commercial viability of an adaptive computing solution for ... · 3 commercial viability of an...

Commercial Viability of an Adaptive Computing Solution

for the mySAP™ Business Suite from Fujitsu Siemens Computers

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COMMERCIAL VIABILITY OF AN ADAPTIVE COMPUTING SOLUTION FOR THE MYSAP™ BUSINESS SUITE FROM FUJITSU SIEMENS COMPUTERS

INTRODUCTION

Adaptive computing is a new way to reduce operating costs in the SAP environment. Adaptive computing solutions

virtualize the physical hardware and allow flexibly configurable system solutions which enable the optimum use of existing resources accompanied by a reduction in operating costs at the same time.

Adaptive computing is an integral component of SAP NetWeaver™ and enables SAP applications and services to work on any server at all times. This makes it possible to allocate resources to SAP applications and services in line with requirements.

The result is systems which utilize existing resources more efficiently in comparison to a conventional implementation with a fixed integration of applications and hardware. This more efficient use of resources principally reduces the requisite hardware investment.

The concept behind realizing an adaptive computing approach by Fujitsu Siemens Computers is called FlexFrame™ for mySAP™, and will be referred to simply as FlexFrame in the following. At the same time, FlexFrame extends beyond the adaptive computing approach of SAP described above, as it not only reduces the need for investment but also entails considerable savings in operating costs.

Customers and partners of Fujitsu Siemens Computers all evaluate the FlexFrame solutions very positively. This applies both in regard to experience in the area of total cost of ownership (TCO) as well as in respect to the return on investment (ROI) of projects in which the new philosophy has already been adopted.

Nevertheless, Fujitsu Siemens Computers wished to verify these statements with an independent survey and clarify the benefits for customer applications on the basis of sound and verified facts accompanied by a transparently structured model calculation.

For this purpose, Fujitsu Siemens Computers commissioned BearingPoint to examine the TCO and ROI of FlexFrame solutions as a neutral consultancy company. The results of this study are presented in the following.

FLEXFRAME CONCEPT

In order to understand the results, it is important to understand the principle behind the FlexFrame concept devised by Fujitsu

Siemens Computers:

FlexFrame™ for mySAP™ Business Suite is an infrastructure solution which is realized as a component of the Dynamic Data Center concept by Fujitsu Siemens Computers. FlexFrame for mySAP™ is an adaptive infrastructure which is optimally layed out for use with SAP NetWeaver.

The solution provides increased flexibility in comparison to conventional SAP infrastructure solutions, makes administration of the SAP landscape easier and reduces operational costs significantly. Its technical concept renders FlexFrame an ideal basis for „SAP services on demand“.

All this is achieved through a clear separation of the four aspects:

Computing, network, storage and control.

The unique nature of FlexFrame can be summarized under four headings: visualization, automation, integration and service orientation.

Virtualization

FlexFrame enables the virtualization of SAP applications, in other words the independent operation of software and hardware. The virtualization of the LAN further enhances the above flexibility and cost savings through FlexFrame for mySAP™.

Automation

Complicated cluster technologies are replaced by an intelligent FlexFrame management software. So-called “high availability agents” are referred to in conjunction with this software. These automate certain processes for a high level of availability. This consequently reduces the complexity as well as susceptibility to errors and, as an end effect, ensures optimum availability or capacity utilization of the hardware.

Integration

The FlexFrame solution with its various solution components, including the network attached storage components of the company Network Appliance, are perfectly adapted to each other. They are tested before delivery and are subject to a strict quality assurance process. This provides FlexFrame customers with an easy-to-install solution.

With FlexFrame, administration and extensions as well as storage consolidation represent no longer a challenge in daily business.

Service orientation

FlexFrame supports the use of SAP services on demand. The new grouping & pooling functionalities of FlexFrame enable the selective protection of data areas so that these separated domains can be made accessible to individual customers or departments on the same hardware.

From a business management point of view, this new approach to a solution entails the following changes in comparison to a conventional architecture:

FlexFrame achieves cost advantages through an improved server capacity utilization based on greater availability and utilization of the hardware installed. There is no longer any need for a special deployment software. Software explicitly designed for the operation in the cluster environment is not required either. A further advantage results from the fact that costly and time-consuming cluster tests are now a thing of the past with FlexFrame. Nevertheless, FlexFrame solutions have high levels of availability similar to conventional computer clusters.

