SAP Innovation Awards 2018 Entry Pitch Deck

JFE Steel corporation, JAPAN

JFE Steel transforms IT and core business processeswith S/4HANA

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JFE Steel Corporation

JFE Steel transforms IT and core business processes with S/4HANA

Japan Mill Products

“ This project makes it possible to standardize business processes and build foundation of a global accounting system. SAP S/4HANA enables us to analyze whole group’s business performance more efficiently and effectively.”

▪ We decided to renovate accounting system providing IFRS

compliance and supporting our global growth strategy,

thus increasing participation by global investor community.

Our project is designed to standardize and modernize the

conventional business processes of a traditional Steel

company using SAP S/4HANA.

▪ Steel industry, being highly asset-intensive, requires higher

capacity fixed asset accounting. Our accounting system has

been redesigned along with SAP S/4HANA.

▪ The project covers JFE steel and its 80 subsidiaries. We

completed the roll-out to 80 subsidiaries within 11 months,

and achieved standard processes without customization.

Toshihiro Tanaka - Chief Financial Officer

80

11

75%off

Subsidiaries

Went-Live in

Months

Reduced the numberof servers

JFE

HD

JFE

Steel

JFEEngi-

neering

Total 80Companies

Other System

(Corporate)

- Emphasize Enterprise Governance

- Almost ZERO Add-on

- IFRS Compliance

- Simplify System & Operation

- Simplify Accountancy Service

- Implement Best Practices

- Standardized Business ProcessesUsers Users Users

Expectations (Business)

Other System

(Each Subsidiary)

SAP S/4HANA (Finance) Expectations (System)

17%off

Saved IT supportscost

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Participant Information

↑ Click here (corporate profile video)

JFE Steel transforms IT and core business processes with S/4HANA

http://www.jfe-steel.co.jp/en/index.html

Mill Products

Yuko Tamura, JFE Steel Corporation

JFE Steel is one of the world’s leading integrated

steel producers*. A strong international player with

a sophisticated production system consisting of

two major steelworks, one each in eastern and

western Japan.

*We are the 8th largest steel manufacturer in the

world and the second largest in Japan.

(source of reference : World Steel Figures 2017)

Yuko Tamura, Staff Manager of “IT Innovation Leading

Department” and the Project Leader for SAP S/4HANA

implementation at JFE Steel.

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Issues that we have been facing

Global expansion had become crucial for JFE Steel, as Steel Market had reached mature stage and overseas competitors had undergone aggressive growth. Corresponding to IFRS compliance was important for our global operations and being demanded by investors community.

Standardization of business processes was important. Though, many of our core competences were in the field, we needed to secure organization skills and human resource inheritances from senior workforce, for preparing generational changes in near future.

Increasing visibility across group subsidiaries was important, as we operate business with functionally branched subsidiaries. We needed to look at the data in horizontal skewer and communicate in the same manner for operating One-JFE group.

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Solution Overview

We started to transform ourselves from a traditional manufacturing company

to a more global and digitalized company in order to survive competitive

market, by using S/4HANA. Objectives were as follows:

▪ Contributing to global growth strategy such as attracting worldwide investors by

showing high governance, operating all the group companies as One-JFE company.

▪ Improving business visibility and transparency that enables quick decision-making,

we standardized business processes and let our employees access and analyze

the data in real-time.

▪ Building up centralized business operations on S/4HANA foundation, within planned

financial budget and original project schedule without any overruns.

▪ Realizing a simple and single architecture/platform, which includes one

consolidated server, unified storages and highly optimized user management,

which serves JFE Steel and all 80 subsidiaries.

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Solution Details

We completed S/4HANA implementation, with almost no add-ons. Implementation for JFE steel was completed within just 9 months and roll-out for 80 subsidiaries was achieved within 11 months.

Key success factors of project management were as follows:

▪ Strong governance model, supported by board members.

▪ Standardization and reduction in the number of reports from legacy application, thus, providing flexible and real-time reports through S/4HANA to the end-users.

