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The Business and Technology Case for SAP's Analytic Services

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The need for advanced business analytics has never been greater, driven by the combination of growing business complexity and the extraordinary growth and complexity of enterprise data. Petabytes of …

The need for advanced business analytics has never been greater, driven by the combination of growing business complexity and the extraordinary growth and complexity of enterprise data. Petabytes of data flowing from inside and outside the enterprise, coupled with new and highly dynamic business processes and the increasing need for broad stakeholder access to information, are fueling the need for analytical applications that can bridge the gap between data and business requirements.

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  • 1. Enterprise Applications Consulting The Business and Technology Case for SAP’s Analytic Services By: Joshua Greenbaum, Principal, EAC Spring 2013
  • 2. The Case for SAP’s Analytics Services 1 Copyright 2013 EAC. Introduction: The Game Changes for Analytics in the Enterprise The need for advanced business analytics has never been greater, driven by the combination of growing business complexity and the extraordinary growth and complexity of enterprise data. Petabytes of data flowing from inside and outside the enterprise, coupled with new and highly dynamic business processes and the increasing need for broad stakeholder access to information, are fueling the need for analytical applications that can bridge the gap between data and business requirements. Bridging that gap is increasingly the domain of advanced consulting services, which ideally leverage existing and new applications and technology as they create new high-value analytics. The complexity of the problems consulting services are being asked to tackle – going to the very heart of an enterprise’s core processes and data – is also changing the dynamic of what it takes to be the trusted advisor that provides those much-needed consulting services. While there are many large consulting firms that can provide one-stop shopping for a broad range of customers, those customers are finding that one size doesn’t fit all, particularly when considering the larger consulting and systems integrators that provide these services. Indeed, the need for more specialized services, specific technical and business expertise, and high-touch, high-value relationships means that the advanced analytical needs of a company are more often better served by a more focused consulting practice than the “too big to fail” top global SIs. This changing dynamic is particularly evident in the SAP market, where a combination of new technology offerings on the part of SAP and a growing awareness of the value of advanced business analytics is driving a significant wave of new opportunities for SAP’s home team, its Analytic Services group. While SAP continues to depend on large global systems integrators – as well as its own resources – for the bulk of the implementation work in the SAP market, Analytic Services is increasingly called upon to take the latest in SAP technology and business knowledge and apply it to high-value and high-return customer opportunities. SAP asked Enterprise Applications Consulting (EAC) to take a close look at Analytic Services and its success in delivering high-value business analytics. EAC’s research reveals a growing track record for delivering market leading analytics in key battleground domains for SAP’s customers, using a combination of advanced analytical tools like SAP Business Planning and Consolidation, SAP HANA, and the SAP Predictive Workbench, as well as by leveraging the rest of SAP’s BI and analytics offerings and existing SAP methodologies like ASAP. The result is both a distinct value-add and competitive advantage for SAP customers in their respective markets as well as providing a competitive advantage for SAP and an important showcase for SAP’s new products and services. This report is in three sections. The first is an overview of the changes in business process, data, technology, and applications that are driving this shift in the use of services groups like Analytic Services. The second discusses the specific service and technology offerings of Analytic Services and how they are designed to meet the new market requirements. The final section showcases examples from the SAP customer of how Analytic Services works with customers to solve their business analytics issues.
  • 3. The Case for SAP’s Analytics Services 2 Copyright 2013 EAC. Three Key Drivers of Change in Business Analytics Requirements: Dynamic Business Environment (such as new market opportunities or business models) Scarcities of Talent Related to New Analytical Requirements (such as “Big Data”) Managing Technology Complexity and Innovation Requirements (such as portfolio rationalization and new technology initiatives) The Market Shift Towards High-Value Analytics Services The need for high-value analytics services has always been present in the global business market, fueled by the never-ending requirements of business change, regulations, and competitive pressures. But three key market trends have conspired in recent years to make the need for high-value analytics services more acute than ever, while simultaneously making the acquisition and deployment of these services increasingly difficult for many companies. This first trend is an ever-quickening pace of change in business management, structure, and practices, driven by the global recession and the increased globalization of business across the board. As the result of an increasingly dynamic global business environment, companies are forced to consider making enormous changes to their structures, business processes, and lines of business. And with those changes comes an often more challenging requirement to alter the reporting and analysis functions of the enterprise to reflect its new structure, business model, or other opportunities and challenges. But dealing with new reporting and analysis functions created by changes in internal business models or structures is only the start. Companies must also try to keep up to date with shifting competitive, regulatory, labor, and other practices that define key risk, governance, compliance, and analytical needs. This already daunting task – keeping business change and analytical needs in sync – is made all the more daunting by a second key market trend: the growing quantity of data that must be analyzed as part of the shifting business climate of today. While much has been made of the astronomical growth in the quantities and complexities of “big data”, the silent problem stalking the enterprise is not how to deal with ever-increasing quantities of data, but where to find the talent needed to turn those petabytes of enterprise data into information and action. And while analyst firms like Gartner Group predict that the spend on big data overall will increase from $28 billion in 2012 to $43 billion in 2013, the problem of finding the people who can design, implement and manage big data projects will become an increasingly difficult challenge. Indeed, Gartner also predicts that up to one-third of the six million new jobs generated by “big data” between now and 2014 will go largely unfilled, due to a profound lack of skills in the market. A recent InformationWeek survey shows another impact of this trend – the salaries of business intelligence and analytics professional are rising quickly, despite the recession, as supply continues to outstrip demand (see figure 1).
