Why Tomago Aluminium reversed course on its cloud journey

Tomago Aluminium is an industry giant in the Asia-Pacific region, and as IT superintendent, Dennis Moncrieff is responsible for leveraging the right technologies to make the process of producing aluminum more efficient.

When talking about the organization’s digital transformation journey, he describes it as a constant. “Sure, digital transformation is a buzzword that’s been bouncing around for a long time,” he says, “but digitizing your processes remains important because no modern business can afford to run an old, unpatched, and unsupported version of something. It’s just too risky.”

In Moncrieff’s experience, however, finding the balance between the old and new isn’t easy.

This conundrum is what motivated Tomago to migrate its ERP system to the cloud back in 2015. The version of their SAP ERP system was out of support and the SAP instance they chose wasn’t available as an on-premise capable, supported hardware platform. Describing their existing systems as “burning platforms,” he says that migrating to the cloud was essentially their only option.

Tomago Aluminium

Cloud migrations were fairly new then and there were still a lot of unknowns about what the process entailed. “We walked into a partner-managed cloud environment,” he says. “We were at the very start of our cloud adoption journey and didn’t understand what this meant. From the moment your data is put into a partner-managed environment, you lose control of it. Obviously, there are pros and cons of this model, but we didn’t fully grasp what these were.” This, he adds, is one of the pitfalls of being an early adopter: you make mistakes, but, hopefully, learn from them.

That said, their initial experience was positive. According to Moncrieff, for the first couple of years, the business enjoyed improved speed and resilience. But when connectivity issues arose, it was challenging to identify where the problem was because there were so many breakpoints between end user and cloud solution. “It became difficult to get anyone to accept there was a problem,” he says. “Every few months, something would go wrong and we had to diagnose exactly where it was on the path before we could get the right support from the appropriate resource.”

Regaining control

When you’re running a smelter that operates 24/7 — with an ERP system that houses data pertaining to around 30 000 lines of stock — and you’re unable to access the information you need, when you need it, the impact can be serious.

So about five years after the migration, Tomago started to reassess their environment. With the cloud market maturing significantly, the company could now look at what it had and compare it to other solutions out there.

At the time, they explored three options: on-prem, continuing with a managed environment, and moving to an ERP as a service model. For Moncrieff, the conversation was really around ownership, transparency, and cost. During this re-evaluation process, they identified a real lack of insight, control, and visibility across their existing systems.

“An ERP solution like ours is massive,” he says, highlighting that this can make it difficult to keep track of everything you are, and not, using. For instance, he says if you’re getting charged $20,000 for electricity, you might want to check your meter and verify that your usage and bill align. “If your electricity meter is locked away and you just get a piece of paper at the end of the month telling you everything’s fine and you owe $20 000, you’re probably going to ask some questions,” he says. Tomago was told everything was secure and running as it should, but they had no way to verify what they were being told was accurate.

“We essentially had a swarm of big black boxes,” he says. “We put dollars in and got services out, but couldn’t say to the board, with confidence, that we were really in control of things like compliance, security, and due diligence.”

Then in 2020, Tomago moved its ERP system back on-prem — a decision that’s paying dividends. “We now know what our position is from a cyber perspective because we know exactly what our growth rates are, and we know that our systems are up-to-date, and what our cost is because it’s the same every month,” he says. “With the cloud, if we wanted to do additional work or give development teams a sandpit to play in, we had to pay for the additional load. I have many more systems and our landscape is much larger today than it was when we migrated back four years ago, but my cost is exactly the same. Considering the growth we’ve experienced in recent years, being in the cloud may have actually restricted our ability to do some of the more innovative things we’ve done to drive efficiency across the business.”

This is especially true for an industrial facility where the IT budget constantly competes with the budget for the machines and vehicles used for product production.

But this experience doesn’t mean Moncrieff won’t consider cloud in the future. “For me, it’s about having the right workload in the right spot,” he says. “For a facility like ours, which runs and operates as an aluminum smelter day-to-day, there’s a certain amount of data we need to keep close to the machines. But when it comes to some of our historical data, it’s probably not as important for us to have access to that information all the time.”

Readiness is another major factor. Moncrieff has seen people get excited by some things that can be done in the cloud, admitting it’s very exciting, cool stuff. But first, he says, you must make sure you’re ready to take advantage of what’s out there, and that your foundations are solid so you know exactly how you plan to use the cloud to solve the problems you’re trying to solve.