The Move From Operation to Innovation

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SAP Solutions and Services

THE MOVE FROM OPERATIONTO INNOVATION

CLEAR TCO MEASURES FOR BEST-RUNIT ORGANIZATIONS

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  4 Preface  5 How to Read This Document

  7  Executive Summary

 11 Chapter 1:

Complexity Reduction 11 System Landscape Consolidation 12 Consolidation of Data Center  13 Decommissioning of Legacy

Systems 14 Reduce the Number of

 Applications 14 Return to Standard1 6 Master Data Harmonization

18 Chapter 2:Execution Excellence

 18 Accelerated and LeanImplementation19 Accelerated and Lean Upgrades21 SAP Enhancement Packages 22 Minimize Downtime for

Maintenance and Upgrades 22 Infrastructure Virtualization 24 Archiving Optimization 24 Storage Cost Reduction 25 Performance Optimization 26 Optimizing the Printing Landscape 27 Automate Job Scheduling 28 Standardize and Automate Testing

 30 Implement Best-Practice ITSMProcesses (ITIL)

3 0 Establish Customer Center ofExpertise

 32 Establish Super User Concept 32 IT Service Productization33 Virtual Training and E-Learning

 36 Chapter 3:Sourcing Optimization

36 Integrated Service Delivery  36 Outsourcing and Out-Tasking 37 Other Selected Sourcing Options

38 Chapter 4:Business–IT Alignment

 38 Joint Business–IT Planning38 Joint IT–Business Project

Portfolio39 Eliminate Shadow or Hidden IT41 Service-Level Rightsizing and

SLA Optimization

 42 Chapter 5:Identify Your TCO Potential

 43 Chapter 6: Application LifecycleManagement (ALM) 43 Overview

 46 Contacts and Contributors

CONTENT

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This guide should be useful for improv-ing the ratio between operation andinnovation. Our intent is to help yourealize productivity gains and savingsby reducing TCO, regardless of whether you have already put some measures

in place or are contemplating the TCOtopic for the first time.

Your feedback is highly appreciated.Please do not hesitate to reach out tous at [email protected] with comments,suggestions, and to tell us what youliked and found helpful. 

Dear Reader,

In recent years, the IT departmentseems to have been relegated onceagain to a perceived status as a high-cost organization whose sole value is in

operating a technical and applicationinfrastructure. While “central” IT costsare very transparent to senior manage-ment, the business value provided by ITis often elusive. Focusing only on re-ducing cost will not succeed in shiftingthe perception to that of a key influencerof business processes and corporatestrategy. Nevertheless, without con-stantly seeking a more cost-efficient IToperation, any attempt to bring usersand management to the table for a dia-

logue about the business and respec-tive processes will be a nonstarter.

Our ongoing conversation with custom-ers has indicated the importance oftotal cost of ownership (TCO). In closecollaboration with our customers, wehave gained more transparency on thekey cost drivers to better understandthe building blocks of a comprehensiveand effective TCO program that canbenefit individual businesses.

Now, SAP has started to put a range ofcomprehensive measures in place thatshould help customers identify potentialimprovements, free capacity, promoteinnovation, and drive business processimprovement:

Enhancement packages – Evolving theconcept from a “must upgrade” modelto a choice, applying technology for aless disruptive, less costly, less risky way to provide new functionality for

business innovation

End-to-end support – Providing sup-port not only for operation but through-out the entire application lifecycle,across applications, the full businessprocess, and respective technologystack. Ten best-practice processes to

support and manage both projects andsolutions throughout the entire applica-tion lifecycle are available. With theSAP® Solution Manager applicationmanagement solution, a comprehen-sive portfolio of tools for the implemen-tation, operation, and optimization ofSAP applications is available, helpingminimize risk and reduce TCO.

Consistency – Simplifying consistentintegration across the range of SAP

products – particularly in terms of thedata model, process model, user inter-face, and technology. This approachcan be considered a key lever to re-duce TCO by offering fewer interfacesand reducing effort to align applica-tions, leading to better end-to-endbusiness process automation.

Helping our customers apply new tech-nology is an ongoing focus within SAP.Even more so, we strive to help themintroduce new functionality to drive

process improvement and automation, while ensuring a stable and technologi-cally consistent application. Customerfeedback, even very early in the devel-opment process, is one of many mea-sures applied to address TCO andsubsequently help the IT departmentmove the senior management dialoguefrom cost to business value. SAP has astrong ongoing commitment to driveTCO reduction and spot new opportu-nities for cost reduction.

PREFACE

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How to Read This Document

This practical guide describes morethan 25 measures for reducing TCO,each of which details an area within thebusiness or IT landscape that you can

analyze and significantly improve. Theguide is structured into four sections, which represent the four key leversdriving TCO reduction within anorganization.

The executive summary describesthese four key levers and aims to give you a high-level understanding of theTCO-reduction measures illustratedmore fully in the document. The intentof the executive summary is to show

how CIOs in particular can take practi-cal steps to achieve substantially lowerTCO across their organization; but ofcourse, all readers will benefit fromthis chapter.

Chapters 1 to 4 are addressed to ITmanagers who are interested in explor-ing these topics in greater detail. Theintention is not that users will read thisguide from beginning to end, but that you, as an experienced IT manager, will pick the subchapters that are most

relevant for your company’s specificsituation.

Each subchapter within Chapters 1 to 4is related to one measure to reduceTCO and is structured in three parts:1. Underlying pain points, issues, and

business needs2. Proposed measures and best

practices3. SAP offering: Links to sources of

further information to make the

document more helpful

Chapter 5, “Identify Your TCO Poten-tial,” helps you with the first practicalsteps and introduces the “TCOdiscovery assessment” service.

Chapter 6, “Application LifecycleManagement,” shows how applicationlifecycle management embraces alloperations-related TCO measures.

Legend:

 = Link to another section within thedocument(S) = SAP service

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Complexity Reduction

IT complexity has grown enormouslyover the past decades and has causeda significant increase in TCO. Many or-ganizations operate within the contextof heterogeneous technologies; largenumbers of applications, systems, andinterfaces; and fast-growing volumes ofdata, as well as the overall increase ofIT penetration of the business. While

assuming there was a good rationalebehind any step that led to a company’scurrent IT situation, IT complexity maybe considered as a hidden tax on IT value. Reducing complexity not onlyhelps CIOs reduce TCO but also tolower risk and regain agility. The follow-ing measures help manage complexity:• System landscape consolidation –

reducing the number of operated sys-tems, including productive, test, anddevelopment systems, in order to

better operate and maintain thesesystems with less effort

• Consolidation of data centers• Decommissioning of legacy systems• Reducing the number of applications• Return to standard – modification

clearing and custom developmentreduction

• Master data harmonization – consoli-dating master data and managing itconsistently across your enterprise

Execution Excellence –

Doing Things Right

Continuously striving for executionexcellence is a prerequisite for movingfrom good to great, and a key successfactor of the best-run IT organizations.The winning formula is really simple:optimize IT execution by improving ITprocesses, apply lean thinking, main-tain best practices, train IT staff, lever-age new technologies and innovation,and benchmark to learn from others.

The following measures help achieveexecution excellence:

• Accelerated and lean implementation– for example, with ASAP methodolo-gy and a global template approach

• Accelerated and lean upgrades• Enhancement packages• Minimized downtime for maintenance

and upgrades• Infrastructure virtualization: applica-

tion instances can be spread acrossavailable server resources to maxi-mize infrastructure utilization

• Archiving optimization• Storage optimization and data volume

management• Performance optimization• Optimized printing landscape• Automated job scheduling• Standardized and automated testing• Implementation of best-practice IT

service management (ITSM)processes (ITIL)

  A  Complexity Reduction

• # Technologies• # Applications• # Systems and interfaces• # Data

B Execution Excellence• Improve the things you are

already doing• Lean IT: reduce waste

C Sourcing Optimization• Optimize IT supply chain

(hardware/software vendor; service provider)

D Business–IT Alignment• Run IT as a business• Establish IT as partner of

business

Key Lever

FinancialImpact

Realizationtime and effort

Today 

 Technologyinnovation(hardware/software)

Tomorrow 

High

High Future

Medium

Medium

Low

Low

Complexity

ReductionBusi-ness–IT

 Align-ment

ExecutionExcellence

Sourc-ingOptimi-zation

Figure 1: Key Lever for IT Cost Saving and Optimization

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• Customer Center of Expertise team –an organizational structure that drivesintegrated quality management, en-abling transparency across businessand IT units when faced with criticalchallenges in SAP solution operations

• Establish the super user concept: asuper user is a talented user withinan organization who is brought into aposition of leadership of one or moreIT systems, supporting and instruct-ing users, answering how-to ques-tions, and making acceptance of thetechnology less challenging

• IT service “productization”: a clearlydefined service – for example, on priceand deliverables – where the contentis standardized and reused (ideally

scaled to mass volume adoption)• Virtual training and e-learning

Sourcing Optimization

It is a fact that IT departments heavilyrely on external providers to run IT anddeliver IT services to the business. Inaddition, IT outsourcing continues to bea trend and an important factor in en-abling and delivering IT services to thebusiness. Most IT organizations of bigcompanies manage dozens of IT suppli-

ers, representing a significant share ofthe IT budget. Thus, optimizing the ITsupply chain is a major factor in reduc-ing TCO. The following measures helpoptimize sourcing:• Integrated service delivery – Offering

and delivering IT services which com-bine different options for differentdimensions: local versus remote ser- vice delivery; local, regional, or globalstaffing; bill of services versus bill ofresources

• Outsourcing or out-tasking• IT shared-service center • IT co-sourcing: outsourcing IT func-

tions into an independent organiza-tion within the boundaries of aconcern (captive outsourcing), or

together with partners (partnering),in order to realize synergies while stillkeeping control of the IT-providingcompany 

• Business process outsourcing –Contracting out the operations andresponsibilities of specific businessfunctions, including the related infor-mation technology, to a third-partyservice provider 

Business–IT Alignment –

Doing the Right ThingsIn the TCO game, forward-thinkingCIOs not only concentrate on measuresto reduce TCO, but aim to avoid or min-imize costs before they actually occur.These CIOs not only manage IT supplybut also IT demand. This requires run-ning IT as a business, and also runningIT with the business, helping the busi-ness achieve its objectives efficientlyand cost-effectively. The best-run ITorganizations establish IT as a partner

of the business. Actively managing thedemand for IT and setting the rightpriorities based on business needs isa major force in reducing TCO andrequires tight business–IT alignment.These measures enable better busi-ness–IT alignment:• Joint business–IT planning – Plan and

determine investments in the applica-tion landscape, operations, mainte-nance, infrastructure, and other ITservices, in strong alignment with the

business

• Joint IT–business project portfolio –Plan and manage the project portfolio jointly 

• Transparent, activity managed IT –Eliminate shadow or hidden IToperations

• Service-level rightsizing and optimiza-tion of service-level agreements(SLAs) – Assess an organization’sSLAs, checking to see if they reflectcurrent business needs and if theybalance the benefit and the effortrequired to ensure the defined ser- vice level

According to a McKinsey &

Company survey,

“Investments in IT-enabledbusiness processes can deliver

up to 10 times the impact of

traditional IT cost reduction

efforts.”

 J. M. Kaplan, R. P. Roberts, and J. Sikes,

Managing IT in a Downturn ,

McKinsey & Company, 2008.

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CIO’s Challenge: Taking the RightMeasures at the Right Time

During the past two years we have rec-ognized an increasing demand fromour customers for guidance and on-sitesupport to identify potential for TCOreduction and set up programs accord-ingly. Together with selected customers we have worked on these projects andevolved a successful approach andmethodology. Based on these experi-

ences SAP has developed the “TCOdiscovery assessment” (see Figure 2).

