In my last blog, “Reduce IT Costs with a 3-Tiered Approach,” I went over three key strategies for reducing your IT costs by optimizing your SAP environments: Minimizing infrastructure, boosting operational efficiencies, and optimizing the application footprint. Instance consolidation was highlighted as an important enabler for all of these strategies.
An HCL study recently found that operations and maintenance costs for organizations running multiple SAP production instances are 30-40% higher than those operating a single, enterprise-wide instance. Therefore, we know companies can realize significant operational savings by consolidating SAP instances — in fact, we believe that an SAP customer with 2,500-users can realize $15-20 million in savings over a five-year period through this effort alone. In addition to the savings inherent in consolidating to a single SAP instance, companies often find reduced software maintenance costs through the rationalization of their SAP license base.
It’s not just about organizations’ current set-ups, however. As many companies prepare to adopt the new capabilities of SAP Business Suite 4 SAP HANA (S/4HANA), they will need to update and rationalize their installations — as an example, depending on how your system is configured, if you are currently using classic G/L and want to take advantage of split and parallel ledgers in S/4, you will need to upgrade to New G/L as an interim step. By consolidating now, organizations can simplify their path to S/4 HANA and avoid what could be a very painful single-step upgrade.
So how should you go about an instance consolidation program at your organization? The first step is to look at your SAP solutions with the business in mind. How does your business use its SAP solutions? What works? What needs to be improved? What isn’t used? Which components generate the highest number of issues? Which components have the highest number of requested changes?
The second step is to extract and analyze the information embedded within existing SAP systems and use it to drive the design of the core of the consolidated solution. Understanding how your current SAP systems are actually used, rather than what they were designed to do, can dramatically accelerate an instance consolidation program and result in significant cost and time savings. For example, by evaluating user activities (Who is using your SAP systems and what are they doing?) you can identify users that can be moved to other applications. Similarly, by determining which processes are heavily customized and which can be redesigned to the standard, your company can take advantage of standard-delivered functionality and evaluate if SAP S/4HANA simplifications can add immediate value.
HCL offers a number of automated tools to help extract and analyze this information, and has developed a set of principles that apply to any instance consolidation project:
- Development of a global single instance (except where this is prohibited by information security requirements)
- A return to standard SAP configuration
- Elimination of redundant configuration
- Elimination of custom coding
- Elimination of unused or limited use data
- Right-sizing to the minimum viable SAP solution footprint
In addition to analyzing your legacy SAP systems, a high-level overview of subsequent phases to a successful instance consolidation project includes:
- Strategy and architecture: Understand the views of business and IT stakeholders about the performance of the current systems and the opportunities to improve process performance; review where new SAP functionality can be beneficially leveraged to replace older, and usually more customized, functionality; and develop a deployment plan that outlines the sequence in which to migrate business units onto the new consolidated instance.
- Single instance design: Confirm the standard, non-differentiating processes and organizational structures that can be rapidly migrated to the new single instance.
- Single instance build: Rapidly configure the standard and strategic processes as they are confirmed by the design team.
- Migration: Once the system is configured, use HCL’s library of standard migration tools and our offshore SAP migration factory to populate the new system.
- Acceptance: Sequence the test scripts in order to prioritize those processes that have external interfaces or dependencies.
- Deployment and hypercare: Once testing is compete, build the single instance production system using the same approach that was used to create the test system, with the additional step of performing master data delta loads, open item migration, and limited transaction.
For more information on how your company can discover the cost savings associated with an instance consolidation project, check out the chat replay of my Live Q&A on SAPinsider to read all my answers to readers' questions on this topic, and also visit www.hcltech.com.
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.