ERP Cloud

A New Standard

When faced with a choice between three legacy ERP systems, Western Digital chose instead to future-proof its systems with Oracle ERP Cloud.

By Tara Swords

Fall 2018

Western Digital manufactures products that can be found virtually anywhere data lives. The company makes standalone storage devices as well as storage systems found in homes, computers, phones, and large data center systems, and cloud storage services that power businesses around the world. It’s an enormous organization with 72,000 employees globally, but it reached its size partly through acquisitions. In fact, Western Digital is the combination of three multibillion-dollar Fortune 500 companies: Western Digital, HGST, and SanDisk. That’s why, in 2016, Western Digital’s IT leaders were faced with an enormous challenge: the company set out on a digital transformation journey and was beginning the process of consolidating the applications of all three companies.

“We were looking at rationalizing 3,000 applications across these three companies,” says Western Digital CIO Steve Phillpott. “At a minimum, we had three of every kind of application. But in some cases, we have found dozens of applications doing the exact same service. That’s just not efficient.”

Steve Phillpott, CIO of Western Digital
Western Digital
Location: San Jose, California
Revenue: US$20.6 billion in fiscal 2018
Industry: Storage/data infrastructure
Employees: 72,000
Oracle products: Oracle ERP Cloud

Steve Phillpott, CIO
Length of tenure: Five years
Education: Bachelor of Science in engineering, US Naval Academy; MBA in technology management, University of Phoenix
Personal quote/mantra: “ The world hates change, yet it is the only thing that has brought progress.” —Charles Kettering

That reality presented leaders with an interesting question: In each instance, which application should they standardize on? When a larger company acquires a smaller company, the smaller company usually switches to the larger company’s applications. But in this case, three similarly sized companies were coming together, and there wasn’t always an obvious solution.

This presented a particular challenge with enterprise resource planning (ERP) applications. Phillpott and his team found themselves faced with three comparable ERP systems and needed to choose just one. But each system would soon need an upgrade—and ERP upgrades are notoriously expensive and can draw ire from a company’s leaders.

Oracle ERP Cloud gives us faster access to new functionality so we can enable the business. We never could have done that many upgrades that quickly with an on-premises application.”–Steve Phillpott, CIO, Western Digital

“We didn’t want to move the whole company to a single ERP system, which costs a lot of money and time, and then turn around and do another big upgrade just a few years later,” says Jahid Khandaker, vice president of global IT applications at Western Digital.

Steve Phillpott, CIO, Western DigitalSteve Phillpott, CIO, Western Digital

Already daunted by the need to put two-thirds of the company through a big change, Western Digital’s leaders suddenly decided to look at the question from a different angle.

They realized that with two of the three companies having to switch to new apps, 66% of the organization would have to undergo a major change no matter which application was selected. “So we thought, if that’s the case, why don’t we look at this as a transformation opportunity and change to a totally new application?” Phillpott recalls. “Yes, that will cause 100% of the company to go through a change, but it would give us the chance to make a decision with an eye toward the future and build a foundation for the next 10 to 15 years.”

That change in perspective gave leaders good reason to look into a cloud ERP solution. The biggest advantage would be the agility that a cloud solution enables, although cost advantage came in a close second. After assembling a 100-person team to evaluate dozens of possible solutions, Phillpott and the team agreed that Oracle Enterprise Resource Planning Cloud (Oracle ERP Cloud) was the best fit.

“A typical on-premises ERP solution can take two or three years from the start to realize any benefits,” says Tina Mashiko, vice president of business finance and business systems for finance at Western Digital. “With Oracle ERP Cloud, we were able to chunk it up into phases so we could have a bigger impact on the business sooner.”

