CF Industries Focuses on IT Efficiency
The largest producer of nitrogen for agriculture, fertilizer and industrial uses embraces a more strategic approach to IT.
One of the biggest IT challenges organizations face is obtaining support for highly customized ERP platforms. Vendors such as SAP and Oracle typically provide support only for standard installations. "This creates enormous difficulties for an enterprise," states Tom Grooms, VP and CIO for CF Industries, a $4 billion producer of nitrogen that's used in fertilizers and other products. The company operates nine manufacturing plants and employs about 3,000 people in the U.S. and Canada.
When Grooms arrived at CF Industries in March 2016, he and fellow executives determined that the company needed to advance from an aging SAP ERP framework to a more agile and flexible platform that could handle digital requirements and possibly tap the cloud. "We needed to find ways to introduce standardization, simplification, and consolidation for all the information surrounding suppliers and customers. We also needed to have better visibility into processes and more data at our fingertips so that we could operate our plants more effectively," he says.
The company terminated its maintenance agreement with SAP at the end of 2016 and turned to Rimini Systems, an independent software support provider, to manage IT and the business support issues during the transition -- and perhaps beyond. The approach offers clear benefits as well as a route to digital transformation. "We could take the money we saved and reinvest it in new systems -- while receiving a higher level of support," Grooms explains. "It created a very compelling value proposition." CF Industries spends about $30 million annually on IT.
As a result, the firm has slashed its annual maintenance costs by 79 percent compared to the previous SAP price tag. This equates to over $25 million in total savings over a 10-year period. Among the gain: a 50 percent reduction in annual SAP maintenance fees and the ability to avoid five major upgrades over the next decade. In addition, 3.5 full-time-equivalent employees no longer have to deal with time-consuming activities such as regression analysis, testing batches of fixes and a variety of self-support activities, he says.
Rimini Street offers a dedicated support team that understands the company's IT framework and business needs, Grooms points out. "There is no need to re-explain a situation to different support representatives every time we call." The move has also drastically reduced the need for customizations. Rimini Street handles many of these requirements -- or eliminates them through software and modules it offers. "They can review our code and make suggestions," he says.
The move has also provided strategic benefits. As the organization migrates to a more agile digital framework, it is better positioned to introduce efficiencies along with more innovative processes and features. CF Industries is currently exploring S/4HANA and S/4HANA in the cloud as well as other platforms. "This serves as at least a three-year bridge, during which time we can evaluate things and select the right path," Grooms explains.
To be certain, the initiative is leading the company into the 21st century. Concludes Grooms: "The IT team used to spend a great deal of time researching problems, fixing things and, as a last resort, calling the vendor for support." The managed services framework has ultimately led to about 20 percent less staff time spent on various tasks. "Instead of laying off staff, we have them focused on more strategic value-added activities."