Executive Briefing
SUCCESSFUL COMPANIES
TRANSFORM WITH FLEXIBLE
SAP SOLUTIONS
Big data analyses, social media, mobile apps and worldwide networks are altering our
society dramatically. Processes are running faster while technologies and trends are
changing at breathtaking pace. Flexible and scalable SAP solutions from the cloud are an
efficient and reliable way to overcome these challenges.
Digital
megatrends
driving IT
bilhão
1
BILLION
MOBILE M2M
CONNECTIONS
BY 2020
10
BILLION
DEVICES ON
THE INTERNET
BY 2016
44
ZETTABYTES
TRAFFIC
BY 2017
All around the world, companies of all sizes and in
all sectors are changing. Examples are plain for anyone to see in the retail and automobile industries.
Market leaders in e-commerce are offering virtual
supermarkets, for instance, and the whole future of
trade is now being shaped by online, multichannel
and mobile sales. In the automobile industry, sophisticated configurators, mobile apps and online
services are state of the art. Cars “speak” with each
other (i.e., connected cars), with the dealer, with
the manufacturer, and above all, with the driver.
Machine-to-machine (M2M) technologies occupy a
central position within automated processes. At the
same time, OEM portals and communication platforms enable effective cooperation and the centralization of information.
The main term used to describe this change is
“transformation“, which signifies departure from the
established. It represents radical alteration that
leaves no stone left unturned and proceeds at an
ever increasing pace. Here, time to market plays a
decisive role. Companies must transform quickly so
as to avoid falling behind and to remain competitive.
THE DRIVER OF TRANSFORMATION
The term “transformation” is usually associated with
the transformation of IT (applications and infrastructure). However, transformation from a market and
business perspective constitutes a more radical
change toward new business segments and greater
customer proximity. In order to hold their ground in
the face of fierce competition, companies have to
get closer to customers, brands and markets. This
means addressing customers in a more individual
and direct manner, as well as using available information for better and faster decision making. For
instance, the market prospects for new products
may be determined using of predictive analytics,
providing a basis on which the required resources
may be planned more efficiently and used more
effectively.
TRANSFORMATION VIA
DIGITIZATION
Innovative technologies such as clouds, big data
and analytics, mobility, in-memory technology and
WHAT DOES TRANSFORMATION MEAN WITHIN THE COMPANY?
As communication and interactions between a company and its customers, suppliers, partners
and competitors largely take place via IT resources, IT plays a decisive role in business transformation. This is all the more true in today's “age of the customer,” which puts the customer at
the center of all entrepreneurial thinking and action.
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social collaboration are leading to a paradigm shift
in companies’ relationships with customers and
staff, as well as to ward a stronger focus on the
(end) customer and on projects geared toward increasing customer satisfaction. Companies are presented with a whole range of new possibilities for
various tasks and departments. In the SAP environment, an abundance of new application scenarios is
emerging for companies, including:
• Real-time sales-channel benchmarking in sales
• Preparation of customer-specific offers in real
time for marketing
• New service business models via machine-tomachine data
• Financial analyses based on real-time data in
accounting
• Identification of fraudulent transactions by means
of real-time fraud detection
•M
odeling of end-to-end financial processes,
through to the mobile end device, with SAP Fiori
and SAP Simple Finance
These are just a sample, as there seems to be no
end to the possibilities offered by innovative technologies and products. The SAP HANA Use Case
Map provides a good overview and demonstrates
numerous examples of the successful use of SAP
HANA in practice.
However, there are a number of factors that put
some companies off switching to SAP HANA. Financial considerations are foremost: 86 percent expect the changeover to require additional investment in hardware, and 74 percent find it difficult to
estimate the cost-benefit ratio. This means that the
investment also has to be seen alongside a tangible
business advantage for the company, justifying the
investment.
USE CASES SHOW ADDED VALUE
Nevertheless, there is already an abundance of real
use cases that represent a broad spectrum of functions and sectors: A consumer goods corporation,
for example, consolidates its international data
pool for uniform reporting across national borders,
harmonizing its processes. Retailers adopt approaches based on innovative, future-oriented business models, such as real-time analysis of consumers' purchasing behavior. Production companies
optimize their ability to react to dynamically
changing circumstances, such as disruptions in the
supply chain or the production flow. Real-time
analytics solutions are particularly beneficial to
those in charge of controlling and operational
processes, or who perform managerial tasks, but
there are also far-reaching prospects pertaining to
marketing.
