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Moving from an on-premises SAP ECC system to the cloud is a major undertaking, but the benefits can make the journey worthwhile.
Building supply company PrimeSource found this out when it came time to move from SAP ERP Central Component running on IBM DB2 on premises to an SAP HANA managed environment running on Virtustream Enterprise Cloud (VEC).
This has resulted in a more flexible and scalable SAP environment, according to PrimeSource CIO Tony Caesar, and also enabled the company to take advantage of Virtustream's consumption-based pricing model. PrimeSource pays only for the resources it uses.
"When I started in 2016, we had a couple issues: We were an SAP shop, but we were running on DB2, and it's very rare to find companies still running on DB2. We were a Windows-based operation as well and had a lot of cracks in our foundation," Caesar said. "We didn't have a high availability strategy, we didn't have a [disaster recovery] strategy and we had all of our servers and our core ERP environment in the same building with us in what we called a 'data center,' but I called a 'computer room.'"
So, Caesar set out to not just fix the antiquated database problem, but to set a forward-thinking strategy for the years ahead. It quickly became apparent that the answer lay in the cloud, and the company first looked at SAP HANA Enterprise Cloud, SAP's managed cloud environment, Caesar said. PrimeSource vetted 10 service providers before deciding to go with an SAP HANA managed environment on Virtustream Enterprise Cloud.
SAP environment size matters
Virtustream, based in New York, was one of the first companies to offer HANA cloud hosting services, and this deep knowledge made a huge difference for PrimeSource. Virtustream provided HANA-savvy technical architects that could determine exactly what PrimeSource needed for its new SAP environment, Caesar said.
"We knew that we wanted to get off DB2, and while we're not ready to go to S/4HANA, we wanted to leverage Suite on HANA. But we weren't quite clear on how you size and how you architect the HANA environment," Caesar said. "Virtustream helped us to figure out how our environment was going to look and what we needed in terms of sizing and spacing."
The other major factor in choosing Virtustream was its consumption-based billing model, built on a technology called MicroVM.
MicroVM measures a virtual machine (VM) instance's actual consumption of compute resources, such as CPU, memory, storage I/O and network bandwidth over time, so users only pay for the resources they consume, according to Vince Lubsey, Virtustream co-founder and senior vice president of solution architecture.
"We thought that we could control some of our billing once we understood how that worked," Caesar said. "So, in essence, we were quoted out a monthly recurring number based on the number of environments, servers and all of the different things that we asked for, but we knew that, once we went live, we'd be able to start looking at data and how to bring that quoted number down. It took us about five months since we've been live on the platform, but we've got it down now to where we can shut down some machines over the weekends. So, we're saving ourselves a good piece of change every month now just by using the MicroVM."
The consumption-based system also helped PrimeSource find inefficiencies in its SAP environment and clean up outdated processes. By the third or fourth month that the SAP HANA environment was live on the Virtustream platform, Caesar noticed that the monthly bill was rising and asked Virustream to investigate possible causes. It turned out that much of PrimeSource's old code from the DB2 system was not optimized for SAP HANA. It also found many processes that had run in the old system but didn't need to run anymore in the SAP HANA managed environment.
"We cleaned up some of our batch jobs, which was work that we did post-go-live that, in hindsight, I'm not sure we would have had enough intelligence in data telemetry to make those changes pre-go-live," Caesar said. "If we weren't using the consumption billing model, we wouldn't have found this out because it wouldn't have been on anyone's radar -- it didn't send out any alerts. The alert for me was that my bill was going up."
Should you move to Suite on HANA or S/4HANA?
When the time comes to upgrade an SAP ECC system and go into an SAP HANA environment, customers face the option of moving to one of two similar-sounding, but very different, options: SAP Business Suite on HANA (usually called Suite on HANA) and SAP S/4HANA.
But are there real differences between the two, and does it matter which route you choose? The answers are "Yes" and "It depends."
Suite on HANA is essentially SAP ECC that's been designed to run on the SAP HANA in-memory database. It retains the same functionality of ECC -- finance, logistics, warehouse management, plant maintenance, sales and distribution, HR -- but promises much better performance. S/4HANA is a rewriting of the ECC code from the ground up for HANA. It was designed and rearchitected with HANA's simpler data model and can take advantage of next-generation technologies. According to SAP, this makes S/4HANA a "next-generation ERP" that enables companies to revamp existing business models or processes and create new ones that can provide real-time business analysis and insights.
However, SAP has not yet rewritten all of the old ECC functionality for S/4HANA, with only finance and logistics (supply chain, sourcing and procurement) available now.
So, which one do you choose? That's the "It depends" part. Some organizations may feel that a move to Suite on HANA is a first step to an eventual move to S/4HANA, but this is not the case. And it's certainly possible to move directly to S/4HANA. Generally speaking, a move to S/4HANA may be better for organizations that are most interested in the new possibilities that S/4's finance and logistics functions enable.
Moving to the cloud, as PrimeSource did, is one way to make the migration path a little easier. PrimeSource moved to Suite on HANA running on VEC but eventually intends to get to S/4HANA, according to Caesar.
"Being on VEC is a step in the right direction, and I know that the move to S/4 should be a little bit easier because we're on VEC and we won't have to do that database migration," Caesar said. "But the core of S/4 is a change, and a lot of that is going to have to be retooled anyway. So, it may give us a leg up, but there will still be a lot of work to do to move our whole organization to S/4."
Know your code before you start
PrimeSource's transformation to the cloud began in earnest on January 1, 2017, and the SAP HANA environment on Virtustream Enterprise Cloud was live by Memorial Day, taking just five months to go from a fully on-premises system to a full cloud system, according to Caesar.
The transition was seamless and had "literally zero impact to the business," he said, but there were some important lessons learned.
Tony CaesarCIO, PrimeSource
"With the consumption-based model, do as much pre-work as you can, know your code and make sure you have optimized code where possible," Caesar said. "Also, I would have had my guys spend more time pre-cleaning up our batch jobs before we moved into the [Virtustream environment]. We had nightly batch jobs that started at 7 p.m. and ran all the way to the next morning, which wasn't a big deal in our legacy environment, but when we moved to the cloud, it was more of a big deal, especially with the consumption-based billing."
Caesar also noted that PrimeSource lacked internal HANA experts and had to rely on Virtustream any time they had a HANA tuning issue. The expertise was fine, but the process was inefficient.
"Going in, you don't know what you don't know, so we didn't know that we were going to need a HANA expert, not a [database administrator] expert," he said. "We thought it would be near-turnkey, but there's no real turnkey when you go from one database to another."
Going to the cloud is not necessarily less expensive than running an on-premises system, Caesar noted, but there are benefits of convenience and flexibility. PrimeSource no longer has to maintain a generator to keep the power on in the case of a blackout or brownout, for example, and the company did not have a secondary data center as a backup to the primary data center.
Better yet, it no longer has to deal with the everyday operations of running the SAP environment.
"If I look at the overall cost of doing it in [VEC] versus the overall cost of doing it on premises, it may be a little bit more in the cloud, but I have a lot more flexibility," he said. "If we need to set up a new server or environment, we call up Virtustream, and that environment is stood up in a couple days. If we need to make a change, we follow a [standard operating procedure], and that change gets made. I like that fact that all of the management and administration -- the daily grunt work -- is no longer on my team's back because it's being handled on a day-to-day basis by the Virtustream team."