  • 4. The Case for SAP’s Analytics Services 3 Copyright 2013 EAC. Figure 1: BI Salary Trends Salaries in BI are climbing despite recessionary pressures, signaling a growing scarcity (Source:InformationWeek) These numbers obscure an important truth. This skills gap is even more a question of quality than it is of quantity. Tackling the big analytical problems of the 21st century – particularly in light of the rate and complexity of business change and the growth in the quantity and complexity of data – is made ever the more difficult by the skill sets required. Business analytics in the 21st century require deep industry knowledge, equally deep line of business knowledge, and a collection of analytical and IT skills that are hard to find in many organizations. “Business analytics in the 21st century require deep industry knowledge, equally deep line of business knowledge, and a collection of analytical and IT skills that are hard to find in many organizations.” And that’s before considering the third market trend that is conspiring against the peaceful sleep of IT and line of business managers around the world: the growth in software complexity that has paralleled the two other trends in scope. The irony of enterprise software’s role in the new imperatives facing the global enterprise is that the path to the efficient and effective use of enterprise software as a way to manage global change has become itself a barrier to that management requirement. One of many examples of this can be seen in the aftermath of a merger, which forces companies to rapidly, and within the narrow confines of regulatory governance, consolidate the operations and reporting of acquired entities that often have completely different IT infrastructures, and therefore different data management and analytical tools, than are in place in the acquiring company. That complexity makes for an extremely difficult data and analytics problem to solve. $90 $119 $85 $110 $83 $109 Staff Management Median annual base salary 2010 2011 2012 Note: Median salaries in thousands of dollars Base: 261 staff and 208 manager BI/analytics IT professionals Data: InformationWeek 2012 U.S. IT Salary Survey of 600 BI/analytics and information-management IT professionals, January 2012
  • 5. The Case for SAP’s Analytics Services 4 Copyright 2013 EAC. But M&A is hardly the only driver. Many companies are simply finding themselves facing these new business imperatives – competition, globalization, business change – with antiquated technology tools that serve more as anchors than enablers in the battle to stay on top of business change. This third trend – characterized by a disconnect between technology capabilities and business requirements – is for many companies the final blow: Without some dramatic assistance, at both a strategic and tactical level, the need to match analytical and reporting capabilities with changing business requirements will go unmet. And with those unmet needs comes a host of problems relating to the effective enterprise management and governance. Because at the end of the day, in addition to the new complexities of global business, the enterprise still has all the same old problems in meeting its analytical needs, foremost of which is the need to synch the business side’s requirements with the capabilities of the IT organization (see figure 2). This eternal imperative, when faced with the three-way problem of navigating business change, coping with the big data talent gap, and overcoming enterprise software complexity – conspire to make the problem of developing and delivering next generation business analytics that can help navigate this complexity an extremely daunting task. Figure 2: Task/Challenge That Consumes Most Time BI/Analytics “Working with executives/users to define needs and requirements” is still the #1 task and challenge for BI/Analytics projects. (Source: InformationWeek) 64% 45% 35% 26% 64% 42% 36% 25% 61% 44% 40% 26% 2012 2011 2010 Which of the following tasks and challenges consume most of your time? Note: Three responses allowed Base: 660 BI/analytics IT professionals in 2012, 769 in 2011 and 793 in 2010 Data: InformationWeek 2012 US IT Salary Survey of 660 BI/analytics and information-management IT professionals, January 2012 Workingwithexecutives/userstodefine needsandrequirements Developingqueriesandanalyses Designingandrevisingreports Researchingnewcapabilitiesandscreening prospectivevendorsandtechnologies
  • 6. The Case for SAP’s Analytics Services 5 Copyright 2013 EAC. What emerges from this complex and challenging environment is the need to rethink where the core capabilities for managing business analytics change must come from. More and more, the traditional sources – internal IT resources and large, global systems integrators – are insufficient to provide the combination of business knowledge, business analytics know-how, and deep IT skills that are necessary to bridge this increasingly important gap. It is this very combination of requirements that SAP’s over 1000 Analytic Services Analytic Services consultants have been engaged to fulfill on behalf of over 2800 SAP customers in 2012 alone. Those engagements typically involve a specific set of services, and the next section will provide an overview of the SAP’s Analytic Services offerings and how they can help companies bridge this increasing critical gap.
