Use Caution When Considering RDS Services For SAP Implementations

Gene Cao

I’ve just returned from SAP’s 2013 SAPPhire China user conference; with more than 17,000 attendees, it’s still the largest SAP event on the planet. The vendor has recently launched new offerings, like HANA enterprise cloud and extended ERP solutions for new industries; it has also extended its China strategy by announcing SAP Anywhere, a bundle of cloud-enabled mobile CRM services, which it has just begun piloting here.

At the event, clients presented their feedback on SAP services, particularly rapid deployment solution (RDS) services. Ever since their launch two years ago, SAP has extended RDS services to more than 150 software applications. The RDS concept aims to provide everything out of one box; clients buy a bundle of application and implementation services. RDS services have brought tangible benefits to clients that want to quickly start their SAP journey or begin with pilot implementations before going for a full-scale rollout.

However, RDS does not apply to all SAP application implementations; it primarily depends on the client usage scenario. Forrester believes that RDS will not be an attractive choice in a few instances:

  • Large enterprises using SAP core ERP systems as a mission-critical application. Large enterprises normally make huge investments in these projects. Their primary focus is not on saving time or money; instead, their top priority is ensuring that the project is a complete success and that all functionality is rock-solid: well-developed and thoroughly tested. RDS services, which can cover up to 80% of ERP system functionality, may not be the best choice in this scenario. We’ve seen this happen in China and Southeast Asia time and time again over the past two years.
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Manufacturers In China Should Change Their Sourcing Strategy To Improve Business Competence

Gene Cao

Chinese manufacturers are repositioning. They’re willing to invest more in improving their core competencies, like R&D and design capabilities, by using outsourcing providers that have successfully served foreign peer companies in the same industry. They must dedicate all their resources — including internal IT systems and solutions like ERP — to meeting this goal.

We recently published a case study on Tagal, a joint venture of ThyssenKrupp Steel Europe and Angang Steel in China. The company was finding it difficult to face up to new business challenges; not only was its infrastructure aging, but its original outsourcing services agreement was constraining business development.

To solve these problems, Tagal changed its sourcing strategy and successfully migrated its ERP system to an Itanium x86 platform to accelerate business processes. The resulting ERP efficiencies enabled employees to process orders and reports twice as fast as before. This has improved Tagal’s relationships with its customers, which are some of the world’s largest automakers. Tagal also reduced its total cost of ownership by 20% in the first nine months alone, primarily due to the simplified sourcing strategy.

How did Tagal achieve these tangible outcomes? It redesigned its service contract and employed three key principles when re-evaluating vendors:

  • Modifying sourcing governance. Tagal drew on lessons that it learned from 10 years of outsourcing. Its new service provider contract contains more penalty terms; for instance, the provider now must refund the outsourcing fee in any month in which it does not fix two system errors within an agreed time period.
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SAP Taps The Cloud To Grow In Asia Pacific

Clement Teo

By Clement Teo, Fred Giron, Gene Cao, and Tirthankar Sen

SAP is betting that its future lies in the cloud. While the company still books just 5% of its global revenue from cloud services, SAP is putting the cloud at the center of its growth strategy, unveiling new business models and initiatives aimed at increasing the cloud consumption of its applications. To facilitate this, SAP is making it easier for clients and partners to embrace the cloud. For example, its cloud extension policy allows customers to reallocate existing license seats to a cloud subscription. Clients can unlock the stored value of unused licences and put it to work, giving end users access to meaningful applications in the cloud.

What It Means

SAP has a number of cloud services on offer, and the changes the company is making to pursue its high-growth strategy in Asia will not only transform SAP’s business model, it will also change how its partners do business. Client organizations in Asia will also have to adapt and:

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Telstra Analyst Event 2013: Many Rivers To Cross

Clement Teo

Telstra hosted its annual analyst event in Sydney on October 23 and 24. In his keynote address, CEO David Thodey compared Telstra’s customer advocacy journey to a triathlon that the firm has just begun, which we believe it a fitting analogy for Telstra’s progress on the path it has set for itself. The company is clearly in the race and making progress, but still has many miles to go.

