Businesses today must be innovative, meeting and exceeding customer demands by delivering new products and services faster than their competition. These ventures, however, can take a financial toll on companies’ IT departments. To help drive differentiation and continue to foster innovation initiatives, these departments are looking for ways both to reduce their costs and to focus resources on leveraging new technologies.
One of the best ways to directly reduce IT operational costs and make significant savings is by optimizing your current SAP environments in terms of the three major cost components — infrastructure, support operations, and application footprint. Whether your company has more SAP licenses than it uses, users are only partially using implemented functionality, or your SAP environment is outdated and cluttered with customizations, there are significant opportunities to drive material operational SAP cost reductions.
Organizations around the globe are rapidly adopting the cloud due to its flexibility, agility, and cost savings. Within the context of SAP operations, this is particularly true for infrastructure, as there are many ways to take advantage of infrastructure-as-a-service (IaaS) offerings. Depending on your company’s current infrastructure provisioning arrangements and where you are in your hardware refresh cycle, you can realize cost savings by:
- Migrating SAP environments to a public cloud rather than investing in new hardware if you are approaching a hardware refresh or at the end of a contract
- Migrating non-productive environments to a public cloud and taking advantage of pay-per-use pricing
- Using the cloud for disaster recovery
If you want to reduce infrastructure costs but aren’t ready for a move to the cloud right now, switching from branded hardware to generic x86 hardware could be a good option. In addition to immediate savings, such a move would also make a migration to the cloud easier if you decide to take that route in the future.
2. Operations and Maintenance
Management and support should not be forgotten when implementing SAP systems. Redesigning your SAP center of excellence could not only reduce your support and maintenance costs, but it also offers the opportunity of improving the service that is provided to your business users. Other benefits of analyzing the costs and performance of your SAP CoE include rapidly assessing your CoE maturity, gaps in capability, costs of IT non-compliance, base and peak resource levels, opportunities for more cost-effective provisioning of services, increased use of automating monitors and health checks, and process performance KPIs and monitors.
3. Application Deployment
Companies often have additional processes and functionality in their SAP systems that they rarely or never use, leading to bloated systems driving increased costs. One of the major issues in right-sizing an SAP landscape is understanding how much infrequently used functionality resides within the SAP system, who uses it, and how often they use it. HCL has developed an analytical toolkit called Insight+ for SAP that analyzes production SAP systems to answer these questions.
The output of the Insight+ for SAP solutions toolkit is then used to identify a recommended minimum viable SAP footprint, which is a measure of the minimum functional footprint operated by the smallest number of users required to run the business processes currently implemented on the SAP system. By running SAP systems at this capacity, businesses can significantly lower the cost of operating and maintaining an SAP system. For businesses that run multiple SAP production instances, this could also be spiking operation and maintenance costs. Operating a single, enterprise-wide instance can significantly lower costs.
In Part 2 of this blog on cost reduction strategies, I delve more closely into the topic of SAP instance consolidation. For further information on SAP instance consolidation, check out the chat replay of Ian's recent SAPinsider Live Q&A and read his answers to readers' questions on this subject.
Or to contact HCL, email firstname.lastname@example.org.
Ian Greenhalgh, Head of Applications Strategy, HCL Technologies
Ian is head of applications strategy for HCL. In this role, he is responsible for developing and delivering new technology-based propositions across HCL’s applications business. He is actively involved in working with clients to analyze issues and opportunities, architecting, and implementing innovative technology, business change and operational improvement solutions to fulfill these needs. Ian has been heavily involved in developing solutions and delivering many of HCL’s largest SAP transformation programs in both North America and Europe.