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On 12 March 2020, the Covid-19 outbreak was officially declared a global pandemic. From that day onward, countries around the world progressively went into a state of lockdown, with enforcement of social distancing and working from home for those that could. It also meant the shutdown of many well-established businesses here in the UK.
SAP customers in some industries that experience an increase in business are likely to continue with most of their planned SAP projects, including S/4 Hana upgrades, deployment of cloud software-as-a-service (SaaS) and digital transformations.
But SAP customers badly affected in many other industries have seen their revenue fall off a cliff. They have no choice but to halt planned projects and try to drastically reduce their SAP ongoing operations and support costs.
Here is a suggested action plan for badly affected companies.
Migrate on-premise SAP
If you have already migrated your core SAP ERP (enterprise resource planning) systems from on-premise datacentres to a managed private or public cloud infrastructure-as-a-service (IaaS), then you are in a much stronger position to save money than those who have not.
First of all, check the actual hours of usage of every single system in your SAP landscape – your dev, testing, training, and so on, as well as production. Hopefully, your service agreement features the pay-as-you-go model, so schedule the shutdown of all unused non-production systems where possible.
Now consult your cloud provider for the latest cost-reduction options available. Did you know that sales staff at some providers are actually measured on how much money they save their customers?
If you have not yet completed your SAP ERP system IaaS cloud migration, do a rapid feasibility study and cost savings analysis for doing so as soon as possible. This could greatly reduce your ongoing (run) SAP operations costs.
Still on the cloud front, if you use any type of cloud services directly provided by SAP, then take a structured approach to your cloud subscription costs from SAP. Check with SAP whether you can renew early and then determine whether you can obtain “renewal protections” to avoid unexpected cost increases. SAP is more than happy to discuss this as part of its commitment to your cloud investments.
Evaluate user base
Next, evaluate the profile of your current SAP users, with a view to streamlining. People come and go and contractors have their own SAP user names, which can be costly if not cleared out. Don’t rely solely on checks to see whether a named user has left the company, because a licence can become redundant is a user moves to another area of your business and no longer requires SAP access.
Schedule regular checks for inactive users who have not used SAP for 90-plus days. If you operate in a multi-SAP system environment, check regularly for duplicated usernames in different systems. One user may have been set up as a different username in another client, leading to double payment of licensing.
Check the dreaded indirect licence usage, where third parties and non-SAP system interfaces can access your SAP data. Ask SAP if you have the correct licence type set up for these users – financial penalties are possible if SAP audits your indirect usage.
Special software tools exist to help you measure and reduce every aspect of SAP licence usage. If you are over-licensed, try to urgently renegotiate your software maintenance costs with SAP. If this fails, you may have to resort to considering third-party SAP application support service providers, which offer dramatic cost savings for SAP systems. These work best for stable SAP systems that don’t need to be enhanced.
Reduce your SAP operations costs significantly by executing overdue housekeeping activities by identifying and removing all unused ABAP custom programs and housekeeping data. Now may also be the right time, at last, to identify and archive all unused old transaction data.
Read more about SAP projects
- Standard support is being extended to 2027, while SAP will continue to offer extended support until 2030, in a bid to get businesses to migrate to S/4 Hana.
- With IoT and blockchain capabilities, some companies are putting SAP Leonardo to work. Here are four examples that illustrate the product’s use cases.
All SAP customers using any form of SAP outsourcing services urgently need to review how their service providers are being impacted by the coronavirus, in order to ensure continuity of service. This means reviewing your current SAP outsourcing SLAs (service-level agreements) and assessing how well your service providers have complied with them over the last six months, especially since the introduction of virus lockdown in both the UK and the service providers’ countries of operation.
Review the virus action plans put in place by your service providers and your own organisation and monitor SLA compliance on a daily basis.
Understand the value of customer business processes
Application standardisation has been a buzzword in IT for many years, and with very good reason. The cost savings realised from a standardised system compared with a heavily customised approach are huge and can dramatically impact your enterprise’s total cost of ownership.
Take a structured approach to reducing the complexity of your SAP environments. Measure your complexity first – benchmark your business processes against standard SAP processes. Standard software tools are already on the market to help you.
Then identify the drivers behind your complexity. Ensure the inbuilt complexity in your system is “rewarded complexity” rather than “unrewarded complexity” – in other words, it adds real business value. Aim as much as possible for “high reward, low complexity” on a graph.
Make the most of Fiori
If you operate an S/4 Hana SAP system, make the most of its standard Fiori analytical apps. This usually gets left till much later.
The power of the in-memory Hana database can drive these analytical Fiori apps with real insights, which can drive not only productivity increases, but also real cost savings.
One example is inventory control, by using Fiori analytical apps such as Overview Inventory Management to show you, at a glance, the most relevant and important tasks. Another is supply chain control, by using the Sales Orders Demand Fulfilment app. This app can be a life-saver in identifying materials and processes that have bottlenecks.
Lastly, don’t forget the housekeeping apps, which keep regular checks on billing statuses, incomplete documents, order blocks and billing blocks – all in the name of squeezing every last drop of revenue from your system.
If you, like most of us now, are now working remotely from home, you clearly need new software tools that are compatible with enterprise VPNs (virtual private networks) and are totally secure. If you are new to working from home, stop, analyse all the responsibilities and tasks of your team, then get specialist advice on setting up and optimising a remote workspace in your home.
Your job content creation tasks are the easy bit and you should be more productive working from home, but the collaboration tasks will be the new challenge. Get some advice on how to choose the best software tools for full remote workspace collaboration, not just web conferencing.
Finally, you must have very enlightened people management to adapt to new ways of working outside the traditional face-to-face world we have all grown up in – but that’s another story.
Derek Prior specialises in SAP research and is a non-executive director with Resulting. He spent 19 years as an analyst specialising in SAP at Gartner and AMR Research, advising organisations all over the world on SAP strategy and best practices. Jon Simmonds is an experienced SAP architect, having spent 17 years with various companies implementing all versions of SAP across the globe.