However, there is no one-size-fits-allsolution. Designing a best-fit actionplan to reduce TCO requires the CIO totake into account influencing factorssuch as business priorities, level of

competition, maturity of the IT organi-zation, TCO measures already taken,and so forth. But our findings revealeda set of common patterns, and a num-ber of measures and best practices,that the best-run IT organizations havesuccessfully undertaken in recent years.

In the following chapters we share with you proven practical measures toreduce complexity and drive execution

excellence, optimizing the IT supplychain and better aligning business andIT. Using these measures, organiza-tions reduced total cost of ownershipsignificantly, while enhancing IT produc-tivity and maintaining and even improv-ing business agility, innovation, andbusiness continuity.

Figure 2: TCO Discovery Assessment

During the past two years we have recognized anincreasing demand from ourcustomers for guidance andon-site support to identifypotential for TCO reductionand set up programsaccordingly. Together with

selected customers wehave worked on theseprojects and evolved asuccessful approach andmethodology.

Task 

KeyResults

• Benchmarking• Gather pain points

• Map customer cost structureon SAP TCO model (optional)• Determination and

documentation of TCO

• Pain points• TCO benchmarks/survey results• TCO focus areas for further

analysis

• Analysis of major IT cost drivers• Identify IT cost-saving and optimi-

zation opportunities• Deep dive on selected areas

• Portfolio of IT cost-saving andoptimization opportunities

• Proposal for action to reduceTCO

• TCO road map

  Data Collection1  Discovery 2  Action Plan3

• Define recommendation• Develop actions to realize IT

cost-saving and optimizationpotential• Develop high-level road map

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System Landscape Consolidation

System landscape consolidation isaimed at reducing the number of oper-ated systems, including productive,test, and development systems, in

order to better operate and maintainthese systems with less effort.

There are several causes that canmake system landscape consolidationdesirable or necessary. For example,after acquiring a company, the custom-er may have to deal with much highercomplexity in the IT landscape, and canthen face the challenge of centralizingand simplifying it. Alternatively, the op-erating costs for the system landscape

may appear high, and the customercould see potential in reducing the totalcost of ownership by simplifying acomplex IT landscape, or by unifyingbusiness processes and using fewersystems as the standardized platform.

Proposed Measures and BestPracticesDifferent approaches can lead to aunified central solution:• Setting up a multi-client system – 

Clients from various source systems

are transferred into a central targetsystem. This approach allows quickcost reduction (“TCO to go”) andsimplification of system complexity.

• Creation of a single-client system – Merging several source systems intoa harmonized single-client systemenvironment to enable unified masterdata and company-wide harmonizedbusiness processes.

SAP Offering

SAP offers several products andservices to support a unified centralsolution:• SAP System Landscape Consolida-

tion and Harmonization services (S)– Facilitates the planning and realizingof system consolidation projectsby creating flexible and simplified ITlandscapes that reduce system re-dundancies, lower total cost of own-ership, and decrease administrativeand maintenance efforts.– SAP System Landscape Consolida-

tion and Harmonization services– Optimization service for SAP ERP

Human Capital Managementsolution

– Implementation service for SAPTest Data Migration Serversoftware

– Implementation service for SAPNetWeaver® Information LifecycleManagement component

• SAP Organizational StructureChange services (S) – These servic-es support the realization of mergers,acquisitions, divestitures, and internalreorganization by fully aligning systemlandscapes, and as a result, gaining

more transparency for end users andenable customers to improve reporting.– Business unit reorganization

service– Realization service for mergers and

acquisitions• SAP Data Harmonization services (S)

– These services involve using accu-rate data as a crucial factor in helpingcustomers successfully operate abusiness; analyzing and harmonizingdata on products, customers, and

partners; and with this, unifying finan-cial and controlling processes. Thecustomer can then introduce a corpo-rate currency or replace an existinglocal currency.– Unification service for SAP ERP

Financials solution– Unification service for logistics and

operations management in the SAPERP application

– SAP Currency Conversion services• SAP BusinessObjects™ enterprise

information management solutions –

These solutions can help you deliverintegrated, accurate, and timely data– both structured and unstructured –across your enterprise.

CHAPTER 1COMPLEXITY REDUCTION

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Consolidation of Data Center

The data center is the main strategicfocus of an organization’s computingenvironment. As such, the data centeris a prime starting point when consider-

ing lowering TCO by reducing its com-plexity, simplifying its operation, andimproving its manageability.

Consolidation may be desirable where,for example, costs are high when oper-ating several infrastructure facilities atseveral local sites. Or there may bepressure from the business (the CFO)to meet market prices and benchmarks, when compared to the leading out-sourcing provider.

There may be underutilized infrastruc-ture at local sites or, conversely, a highnumber of data centers causing unnec-essary downtime by overly intensiveefforts to ensure continuity betweenthem. Too many, or overly complex,data centers can also result in difficultycontrolling cost and in designing andimplementing IT architectures andservices.

Local operations processes can hinder

a streamlined handover from projectand program management to opera-tions, delaying plans to go live, andpossibly leading to unstable operations.Similarly, a local operations team withan incomplete skill set can cause coststo rise at project implementation.

Proposed Measures and BestPracticesThe following approach can help withdata center consolidation:• Reduce the number of data centers

to maximize resource utilization (infra-

structure, workforce) and minimizecost

• Merge data centers, aligning theirgeographical distribution with busi-ness requirements (for instance, afollow-the-sun approach)

• Use disaster and recovery sites ascapacity pool for nonproductionenvironments

• Employ central or common data-center governance

• Introduce harmonization and stan-

dardization of operations processes• Employ  virtualization – sharingcomputer resources between applica-tions on an as-needed, dynamic ba-sis, as demand fluctuates during theday 

• Employ outsourcing or out-tasking • Leverage cloud computing (internal

or external) to cover load peaks• See also system landscape

consolidation

Under the supervision of the GlobalCompetence Center InformationServices, BASF Group finalized in2008 an IT project with the aim ofreducing the IT costs for operations

and application support by consolidat-ing the group’s SAP® applications.Besides system cleanups, releaseupgrades, functional and processenhancements, and a Unicodeupgrade, BASF migrated over30 companies within the given timeframe.

“With the harmonization of

processes and data, we saved

BASF significant costs in busi-ness operations and through

merged and replaced systems,

including third-party systems.

This reduced the overall IT

costs for the group and user

support by a two-digit figure

of millions of euros annually.”

 Thomas Rudolph-Gary 

Vice President, Enterprise Systems

BASF Group

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SAP OfferingSAP offers several products and ser- vices to support a data centerconsolidation:• SAP Quality Center application by HP 

– Provides activities essential to qual-

ity management, including managingrequirements and defects as well asrunning tests and reports, in a single,Web-based application

• Run SAP methodology  (S) – Helpsmaintain process and organizationalgovernance through consolidation

• Hosting provider certif ication, if exter-nal business is being addressed

Decommissioning of LegacySystems

Most organizations have legacy sys-tems associated with high costs of op-eration and support. This can includesystems that are no longer used in aproductive way but contain data thatneeds to be available on demand froma business or legal point of view. Asthe database grows and the system in-creases in complexity, data retentionmanagement costs can rise.

These systems can consume resourc-

es unnecessarily and, in addition, theycan have an increasing impact on theperformance of core systems. Theanswer is decommissioning.

Proposed Measures and BestPracticesThe following approach can help withdecommissioning of legacy systems:• Retire business applications that

have rarely or not been used over the

past year • Explore different approaches, de-

pending on usage and need. Systemsthat are no longer required in a pro-ductive mode may be shut down.Other systems may be replaced bynewer applications, phased out grad-ually, or shifted into a central reten-tion warehouse.

• Make available data systems that arestill needed (that is, those with activeretention time or with legal require-

ments) in a central retention ware-house, with data retention managedautomatically

• Archive systems no longer needed ina productive mode

SAP OfferingSAP offers several products and ser- vices to aid in decommissioning legacysystems:• SAP NetWeaver Information Life-

cycle Management – Enables compa-nies to decommission redundant SAP

systems while preserving full auditingand reporting capabilities for storeddata, and allows you to set informa-tion retention rules

• Implementation services for SAPNetWeaver Information LifecycleManagement (S) – Helps automatethe management of your data so that you comply with internal, external,and legal requirements for its reten-tion and destruction

– Implementation workshop for SAPNetWeaver Information LifecycleManagement

– Analysis service for acceleratedsystem decommissioning

– Implementation service for acceler-

ated system decommissioning

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Reduce the Number of Applications

Many organizations have heteroge-neous and complex IT system land-scapes with up to several thousand

different applications that have grownover time, many of them rarely usedor with only a few users. This situationoften occurs as a consequence ofmergers and acquisitions, and can leadto a complicated picture of redundantbusiness logic, inconsistent data, andcomplex interfaces across multipleapplications, with several differenttechnologies underlying it all.

The cost of operations is high in such

circumstances, with multiple uniqueskill sets required for the maintenanceand support of the different operatingsystems and hardware and softwaretechnologies. In addition, the cost ofimplementing new functionality is alsosignificantly higher under theseconditions.

Reducing the number of applicationssimplifies the system landscape andlowers the cost and effort of IToperation.

Proposed Measures and BestPracticesThe following approach can help withreducing the number of applications:• Decommission applications that have

rarely or not been used over the past

 year• Consolidate systems, applications,

and instances, and replace legacyand individual one-off software instal-lations through the implementation ofstandard software

• Harmonize operating systems, inter-faces, and master data, leading to re-duced procurement, implementation,rollout, maintenance, and supportcosts

• Introduce standardization of architec-

ture, frameworks, technology, anddevelopment across the organization,leading to reduced procurement, roll-out, maintenance, and support costs

• Introduce and strengthen central gov-ernance of IT strategy, processes,and support structures

SAP OfferingSAP offers several products and servicesto help simplify the system landscape:• SAP NetWeaver Information Life-

cycle Management – Enables compa-

nies to decommission redundant SAPsystems while preserving full auditingand reporting capabilities for storeddata, and allows you to set informa-tion retention rules

• Implementation services for SAPNetWeaver Information LifecycleManagement (S) – Helps automatethe management of your data so that you comply with internal, external,and legal requirements for its reten-tion and destruction

– Implementation workshop for SAPNetWeaver Information LifecycleManagement

– Analysis service for acceleratedsystem decommissioning

– Implementation service for acceler-

ated system decommissioning• SAP BusinessObjects enterprise

information management solutions –Can help you deliver integrated, ac-curate, and timely data – both struc-tured and unstructured – across yourenterprise

• SAP NetWeaver Master DataManagement component – Supportscustomer data integration, globalspend analysis, global data synchro-nization, product content manage-

ment, mergers, and acquisitions• SAP NetWeaver Identity Manage-ment component – Addressesaccess and provisioning issues facinga typical enterprise, creates a newopportunity for integrating businessprocesses, and helps you integratesystems in a heterogeneous ITenvironment

Return to Standard

Most customers modify or enhance

their standard software in some wayto tailor solutions to their individual re-quirements. This can lead to high oper-ational costs because it can be difficultto identify custom development objectsthat your system no longer uses. Up-grades to an organization’s existing ap-plications, including support packagesand patches, can require expensivemanual modification effort, with highongoing development, support, andmaintenance costs. Modifications are

Reducing the number ofapplications simplifies thesystem landscape andlowers the cost and effortof IT operation.

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sometimes difficult to understand andmanage, and can lead to inefficientbusiness processes and subparperformance.

Modification clearing and custom devel-

opment reduction is the way back tostandard: it reduces operation costssignificantly.

