Two broad trends once can see in the SAP market.
Trend 1 - Working with SAP hosting partners and then move towards full-fledged SAP on the cloud
By and large organizations are moving away from an on premise SAP data center environment to having partnership with SAP hosting service providers. Basically companies lease server space and as well outsource BASIS Administration activities of their SAP systems to the hosting partners. These organizational can be expected slowly and steadily move towards embracing full fledged ERP on the cloud model as they mature and gain confidence with the hosting partners and also with the whole partnership model. Small organizations of $2 to $ 5 billion sized are the ones who are moving towards the "Public cloud" option which provide the most cost effective solution for them. Bigger organizations will tend to go for "Private Cloud" as they tend to have multiple SAP systems in their landscape and will see more advantage in the dedicated infrastructure even on cloud. "Hybrid cloud" is something that can appeal to bigger organizations as that addresses the risk and confidentiality aspect by moving only the development and quality environments into cloud while leaving the production environment on premise. To me the Hybrid cloud option is the ladder through which SAP user organizations can join the cloud bandwagon, build robust partnership model around risk and confidentiality for moving towards the Private cloud option which provides economies of scale.
Trend 2 - Keep the SAP data center on premise but move the SAP service department into a captive unit in a low cost location.
This option is sort of preferred for large SAP behemoths. Big companies in the order of sizes more than $10 billion will have huge SAP infrastructure and such systems tend to be dated and something heavily customized environments. It is these kind of organizations which consider going for cloud based SAP systems is too risky. These companies have large SAP systems and will keep adding new SAP systems or engage in spin-off activities due to regular merger and acquisitions. Over the time their data center have become too big and too complex, that any new CIO is threatened by the risk involved in even considering disturbing the functioning data center environment. So moving to cloud as a cost reduction strategy will have no buy in and even if implemented it will be on very small areas on ad-hoc basis. For such companies moving the IT support organization to low cost locations is safest bet on cost reduction. Having already outsourced many of the regular production support process, most likely these organization will have retained a core team of IT professionals who run the show with in house knowledge capability around core processes. It is these core process knowledge retention team that will become target cost reduction by way of opening a captive unit in a low cost country.
Is the second trend a viable?, given the rapid advances being made on cloud capabilities in the market and as well on the fast paced changes in the SAP capabilities. 5 to 10 years from now would the large SAP user organizations be better served by an in house data center or complexities will zoom to a level of tipping point where in move to cloud becomes a necessity. I read about a very similar story during the early industrialization due to lack of reliable power grids, big manufacturing industries had invested in building power plants on their own to ensure reliable electricity supply. But with the advancement made in power grids, and efficiencies achieved by utility companies, the concept of in house power plants vanished. It looks to me the same will be the case of data centers for large organizations. Given the advances being made by cloud service providers, it is going to soon become un economical to even have on premise data centers. SAP being the core ERP system for these companies, it is better addressed early for cloud migration. Investing in captives can be a strategy on IT cost reduction along with movement to cloud, but the latter will have larger impact on the bottom line and make large organization's IT nimble enough to react to market dynamics quickly and effectively.
Use of Iterative Methods and Testing Strategy as key differentiator for Project Execution
For SAP Consultants, testing is one of the phase in overall implementation, change management or support projects. Testing can play a very vital role to make first time right impression on the client.
Various models in Testing are :
1. Waterfall Model à It goes sequential
2. RAD (Rapid Application Development) Model à To deliver project in short span and create testing strategy related to overall delivery schedule.
3. Iterative Model à Where development and testing goes hands in hand and multiple iterations are made.
4. Agile and Scrum à Extension of iterative model where overall Project is broken into multiple individual areas and multiple integration areas and overall delivery plan is made.
We say we are following ASAP methodology for delivering a SAP Project which has
1. Requirement Gathering
4. Cutover Activities
5. Go Live and initial support
Here we are following Waterfall or Sequential model for overall testing strategy where bulk of our testing goes in realization phase.
Instead of this if we use Agile and Scrum methodology then we can break each phase in ASAP methodology into an Iterative Method and Testing Cycle and can do multiple iterations to come out with final Results.
For Example :
Requirement Gathering : Break into multiple areas where we foresee Business expectations. Align to standard industry practices. Do multiple iterations in each area separately with business to come out with best fitted requirements. Similarly we should do multiple iterations on the integrations areas in requirement analysis and see best fitted methods for integrations.
When all individual and integrations areas are finalized, a single process (having branches) catering to multiple requirements can be formulated.
Same methodology can be applied to other phases of ASAP method. This makes us pretty confident that no area within the solution is untouched while delivering final solution to client. It makes sure also that we do not find surprises after solution goes live.
Though in practice we find difficult to go through iterative processes due to time constraints, it's always better to even include Iterative Methodology and Testing Strategy with Agile and Scrum in our efforts estimation and highlight our process as one of the key differentiator in our Proposal Response.
Is sustainable purchasing all about meeting regulations and compliance or does it has any larger objectives as well? To put it simply, is it all about obligations or about genuine social responsibility, which encompasses care about environment and the people.
