SAP Application Management under pressure

The pressure in IT and SAP organizations is growing. This is shown by a study conducted by the Heidelberg-based management consultancy cbs on the globalization status of SAP application management at industrial companies in the DACH region.

Global rollouts, restructuring and the consolidation of the system landscape are currently the focus of many SAP application companies. While SAP programs and projects are planned for the long term and accompanied by extensive change management, companies are taking a relatively late look at SAP application operations.

Given the growing permanence and governance challenges of a globally operated solution, a holistic view of the application landscape lifecycle is essential.

In order to continue to be successful in the future, companies are required to review their service concepts in the SAP environment, to reduce their IT vertical integration with a sense of proportion, and to rely more on hybrid and flexible delivery models. This is because the limits to the scalability of services are becoming apparent.

How can these boundaries be overcome and how can the increasing design pressure be translated into needs-based, individual solutions for the lifecycle of an IT organization?

This is the question addressed by the market study "Corporate SAP Application Management" by cbs Corporate Business Solutions. The Heidelberg-based SAP consultants surveyed industrial companies in the DACH region. They evaluated 100 written questionnaires and interviewed 25 IT/SAP decision-makers.

In the June issue of E-3 Magazine, we first reported on the results of the inventory - the SAP DNA of the typical industrial customer.

The conclusion: medium-sized and large industrial companies from the DACH region rely on consolidated global SAP solutions and local control of SAP operations by a central IT.

Operating costs

The demands on application management are increasing as a result of the globalization of SAP landscapes in industrial companies in the DACH region.

This also has an impact on the development of operating costs, because the total expenditure is increasing. Overall, the companies surveyed tend to expect costs per user to rise (44 percent).

However, 33 percent do not expect any significant changes, and as many as 22 percent believe they will be able to reduce their operating costs with a uniform global SAP solution.

Whether and to what extent SAP operating costs are changing as a result of the globalization of their application operations is viewed very differently by SAP management in the DACH industry.

It is clear that there are hardly any singular cost drivers at component level. Almost all companies (97 percent) use other components in addition to SAP ERP, and the system landscapes are generally rather complex.

A closer look reveals that only certain components of SAP Business Suite drive up operating costs. 40 percent of the companies surveyed estimate the costs of operating SAP HCM to be above average.

The SAP GTS/SAP GRC Nfe components are also among the cost drivers. The reasons for the higher operating expenses in these areas are the wide-ranging legal requirements, such as those that must be met in the BRIC countries, special regulations in human resources, and in customs and foreign trade.

Effects of globalization

The operation of a global SAP landscape not only affects the cost side. Such an operation often also entails the transformation of the entire process and system landscape.

One third of DACH industrial companies recognize this. They are specifically planning to comprehensively change, significantly expand or even consolidate their IT landscape in the next three years.

Many companies continue to rely essentially on their existing SAP landscape and only envisage selective redesigns.

When a company introduces and rolls out a global SAP solution, 85 percent of SAP users see their application management ticket volume increase.

This means that significantly more IT specialists would have to be assigned to support a global SAP solution. However, the same 85 percent share the assessment that response times in application management have also increased significantly.

This clearly shows that, as a rule, globalization projects have been initiated without the necessary parallel increase in personnel. Competing project activities often exacerbate the problem:

IT employees who are actually needed for global SAP operations are already firmly integrated in other projects and are not dispensable.

To better support their global SAP system landscape, 78 percent of companies said they have extended their operating hours. For the 52 percent that provide their SAP support centrally from the DACH region, this measure entails significant changes in work organization.

They face the challenge of having to ensure their SAP support in a shift model. In order to enable support across all time zones and to accommodate the increasing need for maintenance, 95 percent of respondents therefore expanded the time windows they support.

Weekend availability remains the exception: only 4 percent of companies consider it important.

Another remarkable result: The study found hardly any demand for "round-the-clock" SAP support. Although the business departments often seem to want this, many companies shy away from 24×7 support 365 days a year due to cost aspects and security reasons relating to the governance of the global SAP landscape.

The use of local key users and IT staff is obviously sufficient for user administration.

The requirements for global SAP application management are increasing both quantitatively and qualitatively. 67 percent of industrial companies have had to expand their contact channels as a result.

A ticket system has become standard and is preferred as a contact channel to direct e-mail and the telephone. In order to operate a global SAP solution, 74 percent of companies had to expand their language skills in SAP support.

In global companies, English is the language used in the support process and documentation.

When it comes to expanding specific SAP expertise and increasing the number of staff in IT and support departments, all study participants signaled a need for action.

The more comprehensive a global SAP solution becomes in terms of functions, country versions and operating models, the more SAP specialists are required. An expansion of specific SAP expertise is considered necessary by 93 percent of companies.

Country specifics such as in the BRIC countries, additional solutions such as SAP GRC Nfe, enhancements to existing solutions, and the appropriate language skills are essential in the smooth operation of a global SAP system landscape.

Hybrid strategy

The operating strategy pursued by industrial companies in the DACH region is clearly hybrid. Three out of four companies outsource individual operating tasks to third parties.

Only 19 percent operate their IT systems completely in-house, and only a minority of eight percent of participants outsource the complete operation of their SAP landscape to third parties.

The vast majority rely on SAP service providers and prefer to get help from their suppliers on a case-by-case basis and in a targeted manner. System hosting in particular (18 percent) is outsourced.

Companies also seek external support for SAP projects (15 percent) and SAP application management (14 percent). Complete outsourcing of application management remains the exception.

Only seven percent of the companies prefer this variant. The companies primarily use four different reference types: Either the implementation consultant continues to be employed in application support after the global solution has been introduced, or only SAP specialists on specific topics are purchased via the second reference type.

The third type of reference, the permanent use of freelancers, is also common, as is the contracting out of partial services to AMS providers.

Customer orientation and flexible offers

The companies surveyed generally rate the use of external SAP service providers positively. Particularly in the globalization environment, they benefit both from many years of specific expertise in global transformation projects and template rollouts and from the comprehensive range of services that specialized SAP service providers can offer.

According to the study, these provide the greatest advantage in covering time windows to be serviced (96 percent). 88 percent appreciate the additional expertise of external service providers for country-specific issues and requirements for global solution topics. For almost 70 percent, external support also significantly increases flexibility.

However, large players in the SAP service provider market in particular receive only moderate marks, although they dominate the market picture in SAP application management. 78 percent of participants believe that the market is dominated by large providers. The user companies also stated that they did not really know the market.

The offerings of the large providers are seen as rigid. Prefabricated processes and models make it difficult to align them with customer needs. But that is precisely what is expected: 85 percent of companies would like to see more customer orientation.

More than 90 percent of participants want flexible offerings that enable them to meet and access their individual needs. This is not just about AMS, but about support for the entire lifecycle (plan-build-run) of a global SAP solution.

Conclusion: Globalization drives change

The globalization of the SAP solution world is increasing and changing the demands on IT and SAP support. IT and SAP organizations are under increasing pressure, and the limits to the scalability of their services are becoming apparent.

What is required are know-how-oriented, integrated and customizable quality offerings for the entire lifecycle of a global SAP solution, from strategy and planning through project business to its operation.

There are obviously no patent remedies or turnkey solutions in the context of the globalization of SAP application management: Rather, these must be individually tailored to the respective company.

This is the only way to successfully design and sustain high-quality, cost-efficient SAP support around the globe.