Proposed Measures and BestPracticesThe following approach can help withreturning to standard:

Modification clearing:• Phase 1: Undertake technical analy-

sis of the modifications

• Phase 2: Undertake detailed analysisof business processes with referenceto modifications, to leverage function-ality and technology available in anactual (or future) SAP release

• Phase 3: Adjust modificationsaccording to results in Phase 2

Custom development adjustments:• Replacement of custom develop-

ments or “downports” from interme-diate releases by standardfunctionality 

• Code modernization for custom code• Implementation of latest technologies

to manage custom code moreefficiently 

SAP OfferingSAP offers several products and ser- vices to aid in returning to standard:• Custom development management

cockpit (part of SAP Solution Manag-er) – Supports the handling andorganization of custom developmentobjects in SAP systems using ABAP™

programming language, identifyingobsolete developments in your SAPsystem, and identifying the effect anupgrade can have on customdevelopments

• Code review service for customcode (S)

• Unused custom code service (S)

“What’s more, we’ve reduced the number of in-house

modifications of our SAP applications and are using standard

functionality wherever possible. This – and the easy adoption

of SAP enhancement packages for SAP ERP – will contribute

significantly to reducing total cost of ownership of the

company’s SAP software.”

Bruno Dannapel Head of Organization and Information for Global Product Supply, Bayer HealthCare

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Master Data HarmonizationIn most organizations, master data livesin multiple systems and applications. Incircumstances where each set of dataevolves independently and conflicts with data in other silos, harmonizationis needed.

Master data may be unmanaged.Unmanaged master data is notoriouslyinaccurate, inconsistent, and incom-plete, and leads to poor business deci-

sions, or even business disruptions. Access to master data may be poorand inflexible during organizationalchanges (for example, mergers andacquisitions and carve-outs). And, when running the business with part-ners, there may be inefficiencies andunexploited cost-savings potential(for example, demand aggregationfor similar parts across severalbusinesses).

Data quality may not be monitored con-tinuously across the system landscape,and manual effort may be required forad hoc reporting and incident andproblem management. The result is in-efficient business processing and dis-satisfied customers. The answer is toconsolidate your master data andmanage it consistently across yourenterprise.

Proposed Measures and BestPractices

The following approach can help withharmonizing master data:• Establish a master-data governance

strategy • Define a standardized and harmo-

nized (common) data model thatcomprises globally relevant data byidentifying master data attributes

“With the harmonization of

processes and data, . . . we

reduced the overall IT costs

for the group and user sup-port by a two-digit figure of

millions of euros annually.”

 Thomas Rudolph-Gary

Vice President, Enterprise Systems,

BASF Group

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• Improve data quality by setting upperiodic monitoring based on pre-defined metrics

• Reconcile the identified master-dataquality issues in the dimensions of:– Completeness

– Correctness– Consistency – Currency – Compliance– Uniqueness

SAP OfferingSAP offers several products and ser- vices to support master dataharmonization:• SAP NetWeaver Master Data

Management component – Supports

customer data integration, globalspend analysis, global data synchro-nization, product content manage-ment, mergers, and acquisitions

• SAP NetWeaver Identity Manage-ment component – Helps companiesmanage users’ access to applicationssecurely and efficiently, while meet-ing audit and compliance require-ments. With SAP NetWeaver IdentityManagement you can increase effi-ciency and reduce operational costs with central management of user

identities across multiple heteroge-neous applications, and employ userself-service features and a rules-driven workflow and approvalsprocess.

• Evaluation of master data governance (S) – Aids customers who wanthelp defining, building, and applying agovernance framework for dataquality 

• SAP BusinessObjects DataServices software – Provides onedevelopment, runtime, and manage-ment environment that allows youto integrate, transform, improve, anddeliver data anywhere, at any

frequency • Data quality health assessment (S)• Data quality monitoring (S)

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CHAPTER 2EXECUTION EXCELLENCE

 Accelerated and LeanImplementation

More than ever in today’s tough anduncertain economy, companies expectshorter project implementation timesand transparent, explicit implementa-tion processes to help achieve a lowerTCO. Getting a rapid return on invest-ment is more critical than ever. Onesolution is to enable more efficientimplementation.

Some of the issues that can be solved with more efficient implementation in-clude, for example, failure to achievethe business goals of line-of-business(LOB) owners, loss of focus, and bud-get and schedule overruns. Heightened

efficiency can also address other con-cerns such as the process of aligningbusiness requirements with corre-sponding areas in SAP software, or toidentify the required installation andconfiguration activities. Or it may sim-ply be that implementation projects donot result in a return on investment.

Proposed Measures, Best Practices,and SAP InnovationsEasy-to-implement solutions are

increasingly becoming a top priority.Solutions must be appropriate and eco-nomical, both in terms of size and com-plexity. A critical factor for companiesmaking decisions on IT spending istime to value. There is a drive to simpli-fy IT environments and ensure tangibleROI for lines of business. ASAP meth-odology and templates can all play apart in producing faster, leaner solu-tions that are fit for purpose and offer value for the money.

 ASAP Methodology forImplementationThe ASAP methodology for implemen-tation is the SAP road map for theimplementation of SAP solutions, andpromotes phased, cost-effective, andspeedy implementation. It provides aproven, comprehensive, repeatable,and rich implementation methodologyto streamline projects and lower costs.

 ASAP methodology supports project

teams with templates, questionnaires,

There is a drive to simplify IT environments and ensuretangible ROI for lines of business. ASAP methodologyand templates can all play a part in producing faster,leaner solutions that are fit for purpose and offer valuefor the money.

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checklists, and tools, including guide-books and accelerators. It empowerscompanies to exploit the power of SAPsolutions by providing efficient guid-ance for service-oriented architecture(SOA), business process management,

and traditional implementation projects,as follows:• Shorten the blueprinting process with

clear guidelines for structuring theblueprint workshops, including accel-eration techniques and design workthrough use of preconfigured contentor a show-and-tell approach, forexample

• Receive efficient guidance for busi-ness process management projectscovering to-be design and solution

transformation as well as build, run,and landscape development opera-tions for SOA projects

• Establish more effective projectgovernance, risk management, andquality management through consis-tent application of structured qualitygates and management processesaligned with PMI standards to keepthe project on track

• Conduct workshops to agree on aclear definition of value and establishexact business goals; perform contin-

uous measurement against thisbenchmark throughout the implemen-tation lifecycle

• Use agile techniques in your imple-mentation project for an iterativeapproach and early validation cycles

Global Template Approach A template is a standardized, reusablesolution encompassing process, data,and IT, which takes into account globaland local requirements. A “master” en-

 vironment is preconfigured by a central

organization where the predefined set-tings serve in other parts of the compa-ny as a template for the implementa-tion. A template has these features:• Common processes and master data

– for example, business processes,

corporate reporting, customer and vendor master, and so forth

• Common system design – for exam-ple, organizational structure, configu-ration, and so forth

• Common deployment architecture –for example, development, qualityand productive system landscape,and software lifecycle management

• Common governance, guidelines,and procedures – for example, solu-tion governance on a global and local

level, standardized training anddocumentation, and implementationmethodology (such as ASAPmethodology)

Use templates in SAP Solution Manag-er to streamline the global rollout alongstandardized business processes.

Other Related Measures Additional ideas for a lean implementa-tion include:• Rapid design through preconfigura-

tion or prototypes to aid visualizationand mutual understanding, and toreduce the margin of error duringrealization

•  Standardized and automatedtesting 

 Accelerated and Lean Upgrades

Upgrades are perceived by somecustomers as costly and complex long-term projects because of the large

number of people involved, the poten-

tially long project duration, and thesometimes significant testing effort.Issues often cited by companies as themost challenging during the planningphase of an upgrade are estimation ofthe upgrade cost and effort, followed

by defining the business case, definingand allocating project team and re-sources, and minimizing downtime.

However, with comprehensive servic-es, tools, and content, you can lowerthe risk involved in an upgrade, acceler-ate and simplify its implementation, andhelp reduce mid- and long-term costs.

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Proposed Measures and BestPracticesDue to its low costs and manageableimpact, the majority of SAP customersfirst execute a technical upgrade toSAP ERP 6.0 (often including the latest

enhancement package) without any im-mediate functional enhancements. Thishelps lower the impact, risk, and dura-tion of the project as much as possible.On average, the upgrade project fromSAP R/3® 4.6C software to SAP ERP6.0 lasts 21 weeks, but the averagebusiness downtime is only about48 hours. In most cases customersexecute an upgrade of the operatingsystem and database release prior toor jointly with the upgrade. Some cus-

tomers take advantage of the businessdowntime and change to a better-suitedhardware vendor or database provider, while some even switch to a new datacenter or a new service provider. So inthe first step, the technical upgrade,significant savings can be realized.

In a second step, customers expandthe processes supported by the newSAP ERP 6.0 application, which pro- vides new capabilities for the customer.

 An upgrade project offers the chanceto implement changes that help reduceTCO in both the short and long term inthe following areas:•  Modification clearing •  Custom development 

adjustments• Implementation of development gov-

ernance processes to reduce futuremodifications and customdevelopments

•  Test automation

•  System landscape consolidation 

“For upgrading our SAP systems to new releases, we ordered

several sessions of the SAP GoingLive Functional Upgrade

service that were performed by SAP Active Global Support. …

With these services we can save at least two business days persystem, which would be necessary for deeper administration

tasks.”

Rüdiger Hodapp, Leiter Anwendungssysteme, HAHN & KOLB Werkzeuge GmbH

 A recent upgrade to the SAP® ERPapplication by the French companyPolyrey SAS demonstrated how it is

possible to achieve significant totalcost of ownership (TCO) savings when upgrading. Using proven SAPmethodologies and implementationbest practices, Polyrey deployed itsupgrade on time and within budget,paving the way for enhanced custom-er service and ongoing savings.

The result was that Polyrey achievedseveral significant TCO savings. Thesoftware upgrade was implementedfaster than scheduled, and deployed

 within the planned budget. The appli-cation landscape was streamlined,

and custom code was replaced withstandard software wherever possible. Also, training time was reduced

owing to the user-friendly interface.In addition:• The number of technical interfaces

 was reduced by 20%.• The time to extract and analyze

financial closing data was reducedby 50%.

• The number of lines of logistics-related custom code was reducedby 35%.

Source: SAP Customer Success Story“Polyrey – Increasing Business Value withStrategic Design”

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• SAP Service Marketplace with thecomplete portfolio of upgrade tools(service.sap.com/upgradetools)and upgrade services(service.sap.com/upgradeservices)

SAP Enhancement Packages

To further simplify the way customersmanage and deploy new software func-tionality, SAP introduced its enhance-ment package strategy for SAP Busi-ness Suite 7 software. SAPenhancement packages relate to thecore applications of SAP BusinessSuite and are designed to acceleratethe delivery of innovation to SAP cus-tomers. Enhancement packages have

the same maintenance duration as the

underlying core applications and pro- vide customers with increased ROI, asthey deliver new and improved func-tionality to boost the efficiency andflexibility of existing businessprocesses.

 A survey of responses to the “Enhance-ment Package Experience Database”2 found that total average project dura-tion was reduced from 21 weeks to7 weeks when the enhancement pack-

age method was used, as opposed totraditional upgrades.

In the future SAP intends to continue todeliver enhancement packages for thecore applications, making it unneces-sary for companies to engage in large,potentially disruptive and expensiveupgrade projects. As a result, organiza-

tions can isolate the impact of softwareupdates and bring new functionalityonline faster through shortened testingcycles.

SAP recommends that customers in-clude the latest available enhancementpackage that is in unrestricted ship-ment in their upgrade to SAP ERP 6.0.Customers who are already runningSAP ERP 6.0 (with or without an en-hancement package) are advised to in-

stall the latest enhancement packagesalong with their (existing) planned main-tenance. The advantage is that the cus-tomer gets the most recent correctionsand legal changes within one project,and is furthermore enabled to activatenew functionality flexibly as the busi-ness needs it.

 After installation, enhancement packag-es provide a selective activation ofbusiness functions at any time, as driv-en by business needs. Functionality re-

quired by the business can be selectedand activated: functionality not requiredby the business will remain dormant.

