Inside SAP magazine Winter 2013 (issue 22)

Issue 22 | Winter 2013

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The independent magazine for SAP professionals

Cloud special WILL CLOUD BREED A NEW IT SUPERHERO?

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DOING CLOUD DUE DILIGENCE SAP’S UNIFIED CLOUD STRATEGY

FUTURE OF SAP SINGLE INSTANCE: THE IMPOSSIBLE DREAM?

HOT TOPICS TAKING EAM ENABLEMENT TO THE NEXT LEVEL

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CONTENTS 14

17

24

32

39

46

4

Editor’s note

5

Quarterly news roundup

Hot Topics

SAP Leaders 24 The art of the possible: Deloitte promotes HANA

26

28 Partner profile: KALTech Group

9 SAP launches unified cloud

29

14 Doing cloud due diligence 17 Enterprise Asset Management: Taking enablement to the next level

19 Single instance SAP: the impossible dream?

chain

46 A re you wasting money on your retiring infrastructure?

On the Move

strategy

emergence of a new superhero?

44 Going real-time in the supply

Partner profile: Presence of IT

Cloud special

11 The death of the CIO? Or the

Technology

Events 32 SuccessConnect comes to town

49 SME: B1 on demand or onpremise? That is the question

50

Vendor spotlight

36 SAPPHIRE Now 2013 Case Studies 39 Brady streamlines voice picking integration with SAP WM

41 Brewing online business: DB Breweries

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HOT TOPICS

CLOUD

The death of the CIO? Or the emergence of a new superhero?

As cloud services become more ubiquitous, and perhaps more importantly, enterprise-grade, the whispers are gathering pace – what will the CIO do when they are no longer lords of their own infrastructure? Are they putting themselves out of a job?

Not any time soon – as long as they embrace some new superpowers, as Freya Purnell writes.

The explosive growth of enterprise cloud offerings coupled with the rise of ‘shadow IT’, whereby business units procure their own cloud solutions away from the watchful eyes of IT, has led to mutterings about the death of the CIO – or at the very least, a severe reduction in the relevance of the role. After all, if business units can buy their own solutions, effectively outsourcing their management to a third party, what will they need IT for?

Peter Hourihan, CIO at Murray Goulburn Cooperative, says business communities have long believed that cloudbased systems don’t require any input from IT. “Quite often, you’ll see, particularly in the areas of marketing, sales and HR, people go and buy on-demand systems as point solutions, and the first IT will hear about it is when people can’t get access through a firewall,” he says.

This trend has ramped up over the past few years, as cloud systems provide comparable functionality to traditional on-premise systems. Business users have seen cloud-based services as a way to get the solutions or functionality they want more quickly and perhaps more cheaply than negotiating with internal IT. Dean Evans, cloud computing executive, GTS, IBM ANZ, says this move is often driven by frustration with their own IT department.

“They have seen a particular cloud service that is niche to their particular part of the business, and they have decided to go out and procure their services directly,” he says.

But although cloud proponents might extol its benefits in removing all concerns about technology and its complexities, Fortescue Metals CIO Vito Forte says this simply isn’t realistic.

“What cloud allows us is the ability to abstract infrastructure and platforms in a manner that should deliver flexibility and real savings in time, money and resources.

What cloud doesn’t do is solve every problem,” he says.

Reshaping the relationship between IT and business While the predictions of a fundamental shift are true, CIOs argue that they will still have an important role in the enterprises of the future – but that some fundamental changes in their role and business relationships will need to occur.

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David Dowling, owner of Dowling Consulting, says IT will have to align what they provide with business services.

“They almost have to turn around and stop looking at the technology, and look at how to provide a better business process. Therefore their understanding of the business has to be at an activity-based costing level, because they have to understand what the contribution of this service is to the cost of this particular business process,” Dowling says.

