Six Strategies to Manage Complexity and Reduce TCO in SAP Environments

Six Strategies to Manage Complexity and Reduce TCO in SAP Wednesday April 21, 1-2pm Central Frank Powell Chief Operating Officer

Symmetry’s 21st Century Approach to Managed Services Quality – proactive support delivered by US-based experts Accessibility – 24x7 direct access to your support team Affordability – highly competitive, fixed price contracts Lifecycle Support for any SAP application on any platform combination SAP NetWeaver Security design Implementation SAP certified Upgrade & / Basis & Support Hosting project support administration administration

Introducing Frank Powell Chief Operating Officer Symmetry

Agenda Sources of Complexity Evaluating the Cost of Complexity Six Strategies to Reduce Complexity

SOURCES OF COMPLEXITY IN SAP

The Landscape SAP Landscape DEV QAS PRD

The Landscape SAP Landscape ECC DEV ECC QAS ECC PRD BW DEV BW QAS BW PRD CRM CRM CRM DEV QAS PRD

The Landscape SAP Landscape Email ECC DEV ECC QAS ECC PRD EDI BW DEV BW QAS BW PRD Time Clock Payroll CRM CRM CRMPRD DEV QAS UPS

The Landscape SAP Landscape ECC DR BW DR Email ECC DEV ECC QAS ECC PRD CRM DR EDI BW DEV BW QAS BW PRD Time Reporting Clock Payroll CRM CRM Vendor CRMPRD DEV QAS Order UPS Entry Regulatory

The Landscape SAP Landscape ECC DR BW DR Email ECC DEV ECC QAS ECC PRD CRM DR EDI BW DEV BW QAS BW PRD Time Reporting Clock Payroll CRM CRM Vendor CRMPRD Internet DEV QAS Order UPS Entry DNS Routers WAN Regulatory Backup Domain Recovery

Sources of Complexity Number of systems required to run all the applications Each new APP needs a home Virtualization helps – but adds another layer of complexity Number of interfaces that need to be managed 3rd party Customer developed Network requirements Faster, faster, faster! Security demands SOX Regulatory High availability and Disaster Recovery Many times not clearly defined to meet requirements No “one size fits all” solution Managing vendor relationships in support of the environment

Sources of Complexity Changing business requirements Acquisition/divestiture Expansion Regulatory changes Required customizations (from standard SAP) A canned solution just doesn’t exist The canned solution is too expensive Evolving technology Virtualization Clustering Replication Number of disciplines required to manage it all Budgeting Personnel management

EVALUATING THE COST OF COMPLEXITY

Impact of Complexity and its Cost Its all Plumbing Even in a relatively simple system, once you start tugging on once piece, it affects all the other pieces Professional plumbers don’t like working on old systems and charge more for doing so, they’d rather work on new construction

Impact of Complexity and its Cost Ultimate complexity The human body has aspects of plumbing, but adds several dimensions such as organs (complex systems themselves), diet, medications, exercise, habits, environment, emotions ,etc. Doctors have many more variables in “managing” the human body Do you know of someone who takes 20 pills a day for health reasons who wonders if the pills have started to be the problem?

Impact of Complexity and its Cost Information Technology Somewhere in the middle But at some point the time and effort going into just managing complexity can start out weighing the benefit. Do an internal evaluation to ask yourself where these costs exist.

Communication Issues Developing silos are inevitable, but can be prevented Department to department Internal to external (vendors, consultants, customers, etc.) Lack of a common understanding Misunderstanding about how the entire system really works due to the silos of experience and knowledge Causes departments to pull in different directions “I thought that was my responsibility” vs. “that’s someone else’s problem” Staff turnover hurts tremendously Communication breakdowns have direct financial impact Left hand doesn’t know what the right hand is doing Repeat efforts and loss of efficiency Project scope creep

Cost of Management Cost of management is more than you realize – The more complex the system, the more management required Example: Cost of Management Weekly “status” meetings with: Basis, security, datacenter, and functional departments At least 3 vendors e.g. hardware, security support, project support, functional support, Basis support, hosting provider, SAP rep, 3rd party software rep. 7 hours of meetings x 50 weeks = 350 hours spent in meetings 350 hours = 43.75 days = 5 weeks!!! 5 weeks x IT director’s wage = $$$ Just to keep up with understanding your complex system! Can’t be eliminated, but what if it could be cut in half?

Cost of Management Lost opportunity cost – what could you have done with the extra time Start other initiatives Evangelize IT within your organization Drive innovation Mentor your team Go to training Or do a better job at… Contracts Budgets Reviews Reporting Project planning Etc…. There is real effort and cost at all levels managing a highly complex system

Cost to Projects Time and Money Poor communication between departments Poor communication with vendors It becomes difficult to understand all the nuances of a complex system Don’t know what you don’t know, or what you want until it’s too late…. Q: Why didn’t you tell me it could do that? Q: Why didn’t you tell me this was a bad idea? Q: Why didn’t you tell me this in the beginning? A: Because we didn’t know or fully understand!!!