SAP OfferingSAP offers several products andservices to support accelerated andlean upgrades:• Technical upgrade planning for SAP

Business Suite software (S) – Using

a standardized and proven approach,analyzes the specific upgrade situa-tion and calculates the adjustment,test, basis, and project managementefforts for the technical upgradeproject

• SAP Upgrade Assessment service (S)• SAP GoingLive™ Functional Upgrade

Check service (S) – Optimallyprepares your system to operate effi-ciently in the upgraded environment;usually consists of two service

sessions, an analysis session and a verification session• SAP Upgrade Road Map content in

SAP Solution Manager and in theSAP Service Marketplace extranet –Provides SAP’s standard methodolo-gy for planning and executing an SAPupgrade project, with best practicesand templates for project manage-ment, as well as functional and tech-nical aspects facilitating key tasks ofthe entire project team

• Custom development management

cockpit (part of SAP Solution Manag-er) – Supports the handling andorganization of ABAP custom devel-opment objects in SAP systems – forexample, identifying obsolete devel-opments in your SAP system andidentifying the effect an upgrade canhave on custom developments

• Solution browser tool – Identifies newfeatures that have been added be-tween two releases of SAP ERP orany of the available enhancement

packages and describes their respec-tive business benefits

“We reduced the costs for in-

stalling, configuring, testing,

and going live with the en-

hancement package by almost

10 times.“

Didier Magnien 

Director, Global SAP Systems, Sappi

2. Based on 51 enhancement package installations of enhancement packages 2 and 3.

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SAP OfferingSAP offers several products and servicesto assist with enhancement packages:• SAP enhancement package installer  

– Enables a streamlined installationprocess, adding only relevant en-

hancements; the standard tool usedfor the SAP enhancement packageimplementation

• The “Business Function Predictionfor SAP ERP” – Provides a tailoredrecommendation for which businessfunctions delivered by SAP enhance-ment packages are relevant for a cus-tomer’s business and which function-alities are most often used by othercustomers

• SAP enhancement package

planning for SAP ERP (S)

Minimize Downtime forMaintenance and Upgrades

When carrying out maintenance andupgrade projects, organizations canface unacceptable downtime, whichcan interfere with normal business op-erations and cause backlogs and dis-ruptions. Minimizing downtime helpsorganizations limit these disruptionsand optimizes the availability of their

systems at such times.

This may be necessary when the esti-mated downtime of a productive sys-tem during a technical operation, suchas an upgrade, Unicode conversion, orenhancement package implementation,exceeds the planned downtime win-dow. Reducing downtime may also benecessary in order to reduce financialimpacts and speed up availability; but itmay be impossible to reduce downtime

 with conventional methods.

Proposed Measures and BestPracticesThe following approach can help withminimizing downtime:• Reduce downtime of technical opera-

tions significantly by combining best

practices with tools and technicalconsulting

• Several techniques and service op-tions are available for the differentscenarios and complexity dimen-sions, such as size of database,downtime, and use case (for exam-ple, upgrade, Unicode conversion,database and operating system mi-gration, data center relocation, en-hancement package implementation)

SAP OfferingSAP offers the following services toassist with minimizing downtime:• Minimize downtime service (S)• SAP Downtime Assessment service 

(S)

Infrastructure Virtualization

With virtualization, application instancescan be spread across available serverresources to maximize infrastructureutilization. This decouples the users and

applications from the hardware, enab-ling the resources to be shared betweenapplications on an as-needed, dynamicbasis, as demand fluctuates during theday. This includes the flexibility to moveapplications between servers as circum-stances dictate. A server no longer sitsidle for long periods when the applica-tion it is serving is not in use.

This approach can be useful when infra-structure costs are high – for servers,

cooling systems, or electrical facilities,

for example. Dedicated testing or train-ing servers may be underutilized, or the whole hardware platform may be sub- ject to vendor lock-in or dependency,leading to an unclear technology roadmap. IT systems can also be expen-

sively overbuilt to accommodate occa-sional peaks of service, such as amonth-end or year-end closing.

 A high cost and a degree of complexityare often associated with conventionalhigh-availability technologies such ascluster technologies. There can alsobe a need to speed up implementationprojects by providing new systemsquickly without acquiring new infra-structure, or to assign unused resourc-

es to solutions where additional capaci-ty is required. Typically, the motivatingfactor is to support seasonal businessor new projects or services, withoutunnecessary cost assignment to proj-ects or LOBs.

Supporting separate “day” and “off-hours” applications is expensive, suchas in the case of a business intelligence(BI) solution that has batch jobs runningat night, while during the day, dialogusers need to access a fast-reacting

system. Finally, the downtime whencarrying out hardware or softwaremaintenance can be disruptive andcostly.

Proposed Measures and BestPracticesVirtualization addresses these situa-tions by making available the existingresources on a flexible basis, as a cen-trally accessible layer. With several vir-tual machines, a physical server can be

used for a wide variety of tasks.

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 A recent study found that “Virtualiza-tion technology represents a promisingopportunity to lower IT costs and devel-op a future-proof, i.e. flexible and dy-namic, IT infrastructure.”3 With virtual-ization, application instances can be

spread across available server resourc-es to maximize infrastructure utilization. Also, the flexibility is available to moveapplications from server to server ascircumstances dictate. The potential fordriving down IT spend is tremendous.In support of this view, Gartner Inc.states, “Virtualization offers IT depart-ments opportunities to reduce cost andincrease agility.”4 Virtualization alsooffers some sustainability benefits, interms of power saving, and may be re-

alized through the following approach:• Target the key virtualization areas, which are nonproductive systems(development, testing, and training);satellite systems (FTP server, globaltrade system, and other interfaces);and legacy systems (tax and auditingsystems)

• Consolidate SAP software instanceson a lower number of servers

• Implement alternative disaster recov-ery or high-availability scenarios

• In particular, use hypervisor virtualiza-

tion on commodity hardware(x86_64) to enable multiple operatingsystems to run on the host serverconcurrently 

• Use storage virtualization and dedu-plication technology to eliminate re-dundant data

• Employ central landscape manage-ment with the SAP NetWeaver Adap-tive Computing Controller tool tohandle additional complexity 

SAP OfferingSAP offers the following services tosupport virtualization:• Implementation services for SAP

software landscape virtualization (S)– This holistic portfolio of service ele-ments supports the customer’s mi-gration from a traditionally deployedlandscape to a virtualized one, with

architectural evaluations, prototypes,migration support, and several train-ing measures.

• SAP OS/DB Migration Check ser- vice (S) – In addition to performing astandard system check, this serviceoffers recommendations for reconfig-uration of the system, including hard- ware. This service is performed whenmigrating to a new operating systemor database.

• SAP NetWeaver Adaptive Computing Controller  – This tool provides a cen-tral point of control for flexibly assign-ing computing resources to run anyservice on any server at any time. Itenables management of entire SAPsoftware landscapes and IT infra-structures, nimbly assigning resourc-es in the landscape as needed. This

helps reduce complexity, cut datacenter costs, increase hardware utili-zation, and achieve the flexibility andscalability needed to improve IT effi-ciency and value. SAP NetWeaver Adaptive Computing Controller man-ages either virtualized or nonvirtual-ized software landscapes, and isavailable within the SAP NetWeavertechnology platform.

3. RAAD Research GmbH, “Virtualization in SAP Environments,” (2009).4. Philip Dawson and Thomas J. Bittman, “Virtualization Changes Virtually Everything,”

Gartner Research, March 28, 2008 (ID number: G00156488).

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 Archiving Optimization

Data archiving focuses on effectivedata management and has two mainpurposes – system load reduction andlegal compliance support. Both primari-

ly use the same processes: analysisand categorization, the archivingprocess itself, and access to archiveddata. Benefits include increased sys-tem availability, better use of resourc-es, and improved system performance.

 Archiving optimization can help answersome specific issues. An organizationmay have large or fast-growing data volumes associated with their SAPsystems, with the consequence that

their storage infrastructure may needto be adapted, system copies may be-come more time-consuming and costly,and there can be SLA violations.(For example, backup and restoretimes cannot be met, or there aredisaster, restore, recovery scenarios.)

There can also be performance issuesdue to growing system sizes, leading toa continuous increase in responsetimes of transactions or reports, caus-ing users to have to wait longer for

them. In addition, there can be longerdowntimes during Unicode conversions.

Proposed Measures and BestPracticesThe following approach can help withoptimizing the archiving process:• Set up a data archiving strategy in

order to manage data volume andreduce future data growth

• Employ continuous monitoring ofsystem-data volume size and growth

• Perform data archiving regularly

• Reduce the size of the existing data-base by using these methods:data avoidance, data summarization,data deletion, and data archiving

• Set up risk mitigation through earlyidentification of unusual data volume

increase• Minimize the monthly data growth of

SAP systems

SAP OfferingSAP offers the following services toassist with data archiving:• Recommendations for system and

data analysis and optimization(“scoping”) (S)

• Archiving implementation andoptimization (S)

• SAP Archiving application by OpenText – Helps you boost efficiency ofbusiness processes and reducecosts through application-spanningcontent views, integration of docu-ments into processes, and securedata and document archiving

• Retention policy management –Provides SAP tools and technologiesfor SAP NetWeaver Information Life-cycle Management that support thecomplete information lifecycle, fromcreation to retention to destruction –

enabling you to enter different rulesand policies reflecting various criteria,including where data is stored, theduration of data retention, and whendata can be destroyed

• Implementation services for SAPNetWeaver Information LifecycleManagement – Help automate themanagement of your data for compli-ance with internal, external, and legalrequirements for its retention anddestruction

Storage Cost Reduction

Storage costs can grow hugely whenunchecked by a storage managementplan. For example, one-to-one systemcopies are traditionally provided for

testing purposes, requiring allocation ofsubstantial resources and potentiallycausing performance issues in the testenvironment. Data volume managementkeeps data growth and size under con-trol by implementation, operation, andoptimization of a data reduction strategy.

Data volume management can helpaddress various issues, including cost.For example, when the data volumeassociated with SAP systems is large

or fast-growing, the number of systemsand the storage needed constantlyoutweigh the benefit of the costdecreases on vendor prices. It can becostly providing enough storage withthe SLA and the security level needed– for example, for HR systems withlocal legal constraints – or similarly,meeting legal requirements such asproviding recent business data over along period of time.

Proposed Measures and Best

PracticesThe following approach can help withreducing storage costs:• Set up and monitor a data volume

management strategy that defineshow to manage, prevent, and reducefuture data growth

• Reduce the size of the existing data-base by using these methods: dataavoidance, data summarization, datadeletion, and data archiving

• Set up risk mitigation through early

identification of unusual data-volumeincrease

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• Minimize the monthly data growth ofSAP systems

• Reduce the data volume in the testand development environment

• Use current storage technologies –

for example, thin provisioning (whichallocates “just enough” space toservers on a just-in-time basis) anddata deduplication (which eliminatesredundant data)

• Use database technologies such asdata compression to reduce the useof storage

SAP OfferingSAP offers the following services tohelp reduce storage costs:• Data volume management – Provides

a holistic methodology, service, and

tool portfolio for landscape solutions,avoiding critical system situationsthrough early monitoring and reduc-tion of data volume increases (bothsize and growth)

• SAP Test Data Migration Server  soft- ware – Helps you create and updatenonproduction systems that can help you test and validate the quality of your application developmentprocesses

• Implementation service for SAP TestData Migration Server  (S) –

Implements and configures SAP TestData Migration Server for SAP ERPand various industry solutions

Performance Optimization

System performance plays a key rolein any strategy for cutting costs andincreasing productivity within an organi-zation. When system performance ispoor, overall organizational perfor-mance and productivity goes down.

System overload can cause business

downtime leading to revenue losses, andslow system response or processingtimes can produce delayed business workflows. Similarly, an unstable IT sys-tem can cause high costs on businessand IT administration, and disrupt busi-

ness processes. These events candamage acceptance by the businessuser, and even lead to contractualpenalties as a result of SLA violations.

These are some typical scenarios thatcan lead to performance issues:• Newly implemented system and

solutions• Upgrades• Enlarged user communities• Extension of functionality 

• Consolidation of resources• System mergers• Changes in technology or platform

 A performance optimization strategyleads to increased system performance,shorter response times, and increasedthroughput.