Hourihan agrees that the relationship between IT and the business needs to change, and believes there is a tipping point where CIOs must look to the cloud rather than traditional bolt-on modules to supplement the ERP footprint.

“In my view, cloud-based provisioning is about getting faster, making it more flexible and cutting out the turnaround times. There is an enormous amount of empowerment for business people to actually have a relationship directly with the vendor that says, I know you’re operating a standard platform and you’re not going to do major modifications, but I can drive how this system is tuned for me as a user, without having to go through the conduit of IT,” he says.

“Where it gets sticky is when you try and integrate the cloud-based solution with your ERP, and how you keep your ERP as a system of record whole. The danger is that the integration discussion falls by the wayside, and you discover that late in the process or even as you’re about to go live.”

To combat this, a complete change in the engagement process with the business is required, and he points to MGC’s adoption of SAP’s Ariba procurement network as an example.

“We’re going to have to change the way we go through the planning process and the pricing process on what work needs to be done,” Hourihan says. “In procurement, we need an understanding of what functionality is duplicated, and to know what integration points are required so the user can operate without being confronted with multiple clunky interfaces, and the system of record is kept whole.”

This is challenging for both the IT group, which must undergo a complete change of paradigm, and for the business side, who thought they wouldn’t need the IT group any more.

“Somehow we’ve got to bridge the gap. It’s a new world that allows much more self-determination for the users without having to go through the traditional hoops that IT would make them jump through,” Hourihan says. “But you require more diligence in terms of your integration and business process.”

Becoming the Chief Integration Officer While forecasts of the death of the CIO might be overblown, the changing relationship between IT and the business will almost certainly see the CIO’s job description redefined.

Research conducted by Brocade, which surveyed 100 CIOs from across Europe, the Middle East and Africa, found that only 20 per cent of those surveyed thought the role of CIO would eventually become obsolete. Instead,

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HOT TOPICS CLOUD

A CIO’s tips for cloud adoption Vito Forte provides some golden rules for moving into the cloud: 1. Know your environment and its workloads. Cloud isn’t about ‘your mess for less’.

2. Be virtualised. Virtualisation is your pathway to reaching the abstraction aim, and builds cloud-based disciplines in your people.

3. Take counterview points to get more out of cloud offerings. For example, if you are using a cloudbased messaging offering, you no longer need to worry about backup or DR. Learn how this is done at scale, and see how you can do the same or better.

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respondents believed the role would evolve to cover a broader business range, with a third stating that they see themselves continuing along a path towards becoming more involved in strategic discussions. Some believe this trend may even result in the merging of the CIO and the Chief Operating Officer roles, as IT outsourcing becomes more central to both ordinary operations and gaining competitive advantage. IBM has recently gauged the views of IT leaders across Australia on this issue for its ‘Truth Behind the Trends’ white paper.

“They see a shift from their present responsibilities around resourcing, worrying about infrastructure, worrying about application services, and being very reactive, to being more proactive, and they see a lot of value in terms of how cloud could provide that,” Evans says.

The challenge, of course, is to remain relevant to the business, and to do this, CIOs are going to have take on a new portfolio of roles – or CIO superpowers.

Superpower #1: Evangeliser of innovation The CIO of the future will need to be out in the market, looking at innovative new approaches to the business’s technology challenges, and evangelising these within the organisation.

“You’ve really got to widen your eyes and look beyond the traditional, otherwise the only ideas you’ll ever get will come from the business, in which case, there are questions about your added value,” Hourihan says.

Superpower #2: Architect of integration In the Brocade research, almost half the CIOs questioned

4. Try it. Don’t be afraid. It’s ok if it doesn’t work.

Getting #1 and #2 right gives you options and shields you from vendor markitecture.

expected the evolution towards cloud adoption to mean that they will spend far less time worrying about the nuts and bolts of IT infrastructure. However, the ability to provide consultancy and advice on extracting information from increasingly fragmented data sources across their own and third-party IT resources is expected to grow in importance.