The answer to this question determines the long term rewards and returns for pursuing sustainability practices. Depending upon the viewpoint, companies adopt their approach to sustainability. A short sighted approach means it becomes only a cost controlling tool. It is looked upon as a mere overhead to meet regulations, rather than an enabler for securing future markets. However, companies which see this beyond meeting regulations are taking a more strategic view of sustainability and developing integrated plans to invest in this process.
Yes, it does cost more to incorporate a greener product or substitute in the supply chain, but it gets rewarded in long term through increased customer loyalty, reduced risk and overall increase in profitability. As per recent surveys, more and more consumers prefer products that are more environment friendly and reduce carbon footprint. In the new age, being viewed as a socially and environmentally responsible company is pivotal for market success.
Purchasing is a critical function influencing implementation of sustainability practices. The primary job of purchasing still remains to minimize cost, but it needs to optimize it with respect to impact on environment. This would entail devising a purchasing strategy to look for alternate suppliers, product substitutes and maintaining a track record of suppliers in sustainability performance.
When it comes to devising a purchasing strategy around sustainability, size does matter. It would really depend upon the size of the company and the type of product business. However a common approach would be to start slow instead of a big bang approach. Otherwise it risks becoming too lofty a vision to be realized. Aim for realistic improvement by identifying non-critical inputs like packaging materials, MRO items etc. as potential candidates for 'quick wins' . Develop new breed of 'green' suppliers by actively promoting and engaging them. This would entail a new supplier onboarding strategy driven by a strategic policy of encouraging 'green' suppliers. Monitor supplier performance by measuring KPI's related to sustainability. Build external intelligence network to capture indicators of various regions to identify risks proactively.
To support these changing purchasing processes, a solid supplier management tool is a must, which would help not only in managing the basic and operational metrics but also cover the strategic metrics concerning the sustainability parameters. It needs to track the performance of suppliers and help purchasers with informed decision on when to phase out and develop new suppliers.
For SAP customers, the recent SAP SLC product from SAP fits the bill by offering a comprehensive supplier management functionality. It features a dedicated scorecard functionality to create sustainability scorecards and ratings. Being integrated into SAP ECC and SRM environment, it provides easy adoption to operational procurement processes.
Overall a successful purchasing strategy incorporating sustainability practices would need commitment from top. Driven by a strategic plan combined with investment in right tools would reap dividends in long run.
As we enter the New Year, companies are brainstorming on the best path to chart through the year. In this age of digital, where there is an overdose of information, creating a strategy that is simple and breaks down complexity is foremost on the minds of business leaders.
It's that time of the year - sitting in front of the fireplace - sipping hot coffee and spending the time with your family. This is how I visualize my holiday season to look like. Year-end means different things to different people. Some of us choose to relax, rejuvenate and look forward to an exciting new beginning ... and for others - the keen-eyed discount hunters - there cannot be a better season than the year-end to brag about their retail exploits.
Recently Infosys implemented SAP MDG solution for introducing data governance on material master for one our clients that has an ERP landscape involving multiple SAP systems and non-SAP systems. We focused on the SAP systems first during the implementation and then came up with a scalable integration solution with non-SAP systems.
The requirement for integration was along the following lines
1. Integration solution should be scalable to enable to add non-SAP ERP system into data governance as and when such systems are ready
2. Initiation of integration should not entail any new development effort in the SAP MDG system
3. SAP MDG user interface should be enabled to allow the data steward to pick and choose the target non-SAP ERP systems to replicate the material master data
4. Receive and process acknowledgement carrying success or failure message
Scalability is the paramount requirement as the number of non-SAP ERP systems are around 30+, hence having a mini development project for each of such application as and when the regions represented by these applications join the global data governance process is not a feasible. So the integration solution needs to be designed in such a way that any new region joining the global data governance stream is just handled by a master data type extension. This forces us to think hard on coming up a viable solution that achieves this scalability and at the same time is not technical complex to develop in the first place.
After studying multiple solution options we went ahead with standard SAP Classification based solution. The contours of the solution are
The class will have characteristic whose value represents the non-SAP ERP system.
This way any new non-SAP ERP system is just handled by addition of one characteristic value.
Some amount of work in the middleware SAP PI is needed once the characteristic value is defined in MDG but does not involved very detailed development effort in PI too.
From a solution development perspective only major drawback we faced was due the fact that SAP creates a separate idoc (intermediate document) message for material classification values for integration with external systems, which means the middleware has to process to two idoc messages for each material and that can make it complex for middleware. So to eliminate this we had to enhance the standard material master idoc message with additional segments to carry the classification values too. But still this is an one time development effort and we found that there is good amount of effort and cost savings compared to alternate solution which might need a development for each non-SAP ERP application addition to data governance and went ahead with this approach
Recently we presented this solution at ASUG (Americas SAP user group) St. Louis, USA conference. The solution idea and the benefits were well appreciated by the august audience.
Some of the interesting comments received were
From a Monsanto executive
"We have millions of material masters in our system and all the challenges and issues you highlighted are very much there and I seriously yearn for your solution in our system"
From an EATON Corporation executive
"We have a high priority requirement to create material master workflow, I am now convinced after listening to your presentation, MDG is the way forward"