  • 7. The Case for SAP’s Analytics Services 6 Copyright 2013 EAC. Analytic Services Overview The Analytic Services group has a relatively broad mandate within the SAP market to provide precisely the kind of analytics support that can address the issues discussed above. This support is primarily focused on high-level consultative services intended to help guide SAP customers in the use of SAP software in order to implement BI and analytics best practices from the customers’ specific industry. Analytic Services consultants are also directly involved in implementation, particularly by providing SAP- specific skills to augment more general internal IT or global systems integrator skills. In both capacities, Analytic Services consultants can also provide an essential liaison between the customer’s strategy and implementation groups and SAP’s internal development resources, ensuring that projects stay in sync with what is current in the SAP portfolio as well as what is coming down the road. This requirement in turn helps define the skillset that Analytic Services typically brings to an engagement. This skillset includes deep business knowledge – both from a line of business standpoint as well from an industry standpoint – as well as project management and IT skills related to the SAP product set. In many cases Analytic Services consultants play the role of “sanity check” in helping ensure that business innovation is optimally implemented using SAP software and tools. These consultants are also responsible for helping move new capabilities – such as SAP HANA– into customer organizations by educating key stakeholders on the value proposition of these new technologies and assisting them in identifying ideal use cases for the new technologies. This highly strategic and consultative role means that Analytic Services deployments involve relatively few consultants relative to the teams being deployed for routine implementation and support functions. This further places the onus on these consultants to provide an extremely high relative value to their numbers. Analytic Services’ consultants and architects can be typically found assisting customers along four overall categories of functionality and service delivery: Traditional BI and Analytics Services: This group comprises the bulk of Analytic Services’ service delivery today, and includes support for classic business intelligence capabilities as well as enterprise performance management (EPM), governance risk and compliance (GRC), enterprise information management (EIM), and other key parts of the SAP business intelligence and analytics portfolio. The key value-add for Analytic Services in this category is the ability to take these traditional capabilities and apply them to the kinds of business and market change that were discussed in the previous section. In many cases, Analytic Services’ role includes helping unlock existing SAP capabilities and licenses that were underutilized and can be brought to bear in order to resolve a new or emerging problem or opportunity. New Strategic Initiatives: SAP HANA and Mobility: Helping SAP customers use new and emerging SAP functionality in the service of their business analytics requirements is a key capability of Analytic Services, and perhaps nowhere is this more important that in areas such as SAP HANA and mobility.
  • 8. The Case for SAP’s Analytics Services 7 Copyright 2013 EAC. The newness of SAP HANA and the underlying concepts of massive in-memory database storage and analytics are clearly virgin territory for virtually all of SAP’s customers, and understanding not the just the technical side of SAP HANA but the business applications of this new capability are a key value that Analytic Services can bring to the SAP customer base. Packaged Analytics: Last but not least, Analytic Services assists SAP customers with the optimization of SAP’s packaged analytics capabilities, which deliver pre-built analytics across a wide variety of vertical industries and lines of business. These include sales, marketing, planning, and other line of business applications as well as more industry-specific capabilities for retail, manufacturing, and pharmaceuticals, among many others. Analytic Services also assists customers with the implementation of Rapid Deployment Solutions (RDS), which are pre-packaged solutions that deliver net new functionality in a highly optimized deployment scenario that is designed to remove a significant amount of time and effort from the implementation process. Each RDS – which cover domains like sales, services, supply chain management, human resources, financial, operations, mobile and SAP HANA, among others – includes business intelligence capabilities that Analytic Services can assist in deploying. In addition, Analytic Services are called on to address more general IT and business related issues such as financial consolidation for the kind of merger and acquisition activities noted in the previous section. In these cases, Analytic Services is able to both provide the high-level consulting services needed to help navigate the complexities of business consolidation as well as assist companies using tools like SAP’s Business Planning and Consolidation to assist in the reporting and analysis of newly consolidated businesses.