Proposed Measures and BestPracticesThe following approach can help withperformance optimization:

• Conduct performance assessmentson a regular basis

• Conduct performance optimizationand sizing of system infrastructure

• Plan for optimized performance whendesigning development projects

• Include performance requirements insystem landscape planning

• Conduct long-term performancemonitoring and management

• Conduct performance testing ofdesign concepts

• Conduct performance test monitoring

“SAP Test Data Migration Server helped us to consolidate

our nonproduction systems while increasing efficiency of the

process. As a result, we reduced our combined database

from 25 TB to 3.2 TB and now have a more centralized SAPsoftware landscape.”

Michael Giessner, SAP COE Architect, Nike Inc.

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SAP OfferingSAP offers the following services toassist with performance optimization:• Performance assessment (system

analysis, use-case analysis) (S) –Helps identify the root cause of per-

formance problems in IT systems orIT-supported business processes,and defines the service deliverymeasures to solve the identifiedproblems. The service aims to identi-fy performance optimization potentialacross all layers of the system archi-tecture – hardware, deployment,configuration, and program code.

• Capacity change-management ser- vice (S) – Takes a systematic ap-proach to plan and control the infra-

structure capacity for your SAPsystem landscape in four steps:– Workload analysis – determine the

actual status of the system– Demand forecast – calculate the

additional requirements– Resource check – check the avail-

ability of needed capacity – System adjustment – adjust the

system configuration to the evaluat-ed size

• SAP Remote Performance Optimiza-tion service (S) – Analyzes an IT sys-

tem for bottlenecks, performing suchfunctions as SQL statement optimiza-tion, application optimization, andSAP R/3 basis analysis. The SAPServices organization then developsan action plan for removing thebottlenecks and improving the ITsystem’s performance. This servicemost effectively optimizes a system’sperformance when run with two othersystem assessment offerings: SAPEarlyWatch® Check and SAP Solution

Management Assessment services.

• SAP Business Process PerformanceOptimization service (S) – Identifiesand analyzes performance bottle-necks and provides (mainly) technicalrecommendations that can be imple-mented quickly 

• Technical analysis and design (S) –Focuses on eliminating overall sys-tem performance problems such asbottlenecks on CPU, memory, data-base, or storage subsystem and onenabling technical capacitymanagement

• Expert sizing service (S)• SAP LoadRunner application by HP –

Optimizes quality, performance, andscalability of end-to-end businessprocesses that run on SAP and non-

SAP software over the entire applica-tion lifecycle• SAP GoingLive Check (S) – Helps

 you manage technical risk to ensurethe optimal performance, availability,and maintainability of your SAPsolution; best applied during a newimplementation or after a significantincrease in data or user volume

• SAP EarlyWatch Check (S) – Helpseliminate costly performance bottle-necks, improve response time anduser acceptance, optimize IT invest-

ments, and reduce the risk of incur-ring downtime by detecting an ITsystem’s critical issues

• SAP OS/DB Migration Check (S) –Offers recommendations for recon-figuration of the system, includinghardware, in addition to performing astandard system check; performed when migrating to a new operatingsystem or database

Optimizing the PrintingLandscape

In many organizations, printing is notgiven enough consideration, bearingin mind the fact that in almost every

business process, at least one outputdocument is created. Today, most ofthis output is paper based (invoices,delivery notes, and so forth).

Using interactive forms instead of pa-per-based forms not only reduces yourprinting costs; it also ensures that thedata from the form is processed auto-matically and correctly within your ITlandscape. Nevertheless, we know thatprinting will always be a business-

critical part of a company’s processesand that there are many challengesfaced by almost every company in thisregard.

These issues are: lowering TCO, greenIT, Unicode-related printing issues,governance in printing, and processmonitoring in printing. All these chal-lenges can be solved with the use of aprofessional enterprise output manage-ment system. This system can help youcreate a single point of contact for your

entire IT infrastructure (SAP and non-SAP), and potentially save a substantialsum of money.

Proposed Measures and BestPracticesThe following approach can help opti-mize the printing landscape:• Analyze your printing landscape,

including a detailed examination of ways to avoid unnecessary adminis-tration effort

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• Implement a central output manage-ment system to reduce printing costsand increase the control of printingprocesses

• Lower your printing costs with quick wins like rule-based printing, whichcan result in instant savings of10% to 20%

SAP Offering

SAP offers the following products andservices to assist with printingoptimization:• SAP Interactive Forms application by

 Adobe• Analysis services (S)

– Evaluation of your completeprinting landscape

– Detailed analysis for the SAP soft- ware landscape

– Quick hints to avoid unnecessarycosts in printing

• Concept services (S) – Helping youto create a complete concept for yourprinting landscape with the best solu-tion for you

• Implementation services (S) –helping you to realize your concepts

 Automate Job Scheduling

The goal of automatic job scheduling is

to manage the planning, scheduling,running, and monitoring of background jobs that would otherwise have to beperformed manually, in order to auto-mate business processes. This savestime and user input, and uses hardwareeconomically.

Where there is a lack of process auto-mation, revenue losses can be causedby slow, or even stuck, business pro-cesses. Similarly, automation can avoidhigh costs in business and IT adminis-tration caused by inefficient jobhandling.

In addition, inadequate job monitoringand job documentation can lead to

excessive risks in scheduling business-critical processes. There is a risk tooin uncontrolled job scheduling, wherelarge numbers of background jobs arescheduled directly by end users: thiscan undermine load balancing, and riskbusiness breakdown and systemoverload.

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Proposed Measures and Best

PracticesThe following approach can automate job scheduling:• Establish central process scheduling• Establish real-time, time-driven, and

event-driven workload automationsolutions

• Integrate with SAP and non-SAPapplications (operation system, data-base, mainframe)

SAP Offering

SAP offers the following products andservices to automate job scheduling:• SAP Central Process Scheduling

application by Redwood – Deliversadaptive, real-time, event-driven jobscheduling and process-automationfunctionality across distributed andheterogeneous platforms

• Proof of concept for SAP CentralProcess Scheduling (S) – Helpsfamiliarize you with the benefits ofSAP Central Process Scheduling andapply the solution; provides you witha complete overview about your best-

fit solution scenario with an analysis workshop

• Implementation service for SAPCentral Process Scheduling (S) –Enables you to migrate from yourexisting scheduler to a modern,state-of-the-art automation manage-ment tool. Experienced consultantssupport you in designing andredesigning your batch processes tooptimize your old processes and im-plement new process functionalities,

including integration with SAP Solu-tion Manager or the SAP FinancialClosing cockpit. You receive a stableproductive environment with SAPCentral Process Scheduling, which will run your business processesefficiently and safely with reducedTCO.

Standardize and Automate Testing

Building and implementing high-qualitytesting procedures can be difficult; as

a result, testing is not done at all, orexpensive, error-prone manual testingis performed on an inconsistent and un-planned basis. There can be extensive(or even unknown) manual test efforts, within the implementation of minor as well as major changes (for example,projects or releases). This can some-times mean heavy involvement of busi-ness resources in testing (a super user,

Supported by cutting-edge software and services,SAP Education enables organizations to lower TCO

 via a range of new training options, which are offeredin addition to traditional project team training inpublic training centers.

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for example). There can be insufficienttest coverage, with a trade-off betweentoo little and too much testing effort,and problems with quality causing anextension of project duration or delayof going live. Also, there can be ineffi-

ciencies in recurring testing tasks – inrollout projects, for example.

The challenge is to carry out testingcorrectly, balancing quality with speedand cost, with an adequate scope, ontime and within budget. Standardizingand automating testing leads to con-trolled and comprehensive testing be-ing performed consistently throughoutan organization’s IT landscape. This caninclude functional testing of all new

processes; integration testing of allnew and existing modules, includinginterfaces and add-ons; and regressiontesting, to check that all existing partsof the system support the businessprocesses as they did before.

Proposed Measures and BestPracticesThe following approach can supporttesting efforts:• Centralize and formalize test

management

• Standardize test management (testprocesses, roles, test standards) andexecution (test documentation)

• Integrate test management with otherITIL processes (change management,incident management)

• Leverage state-of-the-art testing tools

• Introduce automated testing, both ex-ecution and documentation, includingregression testing. Automated testingreduces both the time involved andthe total cost of ownership, particu-larly where automated scripts are de-

 veloped that can be reused for years.•  Outsource/out-task all or part of

the organization’s testing

SAP OfferingSAP offers the following products andservices to assist with standardizingand automating testing:• SAP Solution Manager  (test work-

bench, extended computer-aided testtool, service desk)

• Service portfolio for SAP Solution

Manager• SAP Test Data Migration Server  –Helps you create and update nonpro-duction systems with productive dataand concurrently reduce the volumeof data significantly. Additional func-tionality allows you to make anony-mous the migrated data to comply with data protection requirements.

• Implementation service for SAP TestData Migration Server  (S) – Imple-ments and configures SAP Test DataMigration Server for SAP ERP and

 various industry solutions

• SAP Quality Center  – Provides activi-ties essential to quality management,including managing requirements anddefects as well as running tests andreports, in a single, Web-basedapplication

• SAP LoadRunner  – Optimizes quality,performance, and scalability of end-to-end business processes that runon SAP and non-SAP software overthe entire application lifecycle

• SAP Test Acceleration and Optimiza-tion application – Supports custom-ers in automating their businessprocess tests by automatically gener-ating test components for SAP GUI–based transactions. Using this appli-cation in combination with SAP

Quality Center, you can compose andexecute automated business processtests.

• SAP Test Management Optimizationservice (S)

• Test-tool strategy workshop (S)• Test analysis and proof-of-concept

services (S) – Provides guidance inimplementing the methodologies andtools needed to test business pro-cesses and applications

• Service for setup of automatedregression testing (S)

• SAP test center

“SAP Consulting manages and operates our testing

environment, saving us time and significantly reducing the

cost of development.”

Georg Herrmann, Project Manager, RACE Test Lab, Mail Division, Deutsche Post AG

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Implement Best-Practice ITSMProcesses (ITIL)

Information Technology InfrastructureLibrary (ITIL) is a discipline for manag-ing IT systems throughout their whole

lifecycle, from service strategy viaservice design and service transitionto service operation and continual im-provement. ITIL helps ensure that usersof business functionality can accessthe applications they need efficientlyand fruitfully. ITIL defines an organiza-tion-wide structure for dealing system-atically with the needs of users and theIT organization when, for example, theyseek changes to, or have difficulties with, the system or software they

 work on.

ITIL can help to shape and focus an or-ganization’s internal procedures. A lowquality of ITSM processes within an or-ganization can be indicated where, forexample, there are unstable operations with rising costs or a high frequency ofuncoordinated transports into produc-tive systems. Or there might be a high(or rising) number of incidents relatedto changes and a low rate of incidentsolution in first- and second-level

support.

Proposed Measures and BestPracticesThe following approach can supportimplementation of ITSM processes:• Analyze, standardize, and measure

the most important processes of the

 value chain of the IT department• Implement clear and holistic ITSM

processes within your organization• Take advantage of tools which

support ITIL processes• Reduce manual effort by enhanced

ITSM and IT service automation;for example,  test automation,

automated monitoring and eventmanagement,  job scheduling man-agement and capacity management

  = Link to another section

SAP OfferingSAP offers the following to assist withimplementing ITSM processes:• Assessment and implementation of a

Customer Center of Expertise (Cus-tomer COE) organization (S) – Helpsprioritize the areas of action, tailorthe ITIL processes to the specificneeds of your company, and imple-ment them

• ITIL assessment and implementation(S)

• SAP Solution Manager – Provides anintegrated bundle of functionality in-cluding service desk, change requestmanagement, test management, andmonitoring; is the basis for imple-menting the Run SAP methodology, which is related to ITIL

• SAP CRM 7.0 – Contains muchITSM functionality for managing yourSAP and non-SAP solutions

• SAP Test Data Migration Server  –Helps you create and update nonpro-duction systems, which assist you intesting and validating the quality of your application developmentprocesses

• Implementation service for SAP TestData Migration Server  (S) – Imple-ments and configures SAP Test DataMigration Server for SAP ERP and various industry solutions

Establish Customer Center ofExpertise

 A Customer COE team is an organiza-tional structure that drives integratedquality management, enabling transpar-

ency across business and IT units when faced with critical challenges insolution operations. It helps ensurebusiness continuity, reduce costs, andaccelerate innovation.