All these scenarios require IT services that follow
the dynamics of business processes. This calls for a
competent partner, that can map and support
different business models and processes in an economical manner.
TRANSFORMATION IN THE IT
DEPARTMENT
The IT department is becoming the “enabler” of
revenue growth and competitive advantages. At
the same time, ITs traditional responsibility remains
guaranteeing the day-to-day operation of failsafe
IT systems with high availability. This gives rise to a
genuine dilemma. On the one hand, there are the
operational departments demanding fast, costefficient processes. On the other, management is
pressing ahead with company expansion goals and
implementing new business models. But, both
sides can agree on one thing: IT is expected to dramatically decrease “time to value,“ i.e., the time
between the decision in favor of a particular IT solution and the moment when the staff create added
value with that solution.
CLOUD AS CARRIER TECHNOLOGY
FOR TRANSFORMATION
SAP HANA use cases show that investments pay off.
Source: http://hana.sap.com/abouthana/why-hana.html
While cloud technology has so far served as an effective means of cutting costs and making IT production more economical, the cloud is now becoming the carrier technology. In other words:
No cloud, no transformation.
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As IDC describes it, “The cloud movement is about
much more than the cloud. Cloud cannot be sufficiently understood as a stand-alone phenomenon
in the IT market, but rather as a core ingredient of a
larger transformation of the IT industry – and many
other industries using IT to transform themselves.”
Dynamic and flexible IT resources from the cloud
pave the way for new business processes. Dynamic
acquisition of IT resources for applications, databases and middleware from the cloud helps the IT
department cope with its myriad challenges. The IT
department also has to deal with the speed of
innovation in cloud computing and rapidly provide
platforms for high-speed, short-term computing
requirements.
The corresponding solutions are available because
providers like SAP are transforming their product
range with the cloud in mind. In 2013, Jim Hagemann Snabe, CEO of SAP at the time, declared,
“The future of SAP is in the cloud.” Current CEO Bill
McDermott is continuing on the course set by his
predecessor. And users are open to SAP from the
cloud – even in Germany, where decisionmakers
are usually rather cautious with regard to new developments. In a recent survey conducted by
Pierre Audoin Consultants (PAC), almost twothirds of respondents (62 percent) said that in the
future, many SAP customers will also use SAP
cloud services. However, in order to make SAP
available from the cloud on short notice, and in a
manner that is tailored to suit current requirements, companies often have to adapt their SAP
landscape. The standards are high: customers and
staff expect trouble-free business and service
processes in the form of standardized and industrialized IT services, – with high availability, proven
technologies, needs-oriented delivery and
maximum security.
Nevertheless, the journey into the cloud is worthwhile for the users: in the PAC study, the majority of
respondents identified clear advantages, such as
better support of mobile end devices, reduction of
operating costs and an easing of the burden on the
IT organization.
WHAT DOES TRANSFORMATION
MEAN FOR THE IT DEPARTMENT?
A company's current transformation requirements
give rise to a whole range of questions. Among other things, the following must be clarified:
• How the complexity of heterogeneous systems
may be reduced, particularly in the company’s
SAP environment
• The possible ways of making the fixed costs of
core business applications variable
• How the expenditure on IT operations may be
decreased while ensuring high availability of
SAP systems
• Which measures provide greater transparency
regarding existing systems and their costs
• What should be done in order to support specialist
departments more efficiently and effectively,
and to remove shadow IT
• How cloud services will support the implementation of the company strategy
• Which cloud options should be considered for SAP
WHAT BUSINESS TRANSFORMATION
HAS TO DO WITH SAP
Internationally, with revenue of more than 16 billion
euros and a presence in 180 countries, SAP has become the leading provider of enterprise resource
planning software. Its worldwide market share, ac-
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SAP
CLOUD:
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THE SAP
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strategy.
