Volkswagen Caminhões e Ônibus Bets on the AWS Cloud to Deploy SAP S/4HANA

Created in 2018, the TRATON Group is comprised of the Volkswagen Caminhões e Ônibus, MAN, Scania, and RIO brands. The group launched with 81,000 employees and 29 production units across 17 countries, and it produced 233,000 vehicles in 2018 alone. The VWCO plants maintained in Resende, Brazil and Querétaro, Mexico are currently part of the group.

While preparing for the TRATON Group IPO, it was necessary to segregate the VWCO SAP environment from that of the passenger vehicle operation. According to VWCO SAP manager, Sadao Matsuda, once the company chose to deploy SAP S/4HANA, it decided to start this separation process with the Querétaro plant. In addition to meeting the operational needs of the business, this project would be used as proof of concept for future deployment at the head office.

“Due to the urgency, we decided to not build our own infrastructure for S/4HANA. We needed an agile and elastic solution and lacked time to wait for all of the discussions involving architectural plants, machine sizing, procurement processes, etc. That’s why we decided to use cloud technology,” Matsuda says. 

A second challenge, in addition to the IPO deadline, was that the deployment would be VWCO’s first experience with cloud environments. “Until we began designing this project, there was an internal rule that prohibited the use of cloud computing inside the group,” says Matsuda. Once the decision was made, Volkswagen Caminhões e Ônibus started the process of choosing a cloud computing partner.

At the time, the company evaluated a few different cloud service providers, but ultimately VWCO chose Amazon Web Services (AWS). Criteria such as price and flexibility were considered of utmost importance. Additionally, the company compared cloud service providers, taking business models, scalability/elasticity, and pricing consideration. “AWS had the best cost-to-benefit ratio at the time. The price was also 20 to 40 percent cheaper than its competitors. Management was easy—it was very simple to upload a machine to the platform and simply adjust sizing according to need afterwards,” says Matsuda. 

In addition to pricing, flexibility came to be an important differential, even during the initial project phase. Matsuda remembers that, when designing the solution, there was an estimate of needing seven to eleven servers in the environment. However, at the first workshop on environment architecture, a few exercises showed that there was in fact a need for 24 servers. “In the end, we rearranged the architecture during the project and ended up with 17 servers, subdivided into several environments, all of which did not affect the budget. This facility in managing helped us a lot,” he says.

Another example mentioned by Matsuda: while uploading data into the system, VWCO observed a need to expand the production server’s capacity. That task was performed in only 15 minutes. According to Matsuda, everything was uploaded very quickly, and the flexibility to change servers when necessary proved the management practicality offered by AWS. The project’s kick-off took place in April 2018, and the go-live was in January of 2019. Today, the entire VWCO SAP structure uses Amazon Elastic Compute Cloud (EC2) instances on the AWS Nitro System. 

VWCO did not want to manage several service providers for SAP Functional, SAP Basis, and Operational Services on the cloud. Agility in the project relied on a strong provider who could act as one face to the customer. That is why VWCO sought an SAP consultant with cloud expertise that could undertake the entire operation. The deployment process was performed by R3D, and platform maintenance is performed by the German company, T-Systems.

With SAP S/4HANA now operational, VWCO has experienced a series of benefits in the project and platform operation. The agility demonstrated during deployment is still present in the tool’s management. In 2019, AWS launched a new group of faster and cheaper servers in comparison to the prior generation, and the production server upgrade was completed in only 20 minutes.

“It has been an excellent experience, just as the service quality. We have a robust and trustworthy environment in Mexico, and the idea is to continue expanding. Today, when deploying a new system, we think at least twice before using a physical server,” Matsuda says. The main motivation for the project was the need for speed in deployment, which was fully realized.

In addition to agility, Matsuda emphasizes the reliability and availability of the environment, which has not yet experienced any problems or service interruptions, not to mention its easy management. Another focal point is the total cost of ownership (TCO) for a cloud environment, when compared to an on-premise structure. For Matsuda, eliminating costs such as oversized servers, power, and infrastructure significantly outweighs what the company has invested in cloud technology.

“We had no problems at all with AWS. It was a very challenging project, but the platform is extremely reliable. There are ERP projects in the automobile industry using cloud, and ours has drawn attention. We are currently a reference for other Volkswagen units and other companies,” Matsuda notes.

The deployment project for the SAP S/4HANA at the VWCO unit in Mexico had two purposes: to meet operational needs and to serve as proof of concept for later deployment in the Brazilian unit. As a result of the successful project, VWCO's next step is to deploy the management system in the Brazilian unit as well.

Matsuda explains that VWCO of Brazil currently uses SAP together with Volkswagen Automóveis and Audi Brasil, in a large, on-premises environment. “Since we are all part of a new group within Volkswagen AG, we need to separate our operations from the others,” he says. The goal of deploying SAP S/4HANA in Brazil on AWS is currently in the final planning and hiring stages. The goal is for deployment to begin in the first quarter of 2020 and for go-live to take place in January 2022.

Get more information on the SAP S/4HANA system at AWS.