Customer COE can help organizationssucceed in the constantly evolvingbusiness world. Ever-changing markets,business models, and business strate-gies require flexible IT solutions. Con-tinual improvement is essential to staycompetitive. IT operations and solu-

tions need to be aligned closer to thebusiness, as do operations and devel-opment projects.

Customer COE can help when otherareas require improvement within anorganization. For example, governancemay be missing in IT operations, as well as clear contact roles in applica-tion management, IT operations,custom development, IT infrastructure,

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and other units. The cost of operationsmay be higher than necessary due to alack of standardization, automation, andskills. There may be a limited capabilityfor innovation and improvement inbusiness processes. In addition, theavailability of business processes andsystems may be limited and may notmeet business requirements. Anadvanced Customer COE team actsacross business units to align stake-

holders and provide standards andquality management for implementationand operations. Customer COE canalso be the organization to implementand run the ITIL processes mentionedabove.

Proposed Measures and BestPracticesThe following are concepts to keep inmind when establishing a CustomerCOE team within the company:• The Customer COE team holds re-

sponsibility for the support of effi-cient implementations of SAP soft- ware, as well as the related ongoingdevelopment, maintenance, and quali-ty of the business processes and

systems.• Customer COE drives transparency

and integrated quality management toensure an efficient implementationof SAP solutions and a safe flow ofmission-critical business processes.In particular, Customer COE:

– Provides a central point of contactfor critical situations – a “singlesource of truth”

– Provides business continuity byensuring that the right processesand tools are in place

– Speeds up innovation by safe andefficient implementation of busi-ness processes

– Protects investment through aneffective release and upgradestrategy 

– Promotes standardization andautomation

– Identifies TCO drivers and propos-es solutions

• Customer COE is responsible forend-to-end application lifecycle man-

agement processes and best practic-es (see Figure 3).

SAP OfferingSAP offers the following to assist withestablishing a Customer COEorganization:• Customer COE primary certification 

– Indicates that the Customer COEorganization possesses the basicsupport infrastructure necessary forinteraction with SAP

• Customer COE advanced certifica-

tion – Validates that the CustomerCOE organization has mastered theimplementation of application lifecy-cle management, quality manage-ment functions, and the measure-ment platform in SAP SolutionManager 

• Run SAP methodology  (S) – Providesthe knowledge and the services toimplement application lifecyclemanagement

Figure 3 : Advanced Customer Center of Expertise

Establishing integrated quality management

through application lifecycle management

 Transparency via measurement platform

     M   e    t     h   o     d   o     l   o   g   y

Run SAPmethodology 

SAP® Accelerat-ed Implementa-tion Programmethodology

SAP SolutionManager 

     G   o   v

   e   r   n   a   n   c   e

Businesscontinuity 

Businessprocessimprovement

Protection ofinvestment

Safeguardingintegration validation

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• Operations planning workshop (S) –Evaluates an existing SAP customer’ssupport operations to determine ar-eas in need of optimization. SAP con-sultants work with the customer’sdecision makers and team via work-

shops to understand the current sup-port strategy and vision and the as-issupport processes, and then providethe team with a road map focusedon increasing the overall maturityand effectiveness of the supportoperations and Customer COEorganization.

• SAP Solution Manager  – Providesan integrated bundle of functionalitysuch as service desk, change re-quest management, test manage-

ment, and monitoring. SAP SolutionManager is the basis for implement-ing the Run SAP methodology, whichis related to ITIL.

•   Application lifecycle management – Provides the tools and services re-quired for the implementation of SAPsolutions and their operations duringthe lifecycle

• Customer COE vision and strategy –Provides the basis for strategic deci-sions for setting up a new CustomerCOE

• Customer COE setup and develop-ment – Guides and assists ourcustomer during the design andimplementation phase of the centerof expertise

Establish Super User Concept

 A super user is a talented user withinan organization who is brought into aposition of leadership of one or more ITsystems, supporting and instructing us-

ers, answering how-to questions, and

making acceptance of the technologyless challenging. This leads to a signifi-cant time and cost reduction as sys-tems are adopted sooner, and compa-nies are not seeking or hiring outsidedocumentation, training, and support

personnel.

 A super user can help where there is ahigh number of service desk calls or where there is little or no knowledgetransfer within the enterprise, leadingto insufficient enablement and supportof the business users. Business usersmight be insufficiently involved in proj-ects and change request management,and clearly defined roles and responsi-bilities might be lacking on the business

side for business-related applications –for example, responsibility for definingrequirements, implementing changes,and supporting users. Business usersmay face difficulties in getting help andguidance on how-to questions and incase of incidents.

Proposed Measures and BestPracticesThe following approach can help whenconsidering a super user role:• Establish a super user concept by

defining clear roles and responsibili-ties for business user support andalignment with IT

• Implement a program of early andproactive involvement of super usersin projects

• Ensure that super users have thefollowing support tools available totry resolving issues themselves:– FAQ database– Solution database– Notes search

– Online help functions– User manual

SAP OfferingSAP offers the following to assist withestablishing a super user concept:• Customer Center of Expertise as-

sessment and implementation (S) –Helps design and implement the

super user concept• SAP Solution Manager  – Provides

service desk, change request man-agement, testing, incident and prob-lem management, and other essentialfunctions for daily work – the tool ofchoice for all super users

IT Service Productization

“Productization” services is an ap-proach where there is a clearly defined

scope – for example, of price and deliv-erables – and where the content is stan-dardized and reused (ideally scaled tomass volume adoption). Productizationis a cost-effective way of delivering ITservices that are operated or runrepeatedly.

Productization can help where the costof IT services is an issue, as well as when a department’s share of individu-alized or tailored IT services is unnec-essarily high. Productization can also

be effective when IT services havelimited scalability and delayed deliverydue to the high volume of certain cus-tomer requirements, usually because ofa lack of resources or a shortage of therequired skill sets. Also, there may bea lack of standardization of a significantnumber of repetitive tasks, or insuffi-cient reuse of knowledge within theorganization.

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SAP OfferingThe SAP Education organization offersa virtual training concept that includes“blended academies,” e-academy, virtual live classroom training, ande-learning. In addition, instructor-led

training at the customers’ own facilities(on-site delivery), as well as the SAPCorporate Master program, offer a wide range of options to optimize the value of an organization’s IT invest-ment. This approach promotes employ-ee productivity while reducing travelexpenses, training fees, and the oppor-tunity costs of employee downtime(see Figure 4).

Supported by cutting-edge software

and services, SAP Education enablesorganizations to lower TCO via a rangeof new training options, which areoffered in addition to traditional projectteam training in public training centers:

Blended Academies: Classroom-Based Training and E-LearningConsiderable TCO savings can beachieved by choosing the “blendedacademy” option, which combinesinstructor-led training with e-learning. Itcompresses the average 29 classroom

days of public training into 20, with theremainder of the training comprisinge-learning. Blended academies prepareparticipants for SAP certification.

On-Site DeliveryEven greater savings can be made byconducting the courses, whether stan-dard project team training or blendedacademies, at your own facility. Thereare no staff travel and accommodationcosts, and you can take advantage of a

significantly reduced training fee basedon daily all-inclusive rates.

E-Academy As an alternative to the blendedacademies, SAP Education now offerse-academies, which are more flexible.

The e-academy offers online access toaudio-visual training material deliveringthe same content as classroom-basedacademies. In conjunction with thetraining slides provided, participantscan either l isten to the instructor’spresentation or read the instructor’stranscript. Participants have access toa live SAP training system and helpdesk support for a period of three tofive months. Expert know-how is avail-able via the help desk using a Web-

based conference. Upon completion ofthe e-academy, participants can regis-

ter to attend a certification examinationat one of SAP’s training centers.

 Volume Contracts

SAP Education provides a simple andtransparent offering that increases anorganization’s training budget by acertain percentage depending on the volume of its education spend.

SAP Corporate Master ProgramSAP Education offers courses forstudents studying for master’s degreesthat are funded by partners. This is anextremely cost-effective method forpartners to train and certify new re-

sources. Partners sponsor students ata lower-cost rate, and they save on the

Figure 4: Example of Costs per New Hire to Become a Certified Associate Consultant

Costs per consultant (new hire) to become a certified associate consultant(example: Germany)

18,270

13,630

9,400 8,460

6,660

6,660

6,670

4,600 4,600

12,600 12,600 12,600

8,820

5,5005,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0Standardprojectteamtraining

Blendedacademy 

Includingdiscount(example10%)

On-sitedelivery 

E-academy SAP®CorporateMasterprogram

 Travel costs

 SAP Education training fee

 Opportunity costs

€

6,660

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recruitment costs for resources whoare skilled with SAP software. A part-ner’s employees who are studyingpart-time for a master’s degree workreduced hours at a reduced salaryduring what is typically a 24-month

program. The skills that SAP Educationdelivers during the master’s coursesprepare students for SAP certification.

 Virtual Live Classroom TrainingSAP provides “project team training”in a classroom environment. Thesecourses are aimed at all employeesfrom specialist or IT departments, andrange from a basic overview of SAPapplications and technologies to farmore detailed courses.

Many of these courses are also avail-able as virtual live classroom training.The range of topics is the same as

 with classroom-based training, but isaccessed via the Internet using theSAP Acrobat Connect ProfessionalLearning application by Adobe. Allparticipants are interactively trained byan experienced instructor via a toll-free

teleconference, during which they canask questions. The instructor’s systemsdemo can be watched in real time via aWeb-based learning environment. Fur-thermore, all participants are grantedaccess to live SAP training systems.In addition, printed training material issent to participants prior to the course.

With virtual live classroom trainingthere are no travel costs and studentscan attend the training wherever they

are located. In addition, organizationscan request customized sessions(with a minimum of five participants).

 Traditional E-Learning CoursesIn addition to the e-academies and virtual live classroom training services,SAP Education also offers traditionale-learning courses. These cover anoverview of SAP applications; earlydelta training courses, providing SAPexperts with information about changedproduct versions; and role-based user

courses, imparting user knowledgerequired in specialist roles.

Education-Related Software ProductsIn addition to the above services, theseeducation-related software productsalso help drive down the total cost ofownership and increase the return on ITinvestments:• SAP Productivity Pak application by

RWD – Helps you maximize your em-ployee proficiency and derive greater

 value from your enterprise systems.

These software tools enable easycreation of documentation, context-sensitive online help, and transactionsimulations – all in multiple languagesand with the focus on end-user training.

• SAP Enterprise Learning environment

– Integrates business processes,content development, and the deliv-ery of learning linked to employeeperformance. SAP Enterprise Learn-ing is unique as an enterprise solu-tion that integrates back-office enter-prise resource planning (ERP)functionality with functionality forboth learning management systems(LMS) and learning content manage-ment systems (LCMS) in a single of-fering. As a result, competency man-

agement, performance management,and analytics can all be improved, in-cluding support for ad hoc reporting.

• SAP Acrobat Connect ProfessionalMeeting application by Adobe –Establishes and manages real-time,on-demand virtual meeting rooms with a standard URL, along with livee-learning and Web conferences

• SAP Knowledge Acceleration soft- ware – Provides training and supporton a variety of SAP and SAPBusinessObjects products with Web-

based learning and support• SAP User Experience Management

application by Knoa – Measures theprecise experience being received,and the performance being achieved,by an entire end-user community 

• SAP ERP Simulation game by BatonSimulations – Enables participantteams to use live SAP software torun a company in a competitive mar-ket and develop an understanding ofthe value and power of the software

“SAP Productivity Pak has

improved the quality of our

documentation significantly.