Cost to Projects The real issue… Scope creep – what you thought you could do “quick and easy” turned out to be “complex and difficult” Over budget (More Time + Resources = Higher Cost) Missed deadlines Lost opportunity Extended vendor contracts Reputation effect Never on time Never on budget Never done right

Cost of Downtime Cost of downtime Real costs do exist What does an hour of downtime cost? Annual Revenue / 8760(hours/year) = Cost of an hour $1,000,000,000 / 8760 = $114,155.25 per hour A day of downtime is more than many companies spend on SAP support in a year

Cost of Downtime How much downtime can you afford before it starts to cost you money? “Just in time” nature of businesses means that companies that integrate your product into their manufacturing now face delays and losses. When customers can’t buy a Widget they go Widget Inc’s main competitor Many suppliers face penalties when deliveries timeframes/accuracy are not met (i.e. Automotive industry, Walmart) Hard to quantify “other” costs Loss of reputation Lost sales opportunities

Cost of Issue Resolution Regardless of the scope of the problem, reducing the time-to- resolution has a financial impact Printer in shipping department down – customer impact Getting tax documents out on-time – regulatory impact Manufacturing halted all together – across the board impact More complex environments by nature have longer issue resolutions times Time to resolution is key

Cost of Discovery How does complexity impact your Cost of Discovery Information gaps Misinformation Extra time to locate resources Extra time to bring new resources up to speed Cost of Discovery = ( Actual Time to Issue Resolution minus Time Issue Resolution Should Take ) x Cost of Downtime

SIX STRATEGIES TO REDUCE COMPLEXITY

1. Invest in Professionally Developed Tools Opt for professionally developed 3rd party tools and utilities rather than home grown programs or utilities Some development of small utilities ok, but avoid home grown: Backup recovery programs DR programs Single sign-on solutions Database interfaces outside of SAP API Time and effort to write and maintain home grown tools can be enormous Troubleshooting them is difficult for anyone other than the creator Poorly written documentation or no documentation No knowledge transfer if the creator leaves the company Inefficient programming or logic issues make enhancements difficult Generally no “support” for them (no one to call for help)

1. Invest in Professionally Developed Tools Although you may feel you have an “investment” in those home grown applications, look for jumping out points At upgrade time At budget time At a teachable moment

2. Standardize, Standardize, Standardize Platform Standardization Example Having ECC on Unix/Oracle and BW/CRM on Windows/SQL Multiple technical disciplines needed to support the environment Multiple vendor relationships and contracts Standardizing results in Reduced management overhead Reduced resources needed for support (staff, consultants) Leverage common toolsets and licensing ROI in converting not necessarily short Think of this as a long term strategy Avoid being in the position in the first place

2. Standardize, Standardize, Standardize Standardize custom code where possible Reports User exits Core mods (changes to standard SAP source code) Does SAP now have standard functionality to replace them? Leverage upgrade projects as an opportunity to standardize your platform and custom code Perform an analysis on whether the old custom code is even being used (RBE tool) Benefit from reduced maintenance costs! Customer code now part of standard Code that is no longer used Reduction in ABAP developer time

3. Rein in Over-Engineering Try not to over-engineer solutions Just because you can, doesn’t mean you should Example: Linux , Clustered, Oracle RAC, VM, implementation Still did not provide 100% uptime A DR solution may have been a better fit Over engineering Adds complexity Adds points of failure Increase troubleshooting effort (each part could potentially be the problem) Complicates your DR plan Many times adds a false sense of security Above all equals an overall increase in cost

3. Rein in Over-Engineering Strike a balance of meeting the requirements, maintainability and cost Evaluate whether the value of the added complexity outweighs the added risk and cost – not always an obvious answer Don’t avoid proven solutions – just be sure to use them where appropriate

4. Don’t Ignore Security Poorly designed security architecture results in: Huge maintenance workload for security staff Example 1 Department manager needs a change to their department roles. Then all the managers want it so support ends up with 15 changes Non sensitive transactions go into a common role that everyone gets Example 2 In a task based role architecture each role contains one function (e.g.) create purchase order. Staff require many, many roles to do their job Job based roles make it easier to assign someone everything they need to do their daily job Much greater risk of excessive access or segregation of duties violations E.g. – cut yourself a check, ship goods to your own home, see other’s social security numbers If a transaction is added to a role inappropriately then everyone who has it will have that access

4. Don’t Ignore Security Poorly designed security architecture results in: Difficulty knowing what access people really have and what risks actually exist Well architected security is easier to manage Presents few risks to the corporation Saves money: Time of security personnel Financial loss Reduced audit efforts

5. Consolidate Support Outsource technical support / project work to a team that has worked together before Too many vendors can create confusion – need clear lines of responsibility Tendency of “throwing it over the fence” Balance workload of internal vs. external staff Benefits of reducing the number of vendors include: Reduce management overhead of relationships Financial benefits from better deals on services / products Dealing with fewer vendors that know your environment and strategic goals Improved communications, reduction in knowledge gap issues Improved support, fewer issues, less downtime Lower cost of discovery

5. Consolidate Support Be cautious of using only one vendor Generally require long term contracts Base pricing sounds great until nickel and diming starts Lose leverage Feeling of being held hostage Fall into “group think” – the only way they know how No 3rd party keeping them honest

6. Consider a Hosting Solution Smaller organizations benefit from improved operations Larger organizations benefit from reduction in management headaches No need to develop expertise in commodity based services Dedicated support team has benefits Not a new name with every call Reduced cost of discovery A vendor that provides an integrated solution can keep costs down Hosting OS/DBA support SAP support 3rd party applications Project work

6. Consider a Hosting Solution Find a vendor that nicely fills the voids of your organization Determine where clear lines of responsibility can best be drawn Decide which functions don’t require intimate knowledge of your business

Final Thoughts Demand fixed price contracts They will force vendor to align their goals with yours Getting things done quickly Getting things done right Getting things done for the long haul Request support from the “same” resources Quality does not get enough attention Efficiency does not need to sacrifice quality Need to stay the course with a strategy Changing business requirements will force adjustment Constant retooling will not produce a desired result Evaluate, plan, execute, repeat!

Michael Haase Frank Powell 414-238-2341 414-732-2731 mhaase@sym-corp.com fpowell@sym-corp.com

Six Strategies to Manage Complexity and Reduce TCO in SAP Environments

by Symmetry on Jun 10, 2010

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Six Strategies to Manage Complexity and Reduce TCO in SAP Environments — Presentation Transcript