The speed of business can be accelerated significantly with advances in digital technology. While innovations and improvements are within reach, most businesses today face the problem of not adapting fast enough to the changes in their environment.
JGC Holdings (JGC HD) is Japan’s largest engineering company, with a strong international presence. In recent years, it has been continually driving digitization efforts, working toward a 2030 plan for transformation.
JGC HD believes that the dual functions of talent development and IT utilization are indispensable for enhancing corporate value. As a first step, JGC HD built SAP S/4 HANA as a financial system within the Microsoft Azure environment. With SAP on Azure, the company is now able to centrally manage global information in real time with its enhanced management infrastructure.
JGC HD’s challenge to embrace digitalization
Since JGC HD’s establishment in 1928, it has been spearheading construction projects in more than 80 countries, including oil refineries and LNG plants.
The company transitioned to a holdings system in October 2019 and reorganized its management structure. With the functional materials manufacturing business at the core of the Group in addition to its overseas oil and gas, infrastructure, and domestic EPC (design, procurement, and construction) business, JGC HD has built a new framework, focused on transformation through digitalization.
In April 2018, JGC’s IT department, which previously sat across the company’s multiple teams, was consolidated to launch the Data Intelligence Headquarters.
Takuya Hanada, Chief Digital Officer (CDO), General Manager, Digital Initiative Dept. commented on the impetus for digitalization.
“Two years ago in Houston, when our top management had an opportunity to exchange views with top management in major oils, we received some challenging advice, which was: if you can’t do the project at one-third of the current man-hours and double the speed, you’ll be irrelevant in the future and eliminated from the market. Thus, the first step we took was to integrate our IT functions and develop a grand plan around IT, based on JGC HD’s company vision.”
Given the rapid advances in IT technology, JGC HD was conscious the fact that today’s advanced solutions could quickly become obsolete. With that in mind, JGC HD first formulated a vision of the kind of company it wanted to be in 2030 and used backcasting to derive the roadmap it needed to get there.
Following that, it launched an IT Summit internally, to centrally promote, operate and manage IT for the entire group. Pilot teams were also created for each Grand Plan theme that JGC HD rolled out.
Plans ranged from short term, to medium and long-term implementation. In the case of utilizing AI technology for plant layouts, JGC HD had to decide how to ensure that plants could be standardized, to have the same environment, by accounting for factors including the composition of crude oil and the surrounding topography and climate.
An essential part of JGC HD’s plans to develop digitalization for the future was the improvement of management infrastructure. By centralizing digital resources, processes could be streamlined, allowing JGC HD’s management to achieve business efficiency and speed. SAP S/4 HANA, a financial and accounting system on Microsoft Azure, was thus implemented as the foundation to roll out this plan.
Microsoft Azure as the choice platform for a reliable and internationally accessible cloud
Prior to SAP S/4 HANA, JGC HD traditionally operated a financial and accounting system on-premises.
Looking back on those days, Atsushi Morimoto, Manager, Accounting Planning Team, Finance Group, JGC Holdings, Inc, said, “At a glance, there were no major problems. Before our transition to the holdings system, JGC accounted for a large percentage of the Group, and its operations were stable even with its own financial business flows. However, domestic and global group companies were in the process of restructuring and required the standardization of their systems and business processes.”
Yasuhiro Kitanaka, Assistant Manager, Planning Group, Digital Management Division, JGC Holdings, Inc., elaborated on the IT department’s desire to actively promote the integration of IT infrastructure. “We realized that various systems were operating at different levels for each group company and business unit, and so a policy was implemented to integrate all IT infrastructure in 2016 for greater standardization. This was JGC HD’s first decision to go cloud-first instead of on-premise.”
“In the engineering industry, the way we handle vast amounts of data can make or break the winning of orders. Take plant design for example, where more than half a million drawing and specification files are exchanged across Word, Excel, and CAD, with each file getting revised many times. In order to successfully respond to high volumes of data across files of different sizes, JGC HD moved from on premise to a cloud-first model,” he continued.
At the end of 2016, JGC HD’s cloud-first policy was formulated, and Microsoft Azure was adopted as the platform to run its SAP workloads. Mr. Kitanaka said that Microsoft’s global reach and network was the biggest draw factor for the adoption of Azure, over other cloud services.
“Our major markets are Asia, the Middle East, and Africa. As such, global data exchange is crucial as we implement plant design and construction. It was a big draw for us to be able to use our existing network infrastructure, and seamlessly integrate Office 365 at the same time, which was compatible with our systems.”
When deploying SAP on Microsoft Azure, Microsoft dispatched SAP specialists from the basic design stage to assist with the construction.
“During the project, some important additions and changes were made to Azure, but we were able to respond in a timely manner. Thanks to Azure, we were able to operate without any trouble.”
Standardizing the JGC Group model
The financial system went live in January 2019, with SAP S/4 HANA, OpenText (voucher management), and SAP BusinessObjects (data analysis) running on Microsoft Azure.
Morimoto commented on the transition, and its impact on the Finance Department. “At first, I was confused by the change from the old system to SAP on Azure. However, I soon realized its benefits. By creating a business manual and operation manual in advance, we were able to clearly visualize the flow of the entire business.
The quality of the data and analysis had undoubtedly improved, and with vouchers viewable in PDF format, we have also increased the efficiency of paperless operations. A centralized view of operations has also helped the organization and standardization of operations to become more effective. Moving forward, we will continue to improve and standardize our IT infrastructure across the JGC Group, by rolling it out to our Group companies as soon as possible.”
Mr. Kitanaka has noticed improvements in the areas of design, development and operations, following the implementation.
“The move to Azure has resulted in reduced usage fees during the times we suspend our financial system, on weekends and on holidays. We also noticed that we were able to set up a verification environment within a month – if we had stayed on-premise, this would not have been possible.”
Hanada continued, “Back-office system improvements have faced no significant side effects while we continued to build firm foundations for starting new projects. With the creation of a model that integrates IT infrastructure in the group, we were able to flexibly respond to changes to a new management structure.”
Increasing corporate value through upskilling talent
JGC HD is planning further developments to visualize and share information around enterprise resources including people, inventory and finance, with the platform. Mr. Hanada shared that the focus will be on talent management in the future.
“Our company does not see itself primarily focused on the enhancement of our large-scale production facilities or advanced R&D functions. Rather, we focus on developing our greatest asset – our talent – in order to accelerate future business developments. No matter how good a system is, it must be handled effectively by humans in order to be successful. Innovation can only come to life when human wisdom and digital wisdom fuse. With the two wheels of Human Intelligence (HI) and Artificial Intelligence (AI), we believe that the digitalization of JGC HD will continue to accelerate.”
Mr. Hanada expressed interest in using Microsoft Teams within JGC HD for improved collaboration.
“With Microsoft Teams, we can visualize our internal communication. If we find that department A and department B have a lot of interaction, we may be able to step in and help facilitate collaboration. I think we need to promote the use of Microsoft Teams company-wide.”
“By introducing SAP on Azure, we have been able to lay the foundations for innovation within JGC HD. With the creation of a model that integrates IT infrastructure within the Group, we have been able to flexibly respond to changes resulting from a new management structure as well as ensure improved efficiencies in the meantime,” shared Hanada.
Read the original article in Japanese here: https://customers.microsoft.com/en-US/story/776620-jgc-holdings-professional-services-azure-jp-japan