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Source: PAC
German SAP users
believe that more
SAP solutions will
be used from the
cloud in the future.
cording to Gartner's findings, is 24 percent. Moreover, data from Gartner shows SAP is the world's
largest provider of analytics software, as well as
software for handling business processes, with revenue in this area amounting to more than three billion US dollars. SAP HANA contributes to these figures significantly. No product in the company's
history has ever generated such demand
so quickly, as this in-memory database is strategically important in the area of big data/
analytics applications as well as in the role of a
powerful integration platform for SAP's innovative
cloud products.
SAP has now set another milestone with S/4HANA,
the successor to SAP ERP. As PAC analysts Tobias
Ortwein and Frank Niemann have noted, “For SAP,
the announcement of S/4HANA is an important,
major step in the company's history.” They add that
S/4HANA is not just about a new release of the
SAP Business Suite running on SAP HANA because
it changes the way the core system operates. For
instance, the Financials, CRM, SRM and PLM modules now share a common platform. This eliminates
the previously necessary data transfer between
components such as ERP and CRM.
In addition, SAP is continually integrating the
database with its software products. Alongside
the Business Suite, these include SuccessFactors
and Ariba. In the coming years, SAP is following a
clear road map that defines which SAP systems
are to be transferred to the cloud within what time
cycle, and which are to remain in place for some
time.
SAP FROM THE CLOUD – BUT HOW?
For companies, the SAP transformation process
means that new SAP HANA installations have to be
set up in order to benefit from coming innovations.
Sooner or later, there will also be a need for clarification with regard to the traditional components.
Should they be transferred, or do they have to be
integrated? Integration generates heterogeneous
landscapes that require more time and effort for IT
management. Whenever systems are transferred to
the cloud, be they SAP or non-SAP solutions, a feasibility and cost analysis must be conducted in advance, in the course of which the sourcing strategy
should also be incorporated into strategy development as a decisive factor. Which SAP systems
should be run in-house, as a managed service, via
outsourcing or as a cloud service?
According to Gartner, more than two-thirds of
German CIOs are planning to adapt their sourcing
strategy with respect to cloud services by 2016.
STRATEGIC ACTION:
THE BASIS FOR SUCCESS
Despite all the uncertainty surrounding business
transformation, one thing is clear: the IT department is continuing to become more important
within the company. Considering how fast the
changes are happening, though, there is a risk that
IT decisionmakers will now merely react to requirements. To be successful in the long term, they must
be able to anticipate developments and make navigational interventions. IT organizations that take
an active role in business transformation should develop a sourcing strategy that defines the extent to
which services are provided internally, or by one or
more service providers. In this process, unlike in the
past, decisions are not made purely on the basis of
cost. It makes more sense to decide according to
business advantages and company strategy, and to
support business processes with adequate IT services. This gives rise to goals that are to be set individually, such as:
• Lower costs for standard and scalable
services
• Short response times via services that are to
be performed in a flexible and agile manner
• Customer-specific services
• Establishment of new business processes
and models via technical innovations
In order to support the agility and flexibility that the
marketing and the sales department demand,
cloud applications should be an integral part of any
sourcing strategy. This makes it possible to achieve
goals such as cost reduction, flexibility and greater
individuality, as well as appropriate data protection
and security.
But when companies set out on their journey into
the cloud, no matter where they start from, it is always advisable to use the know-how of experienced and professional service providers who are
already successfully active in the cloud. This is because, particularly in the SAP environment, providing and securing SAP system services, combined
with the complexity of the processes, necessitates
comprehensive practical knowledge and the variabilization availability of resources that an internal
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IT department usually cannot provide in a lasting
and sustainable manner.
NO TRANSFORMATION WITHOUT
CLOUD SERVICES
As IT's importance to the company increases, so
does the CIO's dilemma. The larger and more complex the systems, the higher the cost of day-today operations. Developing and supporting new
business models requires staff and financial resources that are not available. The only way that
CIOs can regain their capacity to act in the long
term is by outsourcing all SAP operations to the
cloud. Easing the burden on day-to-day operations enables CIOs to provide innovative solutions
for the business proactively. In addition, running
SAP in the cloud with an experienced provider offers an opportunity to use new applications based
on SAP HANA, without a major initial investment.