▪ Proposal of substitute and better business operations and processes in parallel.

▪ Education for end-users from the beginning, encompassing IT perspectives, project objectives and required employee mindset change. S/4HANA working model facilitated this prototyping approach.

▪ Good use of the collaboration portal site, where incidents can be shared with all project members and encourage communication for early resolution.

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Solution Details

▪ People EmpowermentWe had recognized the education for users is a Key for our project success. So, we had started the education at

an early stage in the project.

Corporate

Strategy

Project

Objective

StandardizedBusinessProcess

System

Operation

Education + Fully Understand

Education + Fully Understand

Assigning Key Users in each End-User division. Key Users understand not only the system operation, but also

Corporate Strategy, Project Objective and Standardized Business Process earlier. Then, they disseminated them

to End-Users. This activities greatly contributed to Project Success.

Penetrate

Governance

Purpose Led

Thinking

MasteredStandardized

Process

ImprovedSystem

Operation

Reduction of

Add-on

Shorten the duration

of deployment to 80

Subsidiaries

Satisfy Business

and System

Expectations Early

BenefitAchievement

Apr. May Jun. Jul. Aug Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.

2016 2017

Requirement Definition Design Development / TestingPrep.

Migration

Education PolicyDefinition

EducationPlanning

Develop Education Tools End User Training

Extend the

method to 80

companies

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Architecture

JFE

HD

JFE

Steel

JFEEngi-

neeringTotal 80Companies

Other System*(Corporate)

Users Users Users

Other System*(Each Subsidiary)

SAP S/4HANA (Finance)

Single Sign-On

Unified Master Management System

* SAP S/4HANA connects to from more than 120 other systems.

Interface Management

Electronic BooksMaintenance

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Deployment details

◇ This project:

• Our system went live for JFE Steel Corporate on April 17, 2017 (in 9 months).

• After that, we deployed S4/HANA for 80 subsidiaries which were located all over

Japan (in 11 months). In order to promote system introduction and consolidation of

operations to many subsidiaries, we staggered go-live into three groups, viz., August

2017, November 2017, February 2018

• Utilizing the standard functionalities of SAP solutions enabled us to shorten the

period of POC, Prototype and development.

• We did not customize and modify anything, except for some interfaces and very few

reports.

• About 700 employees in JFE Steel and subsidiaries are now using SAP S/4HANA.

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Deployment details

◇ Subsequent projects:

• Standardize and integrate business processes and IT

systems of all steel plants for information and knowledge

sharing across all the plants in order to create an integrated

manufacturing foundation.

• Initiatives are being taken to improve work efficiency and to

realize the workstyle reforms.

• Planning to implement PS for optimizing greenfield and

brownfield plant projects and S/4HANA is a strong candidate

product.

• We will continue to promote business process

standardization, innovation and workstyle reforms. This

project is first step towards that grand vision.

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Benefits

Business value:

Human empowerment:

▪ Saved IT support costs by 17%.

▪ Reduced the number of servers and storages by 75%, still maintaining high performance.

▪ Complied with reporting standards like IFRS for more global operation.

▪ Increased the quality of reporting and gives users in accounting flexible and real-time access to data.

▪ Brought wide management visibility at each group company’s performance and status.

▪ Impacted the other Japanese manufacturing companies by showing our success to be able implement

S4/HANA, utilizing best practices. Gartner made a case report for out project.

▪ Standardized and improved the business processes for human resource inheritance.

▪ Empowered the accessibility and usability's in the field, increasing efficiency at all levels and plan

effectiveness along with also eliminating human errors automatically with S4/HANA.

▪ Established robust and simplified user authentication for all the users and master management system

in order to ease user authority management and gain confidence from IT audit.

▪ Improved the maintenance of user authorizations and codes update that could rationalize the

maintenance workload under multi-company environment, especially considering future global

operations. This makes it easier for us.

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Quote

“ This project makes it possible to standardize business processes and build foundation of a global accounting system. SAP S/4HANA enables us to analyze whole group’s business performance more efficiently and effectively.”