The central document manage-

ment function .. . and a user-

friendly interface . . . result inconsiderable time and cost

savings in our day-to-day work.”

Ludger Klockenbusch, Program Manager

of the Mobility Division, Siemens AG

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CHAPTER 3SOURCING OPTIMIZATION

Integrated Service Delivery

Integrated service delivery goes farbeyond the trend of global delivery andlow-cost sourcing. It applies the princi-ples of process standardization and

lean manufacturing to driving valueand productivity, dividing a project intodiscrete service components anddelivering them in combination to meetdemand as needed. This model sup-ports work based on skill set and de-fined, agreed-upon results, rather thanan arbitrary number of person days.

Budget cuts and cost pressures maybe impacting IT resourcing and efficien-cy. Coupled with this, there may be

increasing service demand from thebusiness units or divisions, but onlylimited scalability of the as-is IT sourc-ing model. Similarly, only limited re-sources may be available for new proj-ects and innovation due to operationalinefficiencies. These are some of theissues that integrated service deliverycan address.

Proposed Measures and BestPracticesThe following approach can support

integrated service delivery:• Offer and deliver IT services that

combine different options for differentdimensions, such as local versus re-mote service delivery; local, regional,or global staffing; bill of services versus bill of resources

• Utilize best-fit internal units or globalsuppliers, as well as traditional localIT staff and consultants

The success factors required to be putin place to achieve this include:• Mutually agreed scope and project

plan• Transparent and clear project setup

(including governance framework)

• Clearly defined work packages• Easy-to-understand and easy-to-follow

task descriptions and work instructions• Precisely defined communication

structure• Well-defined roles and responsibili-

ties of the different teams• Risk and escalation management paths

SAP OfferingSAP offers the following services toassist with integrated service delivery:

• Consulting on an integrated servicedelivery  model from SAP Services (S)• Fixed-price, defined-scope

(“productized”) services (S)• Global delivery services (S)

Outsourcing and Out-Tasking

Outsourcing means contracting out or“externalizing” noncore activities tofree up resources for activities wherean organization holds competitiveadvantage, thus reducing average unit

cost. Areas contracted out may be,for example, data processing, payrollaccounting, or manufacturing.

Out-tasking is a modified form of out-sourcing where you contract out aparticular function, management of aparticular technology, or delivery of aparticular service to an outside organi-zation. Out-tasking is done on a smallerscale than outsourcing, using multiplefirms to perform specific tasks instead

of having one large organization takeover.

Factors motivating outsourcing or out-tasking can be, for example, the highcost of operations, and budget cutsand cost pressure generally. There maybe difficulties keeping operational costsunder control due to system and appli-

cation availability issues, leading tocostly unplanned downtime.

Proposed Measures and BestPracticesThe following approach can supportefforts to outsource or out-task:• Investigate out-tasking or outsourcing

as a proven approach to reducing workload, freeing up resources andshifting skill and bandwidth into coreIT service delivery areas. Top out-

tasking and outsourcing areas areapplication management, operations,testing, upgrades, and Unicodeconversions.

• Safeguard remote and partner deliv-eries with SLAs, and manage therelationship by means of the SLA.

• Take advantage of labor arbitrage –that is, leverage lower-cost locations.

• Consider increasing the footprint ofoutsourcing (if already established)by moving into the next-level domain,or expanding a cost-based outsourc-

ing to a model with productivity gains.• Consider transformational outsourc-

ing if IT process maturity or capacityis low.

SAP OfferingSAP offers the following to assist withoutsourcing or out-tasking:• Outsourced testing for SAP solutions

(S)• Capability assessment for Customer

COE (S)

• SAP Application Managementservices (S)

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Other Selected Sourcing Options

IT Shared Service Center A shared services operation brings to-gether administrative functions previ-ously performed separately – for exam-ple, IT, finance, HR, purchasing, and soforth. For IT, this means consolidating

IT service delivery used by multipledivisions of the same company into ashared operation.

 A Customer Center of Expertise( Customer COE) team can serveas a potential organizational structureof an IT shared service center thatdrives integrated quality management,enabling transparency across businessand IT units when faced with criticalchallenges in SAP solution operations.

Proposed Measures and BestPracticesThe following approach can help withestablishing an IT shared servicecenter:• Ensure common understanding re-

garding the motivation of an IT sharedservice center 

• Ensure that there is a clearly definedscope for the IT shared servicecenter 

• Ensure clear roles and

responsibilities

• Standardize master data• Ensure that there is intensive engage-

ment with the customer and regularlymeasured feedback

• Institute and maintain continuousbenchmarking against the market

• Engage external consulting help todrive the shared services decision,

as is common in companies with thebest-run shared services• Institute a clear implementation plan,

a phased approach, and changemanagement

• Seek executive commitment and anacknowledgment of the key risks of ashared service center implementation

IT Co-Sourcing“Co-sourcing” describes outsourcingIT functions into an independent organi-zation within the boundaries of a con-

cern (captive outsourcing), or together with partners (partnering), in order torealize synergies while still keepingcontrol of the IT-providing company.

Proposed Measures and BestPracticesThe following approach can supportIT co-sourcing:• Safeguard IT supply with SLAs and

manage the relationship by means ofthe SLA

• Put in place a clear IT demand-supplygovernance model

• Put in place enforced contractsbetween parties

• Ensure joint business–IT planning

Business Process OutsourcingBusiness process outsourcing (BPO)

is a form of outsourcing that involvescontracting out the operations and re-sponsibilities of specific business func-tions – including the related informationtechnology – to a third-party serviceprovider, in order to become leaner andmore efficient. In this way, you canbetter allocate resources and focus ondeveloping core competencies.

Typically, business areas suitable forBPO are finance and accounting (order

to cash, procure to pay), HR (payroll),procurement, and industry-specific pro-cesses (insurance claims processingand payments processing).

SAP OfferingSAP offers the following products andservices to assist with business pro-cess outsourcing:• SAP BusinessObjects Profitability

and Cost Management application –Identifies the causes of underperfor-mance and helps you take action to

reduce costs and optimize profitabilityacross dimensions such as product,customer, and channel

• Customer COE capability assessment• Operations maturity assessment (S)

– Evaluates an existing SAP custom-er’s support operations to determineareas in need of optimization

• SAP Business Process Outsourcingorganization (S)

• SAP-supported BPO providers

“The SAP Application Management services allowed us to

significantly reduce our SAP support headcounts. As a result

we achieved a TCO reduction of at least 20%.”

Wong Voon Pui, Head of IT & Card Services, BHPetrol

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CHAPTER 4BUSINESS–IT ALIGNMENT

 Joint Business–IT Planning

The main mission of joint business–ITplanning is to determine investments inthe application landscape, operations,maintenance, infrastructure, and other

IT services, in strong alignment withthe business. This avoids any diver-gence of aims and requirements.

Joint business–IT planning may be ofbenefit where organizations find thereis insufficient reflection of businessneeds in the IT planning portfolio,limited budgets and resources, a highnumber of ad hoc IT requests from thebusiness, and a disconnect between ITplanning and IT budgeting. Coupled

 with this may be a missing alignment with IT strategy, policies, and stan-dards, and a lack of communicationand reconciliation with IT customers.

This can all lead to insufficient consid-eration of economic impact in IT invest-ments and unbalanced decision makingon IT issues by various stakeholders.

Proposed Measures and BestPracticesThe following approach can support

 joint business and IT planning:• Ensure that IT investments are being

made only when:– Business and economic needs are

met– Compliance with IT strategy is given– Risk is acceptable

• Ensure that the IT planning portfoliois defined jointly between businessand IT

• Provide a clear decision-makingmechanism

• Integrate budgeting into IT planning• Ensure up-front transparency about

activities in IT for the planning period• Ensure transparency about the plan-

ning process

SAP OfferingSAP offers the following products andservices to support joint business andIT planning:• SAP BusinessObjects Profitability

and Cost Management – Identifiesthe causes of underperformanceand helps you take action to reducecosts and optimize profitability acrossdimensions such as product, custom-er, and channel

• Executive advisory services (S)

 Joint IT–Business Project Portfolio

By planning and managing the projectportfolio jointly, both partners – IT andthe business – can better focus on thecorrect disposition of project-relatedresources.

 A joint IT–business project portfoliomay be of benefit when there are vari-ous unclear contacts between IT andthe business, and reconciliation and

discussion about project requests areneeded. There may be inconsistentrequest assessment criteria leading tounclear project priorities (“Excel engi-neering”) and inconsistent prioritizationmethodology and objectives leading toa lack of transparency. Weak transpar-ency across the IT–business projectportfolio can lead to political decisionmaking, with no firm foundation forproject budgeting.

Lack of clear business buy-in forproject approval decisions can leaveIT having to justify partially fulfilledrequirements and the overall IT projectbudgets.

Proposed Measures and BestPracticesThe following approach can support a joint IT–business project portfolio:• Establish an effective process and

interface to the business organizationfor project requests to follow theirrequirements and decisions (“do theright things”)

• Gain control over targeted changesby managing the project portfolio ac-tively, as projects are the vehicle to

deliver any change• Allocate the IT project budget basedon clear, agreed criteria and busi-ness-aligned priorities, and gain ITproject budget transparency 

• Gain business buy-in for business-requested IT projects and refer backto business decisions, instead of de-fending the overall result of “too-highIT costs”

SAP OfferingSAP offers the following to help busi-

ness and IT organizations with a jointproject portfolio:• SAP BusinessObjects Profitability

and Cost Management – Identifiesthe causes of underperformanceand helps you take action to reducecosts and optimize profitability acrossdimensions such as product, custom-er, and channel

• Business assessment for project andportfolio management (S)

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Eliminate Shadow or Hidden IT

“Shadow IT” is a term often used todescribe IT systems and IT solutionsbuilt and used inside organizations without organizational approval, oftennot in line with the organization’s statedaims, and without the knowledge or

control of a centralized IT department.Shadow IT creates “unofficial” and un-controlled data flows, making it difficult,for example, to comply with the U.S.Sarbanes-Oxley Act and many othercompliance-centric initiatives. The an-swer is to make shadow IT transparentand actively manage it.

Several issues can be addressed byeliminating shadow IT, which results in wasted time and hidden costs, com-

prised largely of non-IT workers in

finance, marketing, and HR spending asignificant amount of time discussingand rechecking the validity of certaindata. It causes incidents and outagesdue to unplanned infrastructure modifi-cations and inconsistent business logic– errors that occur from either lackof understanding of the concepts or

incorrect use of tools (such asspreadsheets).

Shadow IT can prevent full ROI frominvestments in systems that are de-signed to perform the functions nowreplaced by shadow IT – for example,data warehousing and business infor-matics projects. In addition, it blocksestablishment of more efficient workprocesses and acts as a brake on theadoption of innovative new technology.

Joint business–IT plan-ning may be of benefit

 where organizations

find there is insufficientreflection of businessneeds in the IT planningportfolio, limited bud-gets and resources, ahigh number of ad hocIT requests from thebusiness, and a discon-

nect between IT plan-ning and IT budgeting.

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Proposed Measures and BestPracticesThe following approach can help elimi-nate shadow IT:• Make shadow IT transparent• Create a balance that minimizes

shadow IT as much as possible with-out crippling business units’ ability toget their work done

• Actively manage shadow IT and miti-gate risks, enforcing enterprise archi-tecture, system administration needs,and security standards

• Establish a strong governance model where collaboration between IT andthe business is enforced

• Promote open and frequent commu-nication with the business

• Provide good customer service rath-er than user support only • Leverage agile techniques such as

scrum, where requirements and solu-tions evolve iteratively through coop-eration between autonomous cross-departmental teams

SAP OfferingSAP offers the following service tohelp eliminate shadow IT:• Executive advisory services (S)

“Shadow IT” is a term often used to describe ITsystems and IT solutions built and used insideorganizations without organizational approval, oftennot in line with the organization’s stated aims, and

 without the knowledge or control of a centralizedIT department. The answer is to make shadow ITtransparent and actively manage it.