FlexFrame currently requires “Unix knowledge”, as Linux or Solaris are prerequisites for the operating system. It is important for the user to understand the concept of greater flexibility and the processes altered as a result of this.

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Rethinking one’s ideas requires time, “inhibitions must be abandoned (paradigm change)”. Familiarization may therefore be associated with additional costs, for example training expenses.

METHODOLOGY AND BACKGROUND TO THE TCO/ROI APPRAISAL

The economic viability of the FlexFrame solution was evaluated with the aid of TCO and ROI.

Gartner’s “TCO Chart of Accounts” was used as a basic structure for the TCO calculation. The concept comprises a list of 193 cost items for operating an application infrastructure.

In order to ensure comparability, the structure was typically adapted by removing certain indirect costs.

To calculate the ROI, the change in the operating costs (TCO) was compared in relation to the level of investment.

Graphic: Summary of „Gartner TCO Charts of Accounts“

Three system parameter classes were examined in respect to the hardware setup in order to ensure comparability of the results. Likewise, the processes in the computing center were also established as comparative variables. The processes ascertained and operating costs associated with them were assigned to the following four categories:

• SAP applications and services

• Operating system

• Hardware operation and high level of availability

• Data storage

Very different systems, e.g. a “server farm” with a large number of relatively small server computers or a “monolithic” mainframe. were also established as comparable to each other as a result.The data was gathered in customer interviews or is based on the model calculations from around 40 projects.

Graphic: Cost factors for FlexFrame

The costs for hardware and infrastructure as well as one-off costs typically incurred through training and migration were considered on the expense side. Efficiency improvements in the processes, reduced depreciation and computer center costs as well as the discontinuation of software and training were typically considered as savings in the operating costs.The results of the study relate to a consideration period of three years. The ROI was ascertained as a net present value from the discounted cash flows of this time period.

RESULTS OF THE TCO/ROI CONSIDERATIONS As already outlined, existing FlexFrame projects were analyzed for this study and summarized in three model scenarios. At the same time, we deliberately chose a conservative approach in the model calculation. The actual customer statements reveal even better results.Average results based on example scenarios:

ROI: 122%

Break even: 2.9 years

TCO reduction: 41%

Average results based on customer interviews:

ROI: 168%


TCO reduction: 62%

Direct Costs

TCO CALCULATION

Capital - Investition and ongoing Costs

SOFTWARE

HARDWARE

PROCESSESCOSTS OF PURCHASE

ServerFail Save / ClusteringClientsPeriphery

Operating systemsData BaseApplicationsUtilities - Datacentermanagement

AmortisationLeasingmiscellaneous expensesDisposal

TCO Calculation

Direct CostCapital - Investment and Operating CostsPersonnel CostsOperating Costs

Network Cost / CommunicationManagement and Support

Prevention of One Time Costgrowth calculationsynergies

Indirect CostDowntimeEnd User

According to the "Gartner Chart ofAccounts - Reasons for Measuring TCO"

Soft factors

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The diagram below shows the distribution of operating costs (summarized in four main criteria) for a traditional SAP landscape in comparison to the cost structure when using a FlexFrame system solution.

Graphic: Comparison of the operating costs between a conventional SAP landscape and FlexFrame

RESULTS IN DETAIL

The essential ratios for a medium-sized company with 2 SAP systems and 160 active users are:

ROI: 134%


TCO reduction: 61%

The following configurations were compared in this case:

The investment required for this is:

Traditional: 249,530 €

FlexFrame 280,561 €

As regards the reduction of operating costs, the following scenario became apparent in the areas examined:

SAP system: 27,694 €

Operating system: 123,124 €

Hardware: 63,643 €

Data storage: - 10,790 €

The conspicuous increase in data storage costs can be explained by the net application filer components. The complex technology of this storage solution is more expensive, but provides advantages in regard to so-called soft factors, such as availability and an extended functionality. These aspects were purposely not considered in the study however.