This includes, for example, mobile applications
for more efficient sales and service processes,
in-memory technology for real-time analyses and
faster business decisions, as well as the incorporation of special cloud solutions for e-commerce or
human resources. Thus, IT supports the transformation process in the specialist departments, at
calculable costs.
5
Executive Briefing
HOW DYNAMIC SAP SERVICES
FROM THE CLOUD SUPPORT
THE TRANSFORMATION OF
THE BUSINESS AND THE
IT DEPARTMENT
GREATER FLEXIBILITY AND
SCALABILITY FOR PROCESSES
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One of the IT department's main challenges is
greater flexibility. In the financial sector, for instance, if product lifecycles (from the concept
through to termination of the product) last only a
few weeks, the demand for SAP services throughout the year can only be roughly estimated. The IT
department runs the risk of either holding up too
many costly resources, so as to be able to cover
peaks in demand, or failing to meet customers' expectations when performance requirements are
high. In view of the increased hardware requirements of future SAP products based on SAP
HANA, decisionmakers are under more pressure to
consistently provide (as precisely as possible) only
the amount of IT capacity that is actually used,
and which translates into revenue. This is where
SAP solutions from the cloud come in –, often in
addition to an already existing on-premise SAP
infrastructure.
TURNING CAPEX INTO OPEX
The greater flexibility of costs is a key advantage
to cloud-based IT services. This also applies to
SAP operations in particular, which represent a
large part of the IT expenditure in many companies. Budgetable monthly operating expenses, instead of non-transparent cost blocks, give not
only the CIO but also the entire company as a
whole, the financial scope necessary for business
transformation.
REDUCING COSTS
Asked why companies do not change over to new
technologies, business leaders often cite cost. With
SAP solutions from the cloud, this argument can be
turned around: experts' experience shows that in a
flexible, cloud-based operating model, costs can
decrease by as much as 30 percent compared to
those of a company independently operating an
on-premises solution.
EASING THE BURDEN ON THE
IT DEPARTMENT
During business transformation, the IT department
needs additional resources in order to provide better support for valueadding tasks, such as process
innovation and product development. However, as
complexity and scale increase, the day-to-day operation of companies' existing SAP systems ties up
more and more staff and financial resources. Outsourcing the operation of SAP applications to an
experienced provider frees up more resources,
again, for helping the specialist departments reach
their commercial goals and for facilitating new developments.
IMPROVED PERFORMANCE,
AVAILABILITY AND SECURITY
As with any other business application, the benefits
of an SAP installation depend on its availability and
performance. Cutting-edge software is of no use if
the servers are overloaded and the users stare at an
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hourglass instead of doing their work. However, as
performance and availability are always a cost issue as well, many companies curb their expenditures on high-performance infrastructure when
purchasing on-premise solutions. This reduces not
only the solution's return on investment but also
the productivity of staff and processes. Here, too,
outsourcing SAP-based operations is a viable alternative, because performance, security and availability can be provided more economically in the
provider's external data center than within the
company. This eases the burden on the CIO while
simultaneously ensuring that all applications remain state of the art.
SAFEGUARDING AGAINST FAILURE
Any time service or production processes are
brought to a standstill for an entire day, the implications are clear, and the losses in such a situation
are perilous. Moreover, while IT's expansion and
networking within the company increase, so does
the risk. For this reason, more and more companies
consider taking measures to ensure trouble-free
operation from the simple snapshot, through to disaster recovery and business continuity strategies.
For cost reasons, though, the mirroring of complete
data centers at geographically scattered locations
and network infrastructures designed with end-toend redundancy cannot be realized by most user
companies. Cloud service providers, on the other
hand, provide this as a standard part of SAP services.
SAP HANA INSIDE
Introducing future-oriented technology like SAP
HANA requires considerable expenditure. As SAP
develops all new products solely on the basis of SAP
HANA Enterprise Cloud (HEC), the integration of
the complete SAP Business Suite also entails high
costs. This drives the initial investment upward and
means that some innovative business cases based
on the new applications do not pay off. However,
running SAP from the cloud enables companies to
try out new possibilities first, without generating
high fixed costs – the provider runs the platform and
the costs can be budgeted as part of the monthly
usage fee. This also applies to updates and release
upgrades. Here, cloud users also benefit from the
fact that all the organizational outlay, including running the test environment, is covered by the provider. For the user, operations simply carry on.