While the company shared a broad spectrum of initiatives, our main observations are that Telstra:

  • Has made clear progress since our check-in last year, but its transformation remains a work in progress. Telstra is no different than other incumbent telcos working to transform beyond traditional — and declining — sources of revenue. Its dominant position in Australia is secure, but its prospects in new market categories inside and outside of Australia are less certain. We do not believe that Telstra is particularly innovative compared with service providers in the US or Europe, but we do believe that it has a viable transformation strategy and is making progress. Its progress in the Australian media and entertainment industry, including its Foxtel investments, is impressive — it has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers.
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An Asia Pacific First — The Forrester Wave: Asia Pacific Carrier Ethernet Services, Q4 2013

Clement Teo

Carrier Ethernet aims to provide users with a wide-area service to connect sites, in the same way that asynchronous transfer mode (ATM), Frame Relay, and X.25 services from carriers have done in the past. While end user demand for carrier Ethernet services in Asia is relatively small, it’s growing year over year and is having an impact on service providers’ bottom lines: Carrier Ethernet services currently account for 8% to 10% of service providers’ total connectivity revenues in the region.

For The Forrester Wave™: Asia Pacific Carrier Ethernet Services, Q4 2013, we identified, qualified, and evaluated seven global and regional service providers that offer unmanaged site-to-site carrier Ethernet services to multinational companies in Asia Pacific: BT, Orange Business Services, Pacnet, SingTel, Tata Communications, Telstra Global, and Verizon. Key differentiators include the services that each vendor has on offer, such as flexibility in bandwidth bursting, granularity of access speeds, operational metrics and reporting, network coverage, and service-level agreements.

What It Means

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SAP Services Will Make Or Break SAP's Platform Strategy

Fred Giron

Over the past few months, SAP Services has embarked on a major software-enabled services transformation of its offerings and operating models. The strategic intent is to increasingly rely on IP-based solutions (including SAP’s Rapid Deployment Solutions portfolio and assemble-to-order methodology) to deliver outcomes faster, with lower risks for clients and, eventually, support value-based pricing. Next on SAP Services’ transformation road map? I believe that the organization needs to quickly change the perception of the rest of the SAP ecosystem, which still views SAP Services as a competitor.

SAP Services’ business model used to merely rely on staffing “rock star” consultants on client projects in order to facilitate the implementation of complex solutions. The new strategy aims at positioning the 15,000 service professionals on SAP’s newer solutions (e.g., cloud, mobile, HANA . . .) in order to ensure that early projects generate the promised outcomes. In order to achieve this goal, the delivery teams need to be much more focused on collaborating internally (with the R&D team, for instance) as well as externally (with clients). SAP Services will also need to increasingly work collaboratively with its partners in order to ensure the success of the overall SAP-as-a-Platform strategy.

SAP Services needs to:

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Local Telcos Are Well-Positioned For Cloud Services In Southeast Asia

Clement Teo

At the 2nd Annual Telco Cloud Strategies 2013 event in Singapore, I moderated a discussion on how Southeast Asian telcos are gearing up to offer cloud services. Here’s what I observed:

