SAP Global Alliance Manager,
Platform Strategy & Partner Group
As Microsoft continues to expand into emerging areas, our investment
in SAP continues to expand right along with the business to deliver increasing
return on investment. In August 2003, Microsoft completed putting mySAP
Supply Chain Management (mySAP SCM) and SAP R/3 Enterprise into production
to power new strategic projects and support Microsoft’s operations
with SAP’s most recent release.
As background, Microsoft runs its $30
billion business on SAP software and has done so since 1995. The growth
and pace of the business had outgrown existing, non-integrated legacy
systems. A single, global instance of SAP was originally implemented to
deliver consistent financial information across Microsoft’s worldwide
businesses. A single view of financial information was critical to enabling
the company to truly focus on business operations rather than on debating
financial results coming from disparate systems.
Today, every Microsoft employee (over
55,000 now) interacts with our SAP system through easy-to-use self-service
applications. SAP is woven through all major business operations including
finance, asset management, sales and distribution, material management,
human resources, project management, and business intelligence. Already
a pervasive SAP customer, Microsoft expanded its licensing commitment
by signing a mySAP Business Suite contract in June 2003.
Streamlining Microsoft’s Supply Chain
In September of 2000, Microsoft initiated a project to streamline our
forecasting and planning processes on SAP Advanced Planning and Optimization
(SAP APO). A global SAP APO instance was implemented in May 2001 to manage
our PC hardware, PC software, and Xbox console supply chain planning and
Prior to standardizing on SAP, custom
tools and applications powered different forecasting processes, causing
problems with integration, data latency, inaccuracies, and duplicative
headcount. SAP APO brings standard forecasting and planning for six business
divisions, 20,000 active SKUs, 50,000 active forecasting units, 26 distribution
centers, and 22 manufacturing facilities. In addition to strong agility
and quality benefits, Microsoft is realizing a $25 million reduction in
inventory costs since implementation, and headcount savings of over 10
people. The initial SAP APO 2.0 installation has now been upgraded to
Version 3.0 and has been combined with SAP’s full mySAP SCM solution.
Now, Microsoft is focused on bringing
upstream efficiencies and savings to our Xbox component supply chain processes
through a project called “XStar.” Microsoft works with a network
of suppliers who each provide components used in the manufacturing of
our Xbox gaming console. With millions of game consoles now shipped, managing
the component supply is a critical activity. Furthermore, the Xbox business
model is unique because the gaming console itself is not a profit-making
transaction in the first place. So any additional supply chain inefficiencies
put further strain on an already unprofitable part of Microsoft’s
|Microsoft shares information about
our internal SAP operations and best practices each calendar quarter
through a no-charge, one-day SAP Customer Workshop at Microsoft headquarters
in Redmond, Washington. Reservations for this popular program can
be made at www.microsoft-sap.com
under the “Coming Events” tab.
Microsoft’s implementation of XStar
is closely linked to Microsoft’s efforts to upgrade from SAP R/3
4.5B to R/3 4.7 (SAP R/3 Enterprise). SAP R/3 Enterprise contains supply
chain functionality needed for the XStar project. One week after SAP R/3
Enterprise was put into production in early August, XStar went live.
An Innovative SAP R/3 Enterprise
Microsoft Tested and Successfully
Implemented SAP R/3 Enterprise Without Disrupting Users or Its Quarterly
The upgrade to SAP R/3 Enterprise from Release 4.5B that began
in July 2002 was a delicate balancing act for our SAP operations
Microsoft maintains a disciplined
quarterly release cycle, which greatly assists in managing change
and enhancing stability. However, from an end-user perspective,
the process can appear restrictive and inflexible. Further, Microsoft
is running a single, global SAP R/3 instance rather than a set of
SAP R/3 systems, which complicates the planning and testing required
for the upgrade. Microsoft realized the need to move to SAP R/3
Enterprise to position the company to reach further into emerging
markets, such as China, with Unicode compliance, as well as to establish
the latest functionality for future supply chain, treasury, and
xApp projects being evaluated. The overarching question was, “How
can SAP R/3 Enterprise be fully tested and implemented successfully
while maintaining the quarterly release cycle and minimizing the
impact on business end-users?”
The answer was an SAP upgrade technique
called a virtual transport system — a whole
new way of managing transports. First, our 4.5B system continued
running on its development, test, and production servers. Development
on 4.5B continued for our normal August 2002, November 2002, and
February 2003 quarterly releases.
While the 4.5B system was maintained,
a pair of 4.7 development and test servers and a pair of “virtual
transport” development and test servers were installed. New
4.7 development projects were started in 4.7 only, so application
development was not duplicated in two environments. Transports were
sent to the “virtual systems,” creating a buffer of
Using SAP’s upgrade CDs, the
upgrade from 4.5B to 4.7 could be practiced repeatedly using the
1. The 4.5 system was upgraded to 4.7.
2. The changes stored in the virtual system were applied to the
3. The resulting 4.7 system was thoroughly tested.
This process enabled Microsoft to
continue to operate our 4.5B system, meet our quarterly release
commitments and handle existing business processes, repeatedly test
the quality of the upgrade process, and cutover to a new 4.7 development
environment. The drawback of this approach is that if development
occurs for an extended period under the new 4.7 environment while
continuing to run 4.5B in production, the “virtual system”
buffers can become laden with changes. To avoid this issue, in May
2003 the focus of the project became the upgrade itself. Therefore,
development slowed in general, and the virtual system became unnecessary.
Transports could be tracked manually and applied manually.
Virtual systems enabled us to shrink
the window of dual maintenance of changes from two quarters to one
quarter. They reduced the chance of post-upgrade instability. This
process leveraged existing staff effectively. What’s more,
it allowed for a steady transition from run/maintain quarterly activities
to upgrade responsibilities with minimal new headcount requirements.
Facing Your Own SAP Upgrade? Microsoft’s Platform Advantages
Can Amplify Your ROI
Today, business pressures clearly demand doing more with less. Is your
company faced with making additional investments to upgrade your SAP system?
Is the upgrade project challenging to justify? Are you paying too much
for the infrastructure required to run SAP?
An unprecedented number of SAP customers
are evaluating upgrading their SAP systems to the latest releases. These
upgrade projects can be difficult to justify, and they impose change on
your organization. They require additional infrastructure investments.
Now may be the time to cap investments in Unix-oriented systems and implement
your SAP upgrade on a cost-effective, high-return SAP platform —
the Microsoft and Intel platform for SAP. The cost-reduction benefits
associated with the Microsoft Platform can be incorporated into your upgrade
business case to raise the overall ROI and value proposition significantly.
Microsoft, Accenture, Cap Gemini Ernst & Young, HP, Intel, and REALTECH
have teamed together to offer a set of upgrade services and promotions
available for SAP customers now.
It has been clearly proven that the Microsoft
and Intel platform is less expensive to purchase and less expensive to
operate while delivering the reliability, availability, and scalability
SAP systems require. To learn more about upgrading your SAP system on
the Microsoft Platform, visit www.microsoft-sap.com.
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