APPLICATION MANAGEMENT
(AMM/APM)
Every SAP installation evolves along with the company that uses it. In order for the solution to bring
maximum financial benefits at all times, this development must be monitored and controlled. Here,
providers help with services like application management modernization (AMM) and application
performance management (APM). This means that
companies using SAP as a service from the cloud
benefit from know-how that a user company cannot maintain.
USE THE ADVANTAGES OF SAP FROM
THE CLOUD IN PRACTICE NOW
There are many reasons to outsource operation of
your SAP environment now. Here are some of the
most impressive advantages of the cloud innovations that arise from the close partnership between
SAP and IT providers:
• Flexible provision of and payment for IT services
• Secure and efficient operation
• Less investment
This is why numerous companies in various sectors
and of various sizes, with several million users in total, already use SAP services from the cloud today.
They use globally available virtualized solutions
that offer SAP-based operating services from the
cloud in a standardized and industrialized manner.
In this way, SAP operating costs can be reduced by
as much as 30 percent.
In order to fully exploit the potential benefits of the
cloud, the following points should always be considered when choosing your cloud partner:
• Demonstrable experience with successful cloud
services in the SAP environment
• A solid basis of cloud customers of all sizes in
all sectors
• SAP certification, confirming that the provider
meets all of SAP's quality criteria pertaining to a
secure professional cloud environment
• Platforms that are open to all common operating
systems and possible to access quickly and
securely via MPLS or Internet VPN
• Availability of added-value services such as business process monitoring or root-cause analysis
• Global data center networks
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• Highest security standards that meet the requirements of locations scattered around the world
When establishing cloud services, network performance is of particular importance. Here, intelligent
networks (MPLS) that “think” about the loads and
also make dynamic bandwidths available are a key
prerequisite for the business of the future. Furthermore, the network enables control of components
that play a part in a business process and makes
weak points transparent. This is a prerequisite for
IT-based support of critical business processes and
for combining end-to-end service levels as complete services.
implementation of their business strategy and
sourcing strategy, with the necessary flexibility.
This partner should also have considerable experience in operating the solution, as well as in system
implementation and application management.
Moreover, the chosen service provider should be an
expert on SAP system transitions and migrations –
including the incorporation of heterogeneous infrastructures with applications from various manufacturers and the handling of interfaces that this
necessitates. If these criteria are met, the IT department can confidently hand over its SAP systems
and concentrate on its goals in the context of business transformation.
In general, companies should seek a technology
partner that offers them end-to-end support in the
IDC-Commentary
THE SIGNIFICANCE OF SAP SOLUTIONS FROM THE CLOUD IS GROWING
Matthias Zacher,
Senior Consultant,
IDC Central Europe
GmbH
“Only companies that evaluate and use cloud technologies as a model for flexible acquisition of IT
resources can prevail in today‘s tough competitive
environment. In the future, SAP solutions from the
cloud will also take on considerable significance
with respect to business transformation, whereby
companies do not have to commit themselves to
any specific cloud subscription model, as they have
various options to choose from.
Here, SAP S/4HANA offers additional potential regarding flexibility and performance in business.
To make full use of this potential, companies should
seek partners that have long-standing experience,
both in the SAP environment and with cloud computing. For the transformation and transitioning of
businesses and information technology, it is important to focus on such partners that give companies
as much freedom as the solutions themselves.”
Sources:
http://hana.sap.com/abouthana/why-hana.html
2014 DSAG member survey, quoted from www.it-business.de/dienstleister/marketing-vertrieb/messen-events/articles/463495/?cmp=nl-43
IDC, Four Pillars “Cloud,” 2013
IDG study, “Cloud Computing,” 2014
PAC, “SAP goes Cloud,” 2014
Gartner Market Share Analysis: ERP Software, Worldwide, 2013, quoted from www.forbes.com/sites/louiscolumbus/2014/05/12/gartners-erp-market-share-update-shows-the-future-of-cloud-erp-is-now/
Gartner CIO Monitor 2015, quoted from www.computerwoche.de/a/deutsche-cios-sind-aufgeschlossen-gegenueber-cloud-computing,3061114
©IDG Business Media GmbH, Germany 2015
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