  • In the cloud era, SE Asian telcos are moving faster than they are used to. A year ago, Philippine telco Globe Telecom set up a new division, IT Enabled Services, to effectively deliver cloud services, supported by more than 100 professional services people on the ground. While revenues are still low, the new division is now freed from being part of the larger parent company’s processes and can move quicker than competitors to offer managed cloud services for specific industries. Indonesia’s Indosat, on the other hand, has brought both the IT and network divisions together to offer a bundled service — cloud with connectivity — in the same period. Others, like Singapore’s SingTel, acquired IT services company, NCS, to tap into the enterprise segment.
  • Telcos need partners for cloud services. This is essential, as telcos do not typically have all the pieces for an end-to-end solution. For instance, even with a solid IaaS offering, a telco still needs partners to build the value chain in their ecosystem, e.g., SaaS, and grow together. Indosat, for instance, partnered with Dimension Data to offer enterprise cloud services in Indonesia. The partnership combines Indosat’s nationwide connectivity backbone infrastructure and its 10 data center facilities in Indonesia with Dimension Data’s cloud consultancy services.
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What Factors Can Make A Complex SAP Project More Likely To Succeed?

Liz Herbert

At a recent SAP customer event on Business Transformation, Alexander Budzier from the Said Business School at the University of Oxford presented findings on IT project outcomes and their correlations with various project factors. When determining project success rates, the researchers considered business benefits, adherence to budget, and on-time delivery.

Interesting findings from this research include:

  • Project success does not correlate (or very minimally correlates) with size or length of project, or with public versus private sector.
  • Focusing on one goal too much can have a negative effect on other metrics. Consider the extreme example of the Olympics, which had a 100% on-time result (over 10 Games analyzed) but the highest cost overruns, at an average of 207%!
  • Agile deployments (versus big bang) had greater success in some metrics, particularly schedule adherence, but not all.
  • The single biggest factor in determining project adherence to budget and timelines was benefits management. (In this research fewer than half of the projects they studied had actually tracked benefits.)  Those who focused on measuring benefits significantly reduced BOTH project cost and schedule risk. Project cost overruns averages decreased from 36% to 6% when focusing on business benefits; schedule overruns decreased from 119% to 51%.

So, what can we take away from this? Project leaders should:

  • Focus on benefits – throughout the project lifecycle. Benchmarking can help leaders to identify what benefits / metrics to track.
  • Recognize warning signs / risks early -- and address them before they result in disaster. These risks include unknowns in design, organizational resistance, and shifting project requirements.

HP Enterprise Services in Asia: Strong Message for IT, But Not for the Business

Fred Giron

HP recently hosted its Asia Pacific (AP) and Japan analyst event in Singapore. The company presented its “New Style of IT” value proposition and how it intends to position a combined HP hardware, software and IT services stack to deliver client value. After the Boston event back in February, I was particularly interested to see how HP Enterprise Services (ES) is positioning itself as the tip of the spear of the “one HP” messaging and offering in Asia.

When assessing service providers’ relevance to customer needs, I focus on two major areas:

  • Red ocean offerings – where service providers need to help their clients build scalable, flexible, secure and cost efficient technology foundations around cloud, mobility and analytics.
  • Blue ocean offerings – where service providers need to help the CIO engage business stakeholders to drive better business outcomes in areas like customer experience, for instance.
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Get a Grip on those IBM mainframe MLC Costs

Mark Bartrick

We all like free stuff and we all like saving money. I’m a big fan of any free-to-use tools that help identify cost saving opportunities. I regularly dip into online cost comparison sites for stuff I buy at home, such as house and car insurance. These sites are easy and quick to use and often highlight the savings I’ll make by swapping from one provider to another. And we all like to save money, whether it’s at home or at work.

One big cost item for IBM mainframe users is software costs; they consume a significant proportion of enterprise IT budgets and the biggest single item is usually IBM’s Monthly License Charges (MLCs). These often consume a third or even more of a mainframe software budget. In a cash-strapped world, where budgets are under pressure, it’s therefore no surprise to see IT sourcing professionals regularly challenged with finding ways to cut the MLC bill.

Last year, I wrote about some options for reducing IBM mainframe software costs in a Forrester Research paper entitled ‘How to reduce IBM System z Mainframe Software Costs’. Even so I still get asked by clients ‘what else can I do?’, and ‘are there any tools that can help me identify ways to save money?’

So I am always on the hunt for new ideas and cost saving opportunities.

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