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March 30, 2015

Cloud or Captive - IT cost reduction strategy for SAP infrastructure

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.

September 2, 2014

SAP Fiori with ERP integration a Game Changer in ERP Market Share

SAP Fiori with ERP Integration to play Major Role in gaining ERP Market Share for SAP

Currently SAP owns around 24% Market Share in overall ERP Market. Though it's a huge Market share with main competition from Oracle, Sage, Microsoft, SAP's End user still complains of inflexible User interface it has developed for most of its core and add-on applications.

While using SAP, customers want that it should be flexible enough to modify their own dashboards so as to bring important aspects of their daily to do list in Dashboard at the front. Customers also have in their wish list that while using applications for creation, modification or approval of documents they should be able to do the activities as ease using their mobile devices so that overall transactional process is faster and device independent. In addition, their expectation is that they need not logon to multiple systems once entered into main Dashboard.

To bring Customer Wish list in reality, SAP has developed and still developing multiple applications called SAP Fiori. It calls it SAP UX which means SAP Fiori user experience.  These applications can cater to individual areas within SAP like ECC, CRM, SRM, HCM, GRC, PLM, SCM, TM, EM etc.

With Fiori, SAP is trying to gain ground on 3rd party applications which uses HTML or Java or other to design user Dashboards which are really easy to use but requires separate integration with SAP Applications. These increases licensing cost of Customers for 3rd party applications as well as for SAP ERP.

Below chart depicts SAP's market share by ERP and cumulative application share by ERP Type.

 

Graph for Market share for ERP and Cloud products.jpgReferences: Forbes, Gartner & Zdnet, Panorama

Reference Link:  http://www.forbes.com/sites/louiscolumbus/2014/05/12/gartners-erp-market-share-update-shows-the-future-of-cloud-erp-is-now/

http://www.zdnet.com/2013-erp-research-compelling-advice-for-the-cfo-7000011619/

When it comes to cloud applications like CRM cloud, SAP is in fact is not the market leader.  Salesforce has taken the lead due to pleasant working experience on its cloud based applications, easy and flexible dashboard use, quick to plug Mobile infrastructure availability and reduced pricing due to SaaS (Software as a Service) model.

Though SAP Fiori is not exactly a Cloud Application, it makes user experience working on the applications far too pleasant. Customization or enhancements of Fiori applications are quicker as they are developed specifically for particular operations like Purchase Order approval. When individual business wants a change in Purchase Order approval flow, it can be easily done by doing the enhancement only Purchase Order related Fiori application. 

In coming days we'll also see fierce fight in User interface and ERP integration market and how companies launch different products or applications either to retain or enhance their market share.

This competition is likely to be among SAP, ORACLE, Salesforce, Microsoft, Infor, Sage, Google etc.           

Who knows we may see altogether a totally new brand appeared from nowhere and followed unexpected approach to become Market Leader in this space.

 

Siddhant Metkar

Lead Consultant, CSI MFG,

Infosys Limited

February 24, 2013

What's your mobility quotient?

In his keynote on the BlackBerry 10 launch, Thorsten Heins, the CEO of BlackBerry (or erstwhile RIM), talked about the transformation to mobile computing from a mere mobile communication. In this space of mobile computing, the mobile device is always on, connected simultaneously to personal and enterprise worlds and enables a seamless user experience reliably and securely. The BB 10 and its ecosystem of partners and developers is already moving in the direction of mobile computing and so are others among the wide gamut of stakeholders in enterprise mobility.

Continue reading " What's your mobility quotient? " »

August 3, 2012

A Reset in Outsourcing

Randy Mott, the CIO of General Motors made a powerful statement when he announced the end of IT outsourcing as GM knew it. A company just bank from the brink of bankruptcy now has the gumption to raise its headcount by thousands and in a non-core area. In many more ways than ever he also signalled the end of an era where multi-year, multi-billion outsourcing contracts which have dominated the world of IT service providers and have driven their businesses. The contours of outsourcing and the business model of IT service providers now looks vulnerable and hazy atleast for some years from now.

Continue reading " A Reset in Outsourcing " »

May 16, 2012

Enterprise Mobility with Sybase Unwired Platform

Many organizations face the need for making an important decision of choosing the right development approach after selecting a mobile platform  like SUP (Sybase Unwired Platform).  While there is no best solution that works all the time, this paper attempts to bring in the pros and cons that each of the approaches carries with reference to enterprise requirements and different business cases.

Continue reading " Enterprise Mobility with Sybase Unwired Platform " »

March 2, 2012

Industry Perspective: Production supply with EWM execution - Part 2

By Yudhishthir Shrikant Joshi

In the last part, we discussed about the different unique requirements of warehousing for specialized industries like Aerospace. This industry also faces some unique challenges which stand apart from Auto or Retail industry in terma of its business lifecycle.

Continue reading " Industry Perspective: Production supply with EWM execution - Part 2 " »

September 26, 2011

Opportunity Maintenance- A point of view: Part 2

In continuation to what we were talking on Opportunity Management (OM) in Part 1, following picture graphically shows how the OM is planned:
 

OM2.png

 

Continue reading " Opportunity Maintenance- A point of view: Part 2 " »

September 17, 2010

Service Introduction- In IT space

The concept 'Service Introduction' is gaining rapid popularity in IT world as an 'effective tool' to introduce a new application/service into an established system.

In short, Service Introduction is the management of activities to ensure that applications/systems being developed to meet all operational requirements before getting introduced to 'Production or Live' environment. It also has to ensure 'Maintenance teams' are comfortable in providing the required services from the day one.

Continue reading " Service Introduction- In IT space " »

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