Success Story: System Landscape Transformation (SLT)

Danfoss: SAP Carve-Out

SAP-Based Transfer of a Group of Companies, including Reporting, for the Sale of a Business Area
The sale and associated transfer of a business area of the Danish Danfoss Group required extensive transformation of the SAP system landscape. The management consultancy cbs was awarded the contract to carve out 18 company codes into an independent SAP ERP system and BW system, and thanks to the timely implementation of this sensitive project, it was possible to bring the sale to a successful conclusion.

Success Story: System Landscape Transformation (SLT)

The sale and associated transfer of a business area of the Danish Danfoss Group required extensive transformation of the SAP system landscape. The management consultancy cbs was awarded the contract to carve out 18 company codes into an independent SAP ERP system and BW system, and thanks to the timely implementation of this sensitive project, it was possible to bring the sale to a successful conclusion. The well-conceived cbs concept enabled the objectives to be achieved on time and within budget. ollowing the takeover, the objective was to continue the ongoing business activities without interruption under a new name based on the existing processes and information. How were the cbs consultants able to separate the productive SAP ERP and BW systems without any system standstills or disruption to the ongoing business operations?

ERP and SAP BW system landscape. After completion of the deal, these units had to be transferred and migrated to a newly created SAP ERP and BW system environment. The carve-out should cause as little disruption as possible to the ongoing business activities, and the productive operation of the SAP systems should not be interrupted. Many of these requirements were success factors that were directly relevant to the contract and sale. Naturally, Danfoss wanted a costefficient SAP project. In view of the special framework conditions relating to the asset deal, however, the critical parameters for implementing the project were, above all else, time and quality aspects.

Implementation should be accomplished exactly on time and within a brief time span. Migrating the SAP business and technical transition should be complete and seamless, without affecting operative business in any way. This produced a set of requirements that only became practicable by adopting a project approach that was tailored to precisely meet the customers own requirements on time and within budget.

The Project Task

To successfully complete the asset deal in a seamless transition, the existing SAP system landscape in the Danish parent group had to be modified.

About Danfoss
Danfoss is one of Denmarks largest industrial companies. With its international presence, the Group researches, develops, and produces mechanical and electronic components for numerous branches of industry. Its business areas include among other refrigeration technology, solar powerelectronic drive technology, heating and district heating technologies . The Danfoss Group is able to look back on 78 years of experience in the field of energy efficiency. Around 24,000 people are employed worldwide, and production takes place at 79 sites in 22 countries. One hundred sales compa-

Introduction
The Danish industrial group Danfoss sold its gear motor business area in an asset deal. In addition to the property, rights and licenses were also transferred to the purchaser. It was important to ensure that the entire SAP-supported business was handed over to the purchaser quickly and smoothly. By the actual day of the sale, the units and plants sold and all their associated and historical data had to be relocated to separate, new business units within the existing SAP

nies with more than 400 representatives and distributors around the world handle the sales and distribution. This globally active group of companies is privately owned, the majority shareholder being the Bitten and Mads Clausen Foundation. In 2011, Danfoss divested the south German gear motors manufacturer Danfoss Bauer. The gear motor business area was taken over by the American holding company, Altra Industrial Motion, and now operates under the new name of Bauer Gear Motor. www.danfoss.com

cbs Corporate Business Solutions. Die Unternehmensberatung der MATERNA Gruppe.

Danfoss: SAP Carve-Out

The list of affected SAP modules is a long one. Besides a fully integrated central ERP system with the modules FI, CO, SD, PP, MM, and TRS, a Business Warehouse system for the Groups reporting systems also had to be considered. Separating off the operational business units involved 18 legal units and would be possible to complete a double carve-out within a relatively short space of time and without any major interference in operations a crucial factor in the sales argument! The first project step, from end of February to end of May 2011, was the crucial one for closing the sale to the new owner. For the second step starting in August, just under four months elapsed between kick-off and completion of the first step and another 4 month for the second step and go-live at the end of 2011. By December, the purchaser was already able to conduct productive business in the separate SAP system and reap the initial benefits of his strategic business expansion.

