again experienced the importance of an efficient disaster recovery solution when the Tôhoku earthquake – one of the most powerful recorded earthquakes to hit Japan – struck.

Yongqi Liu comments: “Thanks to HADR, we were able to switch COSCO’s production SAP ERP services from our datacenter in Tokyo to the disaster recovery site in Beijing immediately following the 2011 earthquake. The switchover was seamless, with virtually no disruption to business operations.”

With its stable IBM Power Systems platform for SAP ERP, COSCO Net is able to deliver the levels of SAP ERP availability that its business users – and external regulators – require.

“Running SAP ERP and HADR on reliable IBM Power Systems servers makes it easier to comply with strict industry regulations, and to meet the internal demands of the business,” says Yongqi Liu. “Overall, we are very satisfied with the performance of the IBM hardware in our datacenters.”

Stimulating business growth
By centralizing its core business process with SAP ERP, COSCO has gained full visibility of its finances. With the ability to manage multinational operations from a central point, the group is now able to cost-effectively acquire and merge logistics service providers.

Using its central, stable platform to support the transformation process, COSCO is internationalizing and diversifying into the logistics industry. In addition to opening up lucrative new markets, diversification supports the company’s strategic objective of increasing competiveness and stimulating business growth in the face of the global economic downturn.

Yongqi Liu concludes: “By centralizing its international operations with solutions from IBM and SAP, COSCO has gained the ability to extend its operations into profitable new markets. By continuing this close collaboration, COSCO is well-placed to boost competiveness and business growth – even in harsh economic conditions.”

Products and services used

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

Power Systems, Storage, Storage: DS8000, System x, System x: System x3850 X5

AIX, DB2 for Linux, UNIX and Windows, Tivoli System Automation for Multiplatforms

Operating system:

IBM-SAP Alliance

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