Efficiency Gains Come Quickly

Phillpott and his team began planning for the implementation, knowing it would be a complex project. So they divided it into four phases that would span at least three years. Phase 1 focused on financial planning and consolidation, including operating expenses (OpEx) planning and financial reporting. During this phase, the team used Oracle solutions to link all global spend, which gave leaders the ability to make decisions based on detailed worldwide reporting. Phase 2 continued work in those areas and added indirect procurement, harmonizing those processes across the three merging companies. In phase 3, which will begin in fiscal year 2019, the Western Digital team will begin work on order orchestration and customer contracts, creating a solid foundation for the final phase. Phase 4, the last and longest phase, will extend to manufacturing, inventory management, direct procurement, cost accounting, and more.

Number of duplicate suppliers removed from the master data after Oracle ERP Cloud harmonized it

After rolling out just the first two phases, the company is already reaping more than enough benefits to justify its choice.

“We’ve significantly reduced the amount of time it takes to get approved to purchase something,” says Khandaker. “In some cases, we’ve streamlined that process from about 16 layers of approvals to just 3 to 5 approvers.”

Another benefit comes in the form of master data management—a tremendous need for a company that manages so much of its own data—inherited from multiple companies—across multiple geographies.

Jahid Khandaker, Vice President of Global IT Applications, Western DigitalJahid Khandaker, Vice President of Global IT Applications, Western Digital

“In master data management, we didn’t have consistency on things like product data and customer data,” Phillpott says. “Now we’re getting consistency, which is critically foundational for a company of our size. We’ve rationalized our supplier count across the three legacy companies, and where we once had more than 30,000, we’ve been able to get it down to about 17,000.”

Reporting Reflects Real Data

In a global company that operates in a rapidly changing industry such as technology, leaders need the ability to make good decisions fast. But the bigger the company, the harder it can be to get an accurate picture of what’s really happening at any one time. That was especially true after the consolidation of Western Digital, HGST, and SanDisk.

“For our senior vice presidents to be able to make decisions, they need data and analytics,” says Tina Mashiko, Western Digital’s vice president of business finance and business systems for finance. “But we had to cobble together three different spreadsheets and explain three different data points for them each time. If you’re trying to run a business and be agile and make hard decisions based on changes in the marketplace, you can’t do that when you’re relying on data in Excel that’s gathered manually across three different ERP systems.”

Number of approvals needed to get a purchase approved, down from 16

But today, Oracle ERP Cloud consolidates all that data from all three legacy systems. Decision-makers receive one report that shows, for example, total spend and has drill-down capabilities for every aspect of a leader’s department. That not only gives them accurate data, but it also gives them confidence in the data that a human-generated, error-prone Excel file never could.

Upgrades Don’t Break the Business

When Phillpott and his team began planning for the deployment, they all agreed on one critical point: Whereas the three legacy ERP systems were all heavily customized, the new cloud system would have absolutely no customizations. Any minor configurations would have to be supported by Oracle’s upgrade process—meaning an upgrade wouldn’t break the configuration or require it to be tweaked manually.

We’ve significantly reduced the amount of time it takes to get approved to purchase something. In some cases, we’ve streamlined that process from about 16 layers of approvals to just 3 to 5 approvers.”–Jahid Khandaker, Vice President of Global IT Applications, Western Digital

It wasn’t an easy sell. After all, employees were already losing the old ERP applications and all of the old, familiar processes that went with them. It was only human nature that they would want the new system to mimic the old ones. But that would require customizations that would ultimately inhibit the company’s agility every time Phillpott wanted to upgrade.

“We made it very clear to the business users that any requests to customize were going to require a business case and C-suite sign-off,” Mashiko says. “Suddenly, there were no more requests.”

Since going live with phase 1 back in July 2017, Western Digital has upgraded Oracle ERP Cloud multiple times—and Phillpott and his team have never looked back.

“Oracle ERP Cloud gives us faster access to new functionality so we can enable the business,” Phillpott says. “We never could have done that many upgrades that quickly with an on-premises application.”

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Photography by Bob Adler/Studio at Getty Images for Oracle