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Service-Level Rightsizing andSLA Optimization

Service-level rightsizing is a one-timeor regular assessment of an organiza-tion’s SLAs, checking to see if they

reflect current business needs and bal-ance the benefit and the effort requiredto ensure the defined service level.

This measure addresses situations where there is no clear definition of ITservices, or the IT service cost is per-ceived as lacking transparency or astoo high in comparison with marketprices. IT service delivery commit-ments may not be managed along realbusiness demand, or there may be no

regular expectation management andalignment of the SLA between busi-ness and IT. Other issues may be SLA violations, low customer satisfaction,and ill-defined customer duties.

Proposed Measures and BestPracticesThe following approach can help withservice-level rightsizing and SLAoptimization:• Define IT service catalog and pricing• Ensure regular joint business–IT SLA

reviews• Adjust SLA commitments to properly

reflect business needs and capabili-ties with minimized cost

• Ensure regular IT servicebenchmarking

• Define clear roles and responsibilitiesfor SLA management and controlling

• Make sure IT capabilities and SLAcommitments are synchronized

• Apply ITIL• Define clear roles and responsibilities

for SLA management and controlling

SAP OfferingSAP offers the following products andservices to help with service-levelrightsizing:• SAP BusinessObjects Access Con-

trol – Protect information efficiently

and prevent fraud by identifying andpreventing access and authorizationrisks in cross-enterprise IT systems

• SAP BusinessObjects enterpriseperformance management solutions – Capitalize on the value of your cor-porate data, enabling your organiza-tion to become more agile and com-petitive by providing organizationalalignment, visibility, and greaterconfidence

• SAP BusinessObjects Profitability

and Cost Management – Identify thecauses of underperformance, andtake action to reduce costs and opti-mize profitability across dimensionssuch as product, customer, andchannel

• ITIL assessment and implementation(S)

• Executive advisory services (S)

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CHAPTER 5IDENTIFY YOUR TCO POTENTIAL

During the past two years we haverecognized an increasing demand fromour customers for guidance and on-sitesupport to identify TCO reductionpotential and set up programs to drivedown TCO. Together with selectedcustomers we have worked on theseprojects and evolved a successfulapproach and methodology. Based onthese experiences SAP has developedthe TCO discovery assessment (seeFigure 5).

The TCO discovery assessment is de-signed to help IT organizations discoverIT cost-saving potential, identify areasfor improvement, and define an actionplan to realize cost savings – leveragingproven SAP best practices, services,solutions, and support know-how. This

methodology involves setting up a jointcustomer–SAP task force, gatheringdata on-site on the TCO challenges,and conducting workshops and inter- views to analyze major IT cost driversand identify IT cost-saving and optimi-zation opportunities.

Phase 1: Data Collection• Define a clear TCO reduction charter • Set up a joint customer–SAP project

team

• Gain transparency about as-is costsituation; gather information fromresources (customer and SAP)

• Conduct TCO benchmarking• Analyze TCO benchmarking results• Define focus areas for further

analysis

Phase 2: Discovery • Analyze major IT cost drivers• Identify gaps in best practices• Identify IT cost-saving and optimiza-

tion opportunities• Estimate saving potential• Deep dive on selected areas• Analyze SAP solutions and services

that can to contribute to TCOreduction

Phase 3: Action Plan

• Set TCO reduction priorities• Develop high-level benefit ranges,

model solutions, and valueproposition

• Define actions to realize IT cost-saving and optimization potential

• Develop TCO reduction road map• Initiate TCO reduction program

Figure 5: TCO Discovery Assessment

Task 

KeyResults

• Benchmarking• Gather pain points

• Map customer cost structureon SAP TCO model (optional)• Determination and

documentation of TCO

• Pain points• TCO benchmarks/survey results• TCO focus areas for further

analysis

• Analysis of major IT cost drivers• Identify IT cost-saving and optimi-

zation opportunities• Deep dive on selected areas

• Portfolio of IT cost-saving andoptimization opportunities

• Proposal for action to reduceTCO

• TCO road map

  Data Collection1  Discovery 2  Action Plan3

• Define recommendation• Develop actions to realize IT

cost-saving and optimizationpotential• Develop high-level road map

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In the current economic environment,CIOs and IT managers are challengedmore than ever to cut IT costs and en-able business process excellence andtimely innovation adoption at the sametime.

The Strategic ViewWith application lifecycle management,customers implement high-quality solu-tions faster and operate them at lowercost. Here’s how:• Accelerated innovation through value

discovery and realization, innovation without upgrade, and near-zerodowntime

• Operation at lower cost throughstandardized, unified, and automated

operations; managed complexity; andmanaged SLAs• Superior quality of SAP solutions,

customer enhancements, and partnerdeployments in terms of functionality,performance, availability, and security 

Business Performance in Volatile TimesSeveral organizations have reducedtotal cost of ownership between15% to 60% while maintaining andeven improving business agility, innova-tion, and business continuity – as a re-

sult of a holistic approach of applicationlifecycle management based on SAPsolutions, services, and support.

Leading enterprises demonstrate howthey have successfully taken differentmeasures in responding to individualbusiness drivers. These measures in-clude system landscape consolida-tion and harmonization; standardiza-tion of IT service management; use of

SAP enhancement packages; and

adoption of service-oriented architec-ture (SOA).= Link to another section

Read more:How Companies Sustain BusinessPerformance in Volatile Times: Raise ITProductivity with Application LifecycleManagement 

Overview

 Application lifecycle managementfrom SAP is based on ITIL and providesprocesses, tools, services, and anorganizational model to manage SAPand non-SAP solutions throughout theirentire lifecycle (see Figure 6).

CHAPTER 6 APPLICATION LIFECYCLE MANAGEMENT (ALM)

Figure 6: Application Lifecycle Management

End-to-end application lifecyclemanagement processes• Leverage best-practice processes

SAP® Solution Manager and integrated

SAP and third-party management tools• Optimize your tool portfolio

Support and consulting services• Gain access to expert knowledgeEducational services• Empower your workforce

Organizational aspects• Utilize best-practice methodology,

organizational model, and standards

 Processe s 

 Tools

 Ser vices

 O r ganizat i o n 

 ALM

Require-

ments

Deploy 

OperateBuildand test

DesignOptimize

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• SAP Quality Center application by HP • SAP Central Process Scheduling

application by Redwood• SAP Productivity Pak application by

RWD• SAP Extended Diagnostics applica-

tion by CA Wily • SAP Test Data Migration Server  

software• SAP Test Acceleration and Optimiza-

tion application• SAP IT Service Management 

application• SAP Resource and Portfolio Manage-

ment application

Best Practices and Methodologies Application lifecycle management pro-

 vides standards, best-practice method-ologies, and organizational recommen-dations covering the most typicalcustomer situations – implementation,operation, or upgrade. You can lever-age these experiences to optimize theimplementation and operation of ALM within your organization.

SAP standards for solution operations describe the different processes ofend-to-end solution operations. Theyaddress the tasks and needs of busi-

ness process experts – the stakehold-ers responsible for designing andexecuting business processes – and ITdepartments responsible for makingthe functionality of SAP applicationsavailable to business users.

SAP road maps provide methodicalframeworks for SAP projects. Theygive a structure to results and activitiesand provide the tools, services, andother methodical procedures that are

recommended or required to help

achieve the project objective. Specialaccelerators in the road map structurehelp with certain project tasks by pro- viding templates, examples, standards,product information, or best practices,for example.

Establishing a Customer Center ofExpertise ( Customer COE) empow-ers an organization to manage its mis-sion-critical operations effectively andefficiently. The Customer COE teammanages quality and collaborationbetween all parties involved in ALMactivities.

ServicesTo support you in implementing ALM

in your organization, SAP provides vari-ous services. SAP customers can getfurther information regarding theseofferings on the ALM Services page.• Expert-guided implementation is an

optimized, short-term setup serviceto configure basic settings of SAPSolution Manager without long-term,in-house consulting.

• Consulting services for SAP SolutionManager  will help plan the deploy-ment of SAP Solution Manager, in-stall the system, configure the man-

datory and desired functions, andtrain users and administrators on howto handle SAP Solution Manager.

SAP offers several training coursesand empowering workshops to facili-tate knowledge transfer to your sup-port organization. The training andcertification of Run SAP methodologyprovides companies, partners, andSAP consultants with the expertise toimplement ALM.

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Contacts

[email protected]

Christian Jaerschke, Principal Business Consultant,TCO Topic Lead, SAP Deutschland AG & Co. KG,

[email protected]

Contributors

 Andreas Mohr, Global Upgrade Office, SAP AG

 Andreas Schmidt, Director Consulting Sales, Business Technology, SAP Consulting, SAP Deutschland AG & Co. KG

 Andreas Wentz, Business Development Manager, SAP Test Management Consulting, SAP Deutschland AG & Co. KG

Björn Interthal, Head of Consultant Academy & Education Service Sales, SAP Deutschland AG & Co. KG

Christian Oehler, Suite Solution Architecture, Solution Management SAP Business Suite, SAP AG

Christian Sommer, Consulting Director, Master Data Services, SAP Consulting, SAP Deutschland AG & Co. KG

Christopher Shinner, Asset Portfolio Manager, Suite Solution Management, Fast Implementation Team, SAP AG

Detlev Sandel, Consulting Manager, SAP NetWeaver, SAP Consulting, SAP Deutschland AG & Co. KG

Dirk Stegemeyer, Director System Landscape Optimization, EMEA & Latin America, SAP Consulting,SAP Deutschland AG & Co. KG

Frank Bayer, Sales Manager, Business User Sales, CFO Solutions, SAP Deutschland AG & Co. KG

Frank-Uwe Schäfer, Program Manager, Business Technology, SAP Deutschland AG & Co. KG

Gunther Manz, Consulting Manager, Process Integration Manufacturing, SAP Consulting, SAP Deutschland AG & Co. KG

Gunther Schmalzhaf, Solution Manager, Virtualization, Adaptive Computing & Cloud Technology,Lifecycle Management Suite and Platforms, SAP AG

Dr. Holger Silberberger, Head of Consulting Sales, Germany – Austria – Switzerland, SAP Deutschland AG & Co. KG

Lukas Bretschneider, Process Integration Manufacturing, SAP Consulting, SAP Deutschland AG & Co. KG

Maik Schmalstich, Consulting Manager, Platform Technology, SAP Deutschland AG & Co. KGMarkus Helfen, Consulting Director, SAP Test Management Consulting, SAP Deutschland AG & Co. KG

Dr. Oliver Kohnke, Principal Business Consultant, Business Transformation Consulting EMEA,SAP Deutschland AG & Co. KG

Ralf Andreas Reinhard, Consulting Director, Process Integration Technology, SAP Deutschland AG & Co. KG

Dr. Simon Bertels, Consulting Manager, IT-Management, SAP Deutschland AG & Co. KG

Dr. Stefan Breulmann, Consulting Director, Technology & Factory Services, SAP Consulting,SAP Deutschland AG & Co. KG

Stefan Elfner, Chief Development Architect, Suite Core Architecture, SAP AG

Stefan Schnadt, Consulting Director, Platform Technology, SAP Deutschland AG & Co. KG

Steffen Thiem, Director, Head of Product & Tools, Global Upgrade Office, SAP AG

 Thomas Grande, Strategic Upgrade Expert, Project Manager, Upgrade Competency Center EMEA, SAP AG

Uwe Rötschke, Senior Consultant, Solution Design and Costing, SAP AG

 Vivian Lüchau-de la Roche, Customer COE Program Owner, SAP Active Global Support, SAP AG

CONTACTS AND CONTRIBUTORS

For more information, visithttp://service.sap.com/tco.

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www.sap.com/contactsap

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