Dowling agrees that the integration piece will be perhaps the most important part of the CIO’s role.

Crucial to this is the alignment and integration of business processes. For example, if an organisation wants its financial, CRM and BI solutions tied closely together, but they are provided by three different cloud vendors, “somebody has to step up and broker that service to a particular standard”, Dowling says.

“You are going to get more of the commodity items and horizontal solutions in the cloud, but your verticals are going to be most likely in-house. So therefore the CIO’s role will be to keenly manage that service and systems integration.”

Superpower #3: Enforcer of standards CIOs will also need to provide governance and controls for their enterprise around standards such as information access and data security.

“What they need to have in play is more of a dynamic sourcing model that enables them to onboard and offboard service providers according to standards in information management and information access,” Dowling says. “Each organisation becomes the virtual service management policy, governance and process owners.”

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HOT TOPICS

CLOUD

Superpower #4: Broker of vendor relationships While the CIO has always been a key player in the management of vendor relationships, becoming more of a mediator between business units and their service providers will also become one of their key responsibilities. Applying a templated service model to define the characteristics of a cloud provider’s service may be part of the value they can add in this area.

Once the necessary checks have been completed and the provider chosen, vendor management is going to be critical to manage the efficient deployment of internal IT resources.

“They are going to be focusing on what the cloud services are going to deliver, what that means for my own IT organisation, and where best should I divert my resources now,” Evans says.

Filtering through the ranks It’s not just the CIO who will have to change – a wholesale move towards cloud will have broader ramifications for IT teams.

With SAP skills within organisations both hard to come by and expensive, Evans points to cloud offerings such as IBM’s SmartCloud for SAP Applications and its associated

automated functions as tools to reduce reliance on these skills internally.

“The goal is to be more responsive and to be more flexible in the IT services that are delivered to the business,” Evans says.

Hourihan believes a reassessment of the role of the ERP in the business may trigger a move away from the classic SAP functional specialist, to focus much more on integration and business processes, with business analysts coming to the fore.

“The more cloud pervades the traditional ERP space, the more ERP becomes a system of record, and it becomes less and less functionally important. That would drive a difference in the composition of your team over a number of years,” he says.

The IT team will also need to be very well versed in vendor management to be able to resolve issues, rather than being able to trace the problem to a server or network issue.

“They’re not going to need a service management regime that looks at technology outages and availability, they’ll be managing service availability. So the IT organisation needs to transform itself from that technology-based service level management to a business-based service level management,” Dowling says. “It’s a fundamental shift.”

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SAP LEADERS PARTNER PROFILE

Cloud clearing for a bright future HR/payroll technology specialist and SAP partner Presence of IT has been quietly building a solid customer base over the last 14 years. Now, the potential offered by cloud models and a new, world-first cloud solution is accelerating the company’s growth.

Freya Purnell reports.

As a consultancy, Presence of IT was always ahead of its time – establishing a specialisation in the HR/payroll arena, at a time when most companies were trying to be all things to all clients.

CEO David Brookes says they initially set out to be product-agnostic, instead focusing on helping clients to get the best from their processes and their business. Another unique aspect of the company’s approach was that in its own internal structure and culture, there was a focus on sharing information that could then be used with clients in an open, collaborative way.

“Part of our model was to attract the best people in the marketplace to become specialists. People naturally were attracted to us because we had a very dynamic organisation,” Brookes says.

Faced with a need to significantly change business processes around HR and payroll, clients were also attracted by this openness, driving strong growth for Presence of IT. Now generating just over $70 million in revenue each year, 85 per cent of that comes from the existing install base, year on year.

“Obviously a significant component of our business is to make sure we know what the clients want and therefore deliver it for them. But with cloud coming along, the dynamic is changing quite significantly,” Brookes says.

“We still want to retain the trusted adviser space, but the reality of cloud-based computing is that clients no longer buy software and do implementations in the traditional way. What they now do is buy a platform, and that platform has to be implemented with the same rigour to ensure they get the value out of it.”