  • 9. The Case for SAP’s Analytics Services 8 Copyright 2013 EAC. Analytic Services and Customer Value The successful application of these skills is evident in a number of key customer deployments, in this section we will look at three examples of Analytic Services’ role in delivering high-value services to SAP customers. Planning and Consolidation in the Mining Industry The challenge of improving and optimizing key strategic functions like planning and consolidation is a common issue among large enterprises, many of which in recent years have seen the need to significantly improve both the technical and business process foundations of these critical capabilities. This was the case for an Asian mining services company that has been a long-time user of SAP software. The company was having problems with its planning and consolidation process as well as the process’ underlying architecture: The company was relying on Excel spreadsheets and fair amount of manual “labor” in order to roll up a “holistic view” of the company’s operations, according to the company’s manager of business analytics. “We needed to think about a system that could shorten the cycle time and support the consolidation function and many other business processes,” the analytics manager said. “The process and work were scattered all over the country. It was difficult to manage our time and where each and every person was in the planning process.” As an existing SAP customer, this company realized that SAP’s Business Planning and Consolidation (BPC) product looked well-suited for the job, but while the company had already licensed BPC, it lacked the understanding or expertise in how to implement the product.
  • 10. The Case for SAP’s Analytics Services 9 Copyright 2013 EAC. Figure 3: SAP Performance Management SAP Performance Management Functional Domains (Source: SAP) “We didn’t have any internal skills for consolidating using BPC,” said the analytics manager. “We needed to increase our understanding of how it would work and we needed to provide a quality solution to our business people.” Going into the labor market to find the appropriate skills turned out to be problematic, and that’s when the mining company called on Analytic Services. “It was quite challenging to find people in the market who had this experience and could do the design and modeling work,” the analytics manager added. “It was natural that we went with SAP.” The Analytic Services team didn’t just provide BPC expertise, they were also skilled at helping to manage the process of getting the IT and business sides to work together to plan the switch to BPC. “We had a design phase where our business users explained their requirements, which we then passed on to SAP so that the architect could understand the pain points,” recounted the analytics manager. “We also had a set of workshops in order to get finance and IT to find a common language, and the architect was in the meetings and very much leading them.”
  • 11. The Case for SAP’s Analytics Services 10 Copyright 2013 EAC. Facilitating that face to face interaction between IT and finance was a critical factor in the success of the project. “IT had to get used to the language of finance, and vice versa,” said the business analytics manager. “I was looking to our people to be cross-functional.” The interaction paid off, she added said: “As we went along with the project I heard finance people starting to use IT terms and the IT people understood P&L structure. The business feels that the solution belongs to both of them, not just IT.” The analytics manager believes that the mix of talents that the Analytic Services consultant brought to the table was an important part of the project’s success: “We had a very capable person doing the design,” she added “He had a finance background and was very good at conceptual thinking as well.” The company is currently in a multi-phase rollout of BPC, and the initial results are “fairly positive”, the manager said. Cycle time for planning and consolidation is not only reduced, but the new system also allows the process to be extended to other departments, like marketing, much earlier than had been originally planned, and problems and issues are identified earlier and are easier to resolve. based on the success of the project, the company is looking to expand its use of BPC to cover planning functions as well, she added. M&A Drives Business Consolidation at Statoil Improving planning and consolidation was also the business driver of an analytics services engagement at a European oil and gas company that recently merged with another European energy firm. The acquisition prompted the acquiring company to begin looking at revamping its consolidation processes, which at the time were being handled by another vendor’s product. Integration to SAP’s Business Warehouse was a key problem, and having a single data structure for reporting and analysis was another. The other product “did a proper job but there was a manual upload, and when we brought the data back into the reporting environment it was hard to understand and use,” said one of the company’s performance managers. It was time for a change. “We saw that a new, modern consolidation tool would be beneficial from a holistic perspective, and from that perspective we would be able to manage our growth,” the performance manager. The company also wanted to streamline is management and analytics function, and redeploy human resources from the old system to more useful functions. “We had six or seven hundred users on the old system,” the manager added. “We wanted to remove non-accounting resources from that function and move into a more analytical world.” Risk management was also a consideration for Statoil. “There was a risk for inconsistencies and system crashes,” the manager added. “It was old and we needed something new.” “It was quite challenging to find people in the market who had this experience and could do the design and modeling work. It was natural that we went with SAP” Manager, Business Analytics.