Three-Step Carve-Out Approach: Advantage cbs

Danfoss entrusted the sensitive task of the double carve-out in SAP ERP and SAP BW to cbs Corporate Business Solutions GmbH. The Danish Group was convinced by the comprehensive expertise and international experience of the cbs consultants in terms of carving out SAP systems and by the cost effectiveness of the proposal. The individual approach to the project that the SLT business consultants from cbs adopted based on their M-cbs methodology, which could be customized for specific project types, was of crucial importance. This enabled Danfoss to first separate the entire business area from the SAP system landscape within a short space of time and then, as a result, complete the profitable sale to another company. For this purpose, the consultants from cbs worked together with the customer to develop a concept that envisaged separating off and migrating the data in a three-step-approach. As their technical tool of choice, the Heidelberg specialists deploy their very own proven SHC Framework solution. In the first step, businesses activities covered in 18 company codes were relocated to 8 new company codes of the purchaser within the exisiting Danfoss group system and SAP client. To provide the purchaser with a production system in a separate administrative unit, the next step involved transferring the8 company codes of the purchaser from the existing ERP and BW systems to a new instance. Therefore, a copy of the system without any master or transaction data is set up as a new SAP target system instance for the purchaser. Using SHC Framework, only the master and transaction data that is relevant to the purchaser is then migrated in accordance with a predefined control system. In the final step, the source system still in productive use at Danfoss is cleansed of all migrated data. With the transition of the new system to the purchasers IT service provider, all activities are completed.

Customer testimonial
For the Danfoss Group it became essential in the sales process to convince the purchaser that such a complex asset deal could be carried out within SAP systems within relatively short time without harming the business. With CBS as partner we were able to provide the purchaser a trustful concept and plan thereby confidence to confirm the take-over. Looking back today we can verify that the concept was proven consistent and deliveries was on time. Henning Andresen Project Director

Benefits
From now on, Danfoss and the purchaser of the gear motor business area will use separate SAP ERP and BW production systems in which they can conduct their business. This enables the purchaser to access the major Danish corporations historical data, thus continuing to conduct its purchased business on the basis of complete and up-to-date information. Danfoss was able to conclude the asset deal on time and in scope, as contractually agreed, without having to interrupt its day-to-day business operations.

Asset Deal What Is That?

In contrast to a share deal, in which only the shares are purchased, a purchaser involved in an asset deal also purchases all the assets of a company. The property purchased can include land, buildings, and machines, as well as intangible assets and rights, such as customer portfolios and licenses. Since individual purchase contracts are signed for all the assets, reference is made here to singular succession. The transfer must take place on the contractually agreed date. Groups sell subsidiary companies or business areas, for example, because they no longer tie in with their core competence. Basically, an asset deal can be carried out for any type of enterprise. Since the companys operations are usually also transferred, migrating the relevant data to the IT systems must be planned and monitored accordingly.

manufacturing plants, which in the end were to be isolated appropriately in the SAP system and transferred to a new ERP system instance. Cross-organizational data and specific customizing and master data were also to be taken into account and appropriately selected and separated. Historical data had to be transferred completely. At the same time, Business Warehouse was to be carved out into a new BW instance. All activities had to be transferred synchronously to productive use by a cutover deadline and without any disruption to the systems operation.

Challenges
The asset deal was to be completed as quickly as possible so that the newly purchased business area could be made productively available to the purchaser at the earliest opportunity including the historical data that maps the previous business activities in SAP ERP and BW. To ensure that only relevant data changed ownership, a detailed concept with rules for selecting and transferring the data had to be devised for the legal units. And last but not least, the potential purchaser was to be convinced that it

cbs Corporate Business Solutions. Die Unternehmensberatung der MATERNA Gruppe.

cbs Corporate Business Solutions Unternehmensberatung Die Unternehmensberatung der MATERNA Gruppe Im Breitspiel 19 69126 Heidelberg T +49 6221 3304-0 contact@cbs-consulting.de www.cbs-consulting.com