Given the changes in technology, mergers and acquisitions, impending upgrades, and extensions to SAP core technology, companies now measure IT costs more closely and grapple with replatforming, license negotiations, and extensions. However, these changes bring about a new opportunity for enterprises to consider how their architecture will continue to support their business.
Ensuring that business processes are seamless companywide presents a key challenge. Over time, many companies have implemented “independent” SAP instances, processes, roles, and technical architectures — all based on localized data — resulting in fragmented processes and costly operating and technology models.
If you are a company running multiple SAP designs, you’re not alone. Now, common sense tells you that if reducing the number of instances is better, then running a single instance is best. But it’s no surprise that companies often find consolidations difficult, painful, and costly. So what’s the right approach?
Understand How You Got Here
You’ve no doubt been on (or led) SAP projects and heard statements like: “Our business processes are unique.” “Our data model is exclusive to our processes.” “We need 24/7/365 continuous uptime.” “Our business is global, and bandwidth and connectivity are constant challenges.” These situations — along with poor server performance, seemingly limited bandwidth, or a lack of global process oversight — often drove businesses to set up separate SAP instances.
But now companies are faced with build and implementation teams that are truly independent by region and business unit; regional instances based on functionality, time zone, or business requirements; or even separate local and regional instances that are hosted in a central global data center. Without skillful planning, your processes and IT systems may suffer from little sharing of knowledge, skills, or asset reuse. As a result, any global initiative would confront numerous — sometimes conflicting — views and insufficient data transparency.
Despite the resources centralization requires, the benefits of achieving fewer instances — or, better yet, a single instance — are very compelling. Business cases generally report large efficiency gains along with cost savings in shared services operations.
Your Options for Centralization
Keep in mind that SAP centralization can take many forms. Consolidating financial data, for example, is a relatively low-cost solution that requires minimal investment — but it still drives more commonality via a single platform. In the end, you can choose to take one or all of these steps:
- Integrate: Technically integrate data and processes, leaving multiple back-end systems in place.
- Harmonize: Standardize applications and data for a consistent view of business information across multiple systems.
- Consolidate: Fully consolidate the technology behind all data and processes.
This last option can be the most challenging, but it yields the best results. Many mature SAP companies go through each of these steps to gain the full benefits of centralizing and streamlining their IT systems.
Integrate for Pure Cost Savings
Integration is a technical solution with the leastamount of organizational pain. Imagine a scenario where you can physically centralize different SAP instances and technically integrate them in the same data center.
Today’s powerful servers and database technology advances make this possible, with online transaction processing (OLTP) and online analytics process (OLAP) running on the same database. (This is why SAP can provide an “all-in-one” version of the SAP Business Suite, where transaction-based applications like sales and distribution functionality can co-exist with its business data warehouse.)
With powerful bandwidth now prevalent through most of the modern world, integrating instances on a single platform is now a reality — users commonly access data through federated portals or thin clients (via data warehouses). In this approach, users have no awareness that the underlying SAP systems have changed, but IT sees reduced operational costs.
By standardizing all SAP instances on a single platform in a single location, businesses can create and maintain any new or custom functionalities in consistent ways. Additional integration can be addressed through a single portal interface, a publish-and-subscribe master data management hub, or a global data warehouse.
Harmonize for One Consistent View
To go beyond pure IT cost reductions, you need to focus on data — and how it can support shared processes. Harmonization uses organizational governance and oversight to ensure that both data and processes (applications) have synergy, even though different SAP instances still technically run separate clients.
This approach focuses on standardizing applications at the data level on a common data model to guarantee that data always has the same meaning across different businesses or geographies. Here, it’s important to understand that this step affects various levels of your company: organizational structure, people, business and regional culture, business processes, data quality, applications, and infrastructure.
This homogeneous information supports common processes and can drive cost savings, especially if you can create shared services centers and replicate best practices. You’ll surely benefit from common auditable processes with a consistent view of your customers and assets.
Consolidate to One Central Instance
This final step relies on shared services, where businesses implement and operate common processes and data structures from a central location in a central instance.
Achieving this step typically requires leveraging new SAP tools, such as SAP Client Migration Server and SAP Custom Development Object Package, as well as third-party tools. These tools survey each SAP instance to understand the corporate structures (hierarchies), business process configurations, custom objects, master data, and roles.
The survey results provide an inventory of each instance and a baseline for the commonality and uniqueness discussion that each process or system owner needs. This baseline allows companies to select the best practices they need for their consolidation effort and their future architectural design.
Success Factors for Centralization
The most successful companies have done the basics right as they’ve centralized their systems: understand all the components involved in centralization; clarify the approach and benefits with business and IT; be upfront about the impact on every aspect of the company.
Because of the business benefits of full consolidation, many mature SAP companies do follow each of the three steps in the approach I outline here. However, it may also make sense to consolidate smaller, key areas of your business rather than every instance across the entire company.
The movement to a less diverse SAP landscape only helps your business and lowers the total cost of ownership. However, even in a consolidated landscape, the temptation to split off and allow diverse processes, data, and operations can still occur — and only rigid governance can prevent it.
|Adolf Allesch is the global SAP NetWeaver lead partner at IBM Global Business Services. A pioneer with the Web, he is now the SAP NetWeaver evangelist for IBM. He specializes in technology-enabled business transformation using SAP and is a frequent presenter at SAP events worldwide. You can reach him at firstname.lastname@example.org.