Toshihiro Tanaka －Chief Financial Officer, JFE steel Corp.

“ JFE steel is a Japanese company that represents highest quality, and innovative performance. JFE takes on a leader role in S/4HANA implementation, to showcase best practices to build simple, and flexible management bases through the group companies. Not only have they showcased best practice, but they have proved that innovation is key, and at the heart and base for the whole company. ”

Yasushi Suzuka －Chairman, JSUG (Japan SAP Users’ group)

“ This is the best S4/HANA implementation project in Japan, in terms of achieving projects’ quality, cost and schedule.The success of this project have strong market influence and impact in Japan”

Yuzuru Fukuda －President, SAP Japan

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Additional information

TOKYO - SAP Japan Co., Ltd announced today that JFE Steel Corporation Introduced SAP

S/4 HANA® as an application in the core system (accounting domain) and announced that it

began operation in April this year.

JFE Steel is the representative steel company in Japan which was born in 2003 when NKK

Corporation and Kawasaki Steel Corporation merged and integrated. Under the corporate

philosophy of "always contributing to society with the world's best technology", we are

contributing widely to the development of society as the world's leading manufacturer of steel

products, which is the basic material supporting industrial society. For further development,

JFE Steel is working on "improvement of domestic manufacturing infrastructure", "promotion

of overseas business" and "improvement of product mix through upgrading variety," and we

are working on "aggressive IT management" as a measure to support them.

https://news.sap.com/japan/2017/05/25/jfe%E3%82%B9%E3%83%81%E3%83%BC%E3%83%AB%E3%80%81sap-

s4hana%E3%81%A7%E6%9C%AC%E4%BD%93%E3%81%8A%E3%82%88%E3%81%B3%E3%82%B0%E3%83%AB%E3%83

%BC%E3%83%97%E4%BC%9A%E7%A4%BE%E3%81%AE%E4%BC%9A%E8%A8%88/

SAP Press release (May 25, 2017)

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Additional information

JFE Steel has adopted SAP S/4HANA “advanced management analysis", “future IFRS

response and shortening of accounts", in order to support continuous business growth in

domestic and overseas business environment, , “standardization of work and personnel

succession", and "further global expansion".

JFE Steel has been using domestic individual packages for more than 10 years, but in order to

realize offensive IT management, in order to develop further domestic and foreign business

including M&A, deal with future IFRS, to review the IT infrastructure that supports the

simplification and efficiency of the project, and we began considering revamping the core

system from the fall of 2015. As a result of examining the products of several companies, we

evaluated the abundance of standard functions of SAP S/4 HANA, future extensibility,

stability ,flexibility and innovation that make maximum use of SAP HANA® in-memory

technology, worldwide. We evaluated points with many achievements and decided to adopt

SAP S/4HANA in June 2016.

Under the support of ABeam Consulting Ltd. and JFE Systems, Inc., the system construction

was advanced with the policy of "New business and system construction that make maximum

use of the characteristics of packages", and eventually almost nine months without add-ons.

We completed the project between April 2017 and full-scale operation started.

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Additional information

“Japanese manufacturing industries, especially metals production, are extremely complex and being able to consistently produce and deliver high quality products requires the most sophisticated approach to blending the best people, processes and technologies. Considering this, it is a great achievement for JFE to have been able to standardize on best practice business processes that enable the company to compete effectively in the global market”

Eckhardt Siess －Head of Industry Business Unit Mill Products & Mining, SAP SE

“My mission and goal was to change JFE to a global top-level company, both in IT as well as business processes. The success of this project is one of the big steps towards my goal.”

Akira Nitta － General Manager of IT Innovation Leading Dept. JFE steel Corp.

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Additional information

Contribution

Japan SAP Users’ Group

Nobumitsu Kambe

SAP Japan

Takeshi Kawanaka, Nikhil Chaturvedi, Hidetoshi Fujimoto

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Additional information

Thank You