The evaluation revealed in the following that scaling results come into effect in the area of investment in FlexFrame scenarios with the migration to larger SAP systems. This can be explained by the fact that certain investments which are necessary for implementing the FlexFrame concept are not linearly dependent on the size of the system to be realized, with the result that larger installations can benefit even more from the FlexFrame concept, as the next example will clarify.

For a more complex infrastructure in a large company with 800 SAP users and 5 systems (R/3 (350 users), R/3 (200 users), CRM (100 users), BW (100 users), HR (50 users)), the expenses for providing the infrastructure (hardware, operating system, first installation, infrastructure) are represented as follows:

Traditional 2,324,119 €

FlexFrame 1,126,053 €

The following ratios correspondingly resulted:

ROI: 112 %


TCO reduction 45 %

The following savings in the operating costs were achieved through FlexFrame:

SAP system 27,852 €

Operating system 77,981 €

Hardware 31,308 €

Data storage 1,661 €

Similar effects could also be observed for a significantly larger system. This involved a corporate computer center in which 217 SAP systems were operated (84 productive systems and development environments for approx. 8,000 users).

The FlexFrame architecture consists of:

11 PRIMEPOWER for databases,

98 PRIMERGY for application servers as well as CI and network appliance filers,

with a total performance of around 475,000 SAPS. Approximately 29 million euros had to be invested for this solution. For a conventional approach based on a 72 processor machine with storage systems, the investment would have been 51 millions euros.

In the above scenario, the use of FlexFrame enabled the following savings in the operating costs:

TraditionalConfiguration

FlexFrameConfiguration

11 Primergy RX300,2 CPU, 4 GB Ram


3 S80 FC Storagesub systems


1 NetApp FilerFAS 270

Accrual /Leasing Costs

Operational CostsComputer Center

Processes

Administration Costs

FlexFrameTraditional SAP Landscape

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SAP system 262,388 €

Operating system 237,300 €

Hardware 60,825 €

Data storage 9,375 €

The following key insights resulted from this:

The “change” in the IT infrastructure has a positive effect on depreciation (reduction by 42.7%), computer center costs (floor space requirements lowered by 74,2%) and maintenance and support costs (reduced by 43.5%).

With regard to processes, the costs are reduced by 66.7%.

This resulted in the following ratios for the solution:

ROI: 107 %


TCO reduction 46 %

SUMMARY OF THE STUDY

The FlexFrame concept from Fujitsu Siemens Computers is especially recommended for larger and more complex IT

landscapes. In these scenarios, both investment and operating costs are far below those of comparable conventional solutions.

FlexFrame is of interest for small to medium-sized IT landscapes – presupposing a certain complexity of the application components installed – especially owing to its comparatively low operating costs, even although the investment for hardware is slightly higher than with conventional system solutions.

In each case, the figures provide convincing evidence for the cost effectiveness of the FlexFrame solution from Fujitsu Siemens Computers and confirm the statements of customers and system partners.

THE AUTHORS

Günter Krieglstein is Managing Director with industry focus at Commercial Services. Mr. Krieglstein advises numerous

harmonization and IT strategy projects for customers in industry. Mr. Krieglstein assumed overall responsibility for the study.

Michael Hähnel is Senior Consultant in the area of Commercial Services. His advisory services focus on the subject field of SAP base processes. He also accompanies projects for improving efficiency in SAP applications for prominent international companies.

YOUR CONTACT Günter Krieglstein, Managing Director, BearingPoint GmbHGanghoferstrasse 2980339 Munich

Tel.: +49 (89) 54033 [email protected]

BUSINESS AND SYSTEMS ALIGNED, BUSINESS EMPOWERED

As one of the largest consultancy companies in the world, BearingPoint GmbH (formerly KPMG Consulting)

provides strategic consulting, application services, technology solutions and managed services to Global 2000 companies and government organizations. We help customers achieve results by identifying mission critical issues and implementing innovative and customized solutions designed to generate revenue, reduce costs and access the right information at the right time.

The name BearingPoint means setting direction to achieve results. As business systems integrators, we align our clients’ business processes and information systems to enable them to access the right information at the right time, empowering them to achieve their desired business results and create enterprise value.

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