  • 12. The Case for SAP’s Analytics Services 11 Copyright 2013 EAC. “We wanted someone who spoke the language and requirements of finance and could communicate to IT what we wanted.” Performance manager, European Energy Company The company put together an RFP for the project that included an important requirement: “The preferred supplier had to be able to provide the necessary resources to implement the project”, the manager said. This specifically included access to the vendor’s product development team, if necessary. “We didn’t want to buy something off-the-shelf and then have the vendor say they’re not responsible.” The project was awarded to SAP, due in large part to the combination of BPC and Analytic Services. “SAP was very willing to look for ways to enhance and improve the solution,” said the manager, “and we had found the best match with BPC.” The project plan called for Analytic Services to locate three consultants on site to assist the company. Getting the skillset right was an important ingredient for the project’s success. “One of the people they assigned us had an IT background and competency in accounting, but we wanted the opposite. We needed an auditor who had the ability to understand the different standards and the accounting requirements,” the manager said. “We wanted someone who spoke the language and requirements of finance and could communicate to IT what we wanted.” Analytic Services found that person, and the result helped put the energy company on target to reduce the amount of time spend on consolidation and reporting by 15-20%. “The savings have been put into quality work and analytics work that we weren’t able to do before,” added the performance manager. “We have a full overview of the information five days earlier than we used to have. We have more quality and comfort in the data when we communicate to the market.” The net result has been very positive for the company. “The project is regarded as a huge success and is the foundation for future development,” the performance manager said. Strategic Engagement In Pharmaceutical Manufacturing For other customers, particularly those with extensive internal IT resources or well-established relationships with third party service provides, Analytic Services can help ensure that the company’s business and technology roadmap is in synch with SAP’s product roadmaps, and vice versa. This is the role Analytic Services has played at a global pharmaceutical company based in Europe. “Their role is more on the strategic side,” explained the head of the company’s business intelligence center of excellence. “They have made it very clear what products we might be interested in, what will work and what won’t work. And they have also been engaged in our governance processes to make sure that we are going down the right route in terms of engaging with SAP support.”
  • 13. The Case for SAP’s Analytics Services 12 Copyright 2013 EAC. Having Analytic Services on board “helps makes sure we don’t do things that cause us problems. That’s why we haven’t had any extraordinary interventions, we’ve engaged with them from the start. It’s kind of an insurance policy for us.” Business Intelligence COE Head Key to Analytic Services’ role at the company is the sharing of industry best practices garnered from other Analytic Services engagements in the pharmaceutical industry. “They bring to us their experience with what has worked with other companies,” added the business intelligence COE head. “One of the key contributions was in helping establish the principles upon which our environment can be made scalable, consistent, and based on best practices. It helps us make sure we have the analytic services right so that when we want to do something more complex we have the foundation right.” Having Analytic Services on board “helps makes sure we don’t do things that cause us problems,” said the COE head. “That’s why we haven’t had any extraordinary interventions, we’ve engaged with them from the start. It’s kind of an insurance policy for us.” These are but a small sampling of the engagements that Analytic Services has undertaken for SAP customers. Analytic Services has also helped drive the use of SAP HANA and SAP’s mobility solutions, expanded the use of SAP in key domains such as planning and category management, advanced modeling and visualization, and helped thousands of customers better utilize their SAP software and provide a more return on these customers’ SAP investments. In each of these cases, Analytic Services’ ability to be the bridge between business and technology complexity and analytical success was a critical factor in enabling SAP customers to optimize their business environments and their use of SAP technology.
  • 14. The Case for SAP’s Analytics Services 13 Copyright 2013 EAC. Conclusion: Analytic Services as a Trusted advisor The growing requirements for advanced analytics are emblematic of the high-stakes game that enterprises play every day on a global scale. As the complexities of doing business intersect with the rapidity of business change, services like SAP’s Analytic Services become an essential part of the toolkit of the successful enterprise. Few companies can afford to maintain the level of expertise that an Analytic Services consultant can provide, nor is it cost-effective for many companies to have such expertise on staff. The ability to effectively in-source this expertise in the form an on-site Analytic Services consultant who can provide that unique combination of business knowledge and technical expertise while providing a much-needed connection back to the development organization is itself a best-practice that more and more SAP customers are signing up to deploy. The success of Analytic Services and its continued growth speaks for itself: this high-value, high-stakes role cannot be accomplished by generic IT consultants or fulfilled using off-shore resources. While each has its role to play in a successful SAP implementation, the examples in this report speak to the continued need to engage a variety of resources in the quest for a successful project. One of those resources needs to be a trusted advisor with a specialized skillset that can be used to zero in on the analytics requirements for SAP customers. The 2800 customer engagements in 2012 alone are perhaps the best evidence that this model is working well, very well, for SAP and its customers.