The company recognised this shift around four years ago, and when SAP acquired SuccessFactors, they realised that the time had come for change. Since then they have become a SuccessFactors premier partner, and have invested heavily in resourcing this area.

Developing a new platform The next step, according to Brookes, was to talk to SuccessFactors about how they could move their 200 SAP HR and payroll clients into the cloud.

“There is an inevitability about that – SAP is investing in the cloud and is not going to necessarily invest as much in on-premise any more, so somewhere along the line, these guys have to migrate across. But the fundamental question was going to be around compliance with their payroll,” he says.

In a project spearheaded by CTO Shaun Flannery, Presence of IT then worked in collaboration with SuccessFactors, with its teams in Walldorf and San Francisco, to develop a proof of concept and then a new solution offering, called SuccessFactors Employee Central Payroll (or EC-Payroll). It is the first-to-market integrated cloud-based solution that delivers SuccessFactors human capital management applications as a single payroll cloud platform from SAP. It will allow existing customers to move their systems into the cloud without reimplementing.

“The EC-Payroll allows existing customers that have spent all that money and innovation in the past to take that configuration and their systems to migrate across into the cloud. They will get the new functionality from SAP, and they will get all the efficiencies of cloud,” Brookes says.

Presence of IT has also drawn on its long track record of successful implementations to create its Fast Track methodology, which will enable new clients to get up and running on EC-Payroll very quickly.

“We estimate somewhere in the range of 40 to 60 per cent savings on traditional implementations,” Brookes says.

Positioning for the next phase of growth The move into this space also represents a shift for the company, as it adjusts to the new enterprise technology world and positions for the next phase of growth.

“The relationship sell is fantastic for building a large client base and a company and a reputation,” Brookes says.

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“But there is a fundamental piece that we missed – the fact that SAP had changed, our market had changed, and the reality is we need a sales capability that supports our delivery capability in order to be relevant to those clients.”

Fortunately, he says, Presence of IT has always had the capability for innovation.

“In order to be a specialist, you have to add value.

You can’t just repeat what’s already out there, and we have always had it in our DNA to build products and solutions. We have taken all that innovation and all those process efficiencies and reports and other aspects, and we have bundled them together in the EC-Payroll solution,” Brookes says.

The company has also made a key hire to assist in their next phase, snapping up former SAP ANZ COO Shane Grobler, who joined as director of business transformation and strategy.

Having come on board at the beginning of the year, Grobler says he was attracted to Presence of IT because of its specialisation.

“Presence of IT had got to that model before anybody else. It was so ahead of its time, just in terms of being focused,” Grobler says. “The time was right for them to change, to actually get more aligned from a sales point of view and a business process point of view. We’re not going

SAP LEADERS PARTNER PROFILE

to be an SAP lookalike, though we are going to be very aligned as far as possible, but we are going to be doing it our way.”

Roadmap to the cloud Despite some early concerns about data security, customers are beginning to embrace the concept of the cloud because of the efficiencies and access to innovation it could offer.

One of the problems many face is that to ensure continuing compliance with payroll, customers must upgrade their entire systems every few years.

“What they want to do is simplify that, as they don’t necessarily want the business being driven by payroll compliance. They are not in the payroll business, they are in the people business,” Brookes says.

With vendors like SuccessFactors bringing more sophistication to areas such as HR performance management and recruitment, companies want an easier way to access this innovation.

“The reality is that organisations buying an HR system want an HR outcome, not necessarily a payroll outcome.

That’s why clients are looking to SuccessFactors. Having payroll and HR separated was always going to be the issue, so bringing them together makes logical sense, and it also means customers are aligned to a product,” Brookes says.

In addition to the technology developments, employee expectations around how they relate to their employer around HR is also a strong driver towards the cloud.

“The reality is good people in