Customers are saving on SAP operational costs this year with SAP infrastructure projects, including ditching Oracle databases in some Unix and Windows environments, trying to rein in database size, and virtualizing SAP applications, according to AMR Research.
Companies are spending between $150,000 and $3 million on such projects and realizing payback within nine to 10 months, according to Derek Prior, research director at the Boston-based firm. Prior gathered the findings from about 20 companies interviewed as part of AMR's SAP Peer Forum, which offers best practices and lessons learned through teleconferences, summits and webcasts.
To identify areas of potential SAP savings, it's important that SAP customers establish a 10-year lifecycle plan that includes hardware, software, support and upgrades, Prior said. Most companies put infrastructure costs in a different bucket from applications and therefore can't get a good view of where overall operational costs can be cut.
"Take a long-term view of SAP costs," Prior said. "You should not have a whole succession of different projects with an SAP tag on them. There's a possibility to take advantage of advances in technology and infrastructure that SAP applications run on to reduce the bigger cost."
Companies are finding quicker payback with technical projects aimed at cutting the annual ongoing operations for SAP systems than with projects directed at reducing business expenses, Prior found. The SAP projects they're conducting on the business-end are still very big projects – such as more software rollouts.
"Companies agreed there's a real potential to save money by doing much smaller projects than they're currently doing," he said.
For instance, some are finding it cheaper to swap Oracle databases in a more Unix-oriented environment to DB2, he said, or to swap Oracle for SQL Server in a more Windows-oriented environment.
Companies are also replacing application servers near the end of depreciation life with blade technology, Prior said, as a low-risk way of getting a quick payback.
Server virtualization is also helping to consolidate servers and reduce hardware costs. Server virtualization has been relatively slow in the SAP customer base because of the mission-critical nature of the applications, but SAP virtualization is starting to pick up. Companies are beginning with non-production systems and establishing a virtualization strategy to manage them, and some are now starting to virtualize production systems as well.
"It's still a minority of companies, but I think it's going to accelerate," Prior said.
Companies are also focusing on things like automated testing and test data management. Others are getting a good payback from managing databases by careful data deletion and data archiving to squeeze down the database size, he said.
This project could require some expert consulting, he said. With data deletion, it's essential to get agreement within company as to what constitutes old data, which can be discarded, and what needs to be kept. The company also may need to bring in consultants if it does a broader archival project in order to determine what information has to be online and what information has to be archived and still accessed quickly online when necessary.
On the business end, it was a little more difficult to identify fast-saving SAP projects, Prior said. But in smaller areas like purchasing and financials, companies are using the SAP financial applications, including SAP ERP FI, more effectively to manage working capital.
"In the current economic climate," he said, "more companies need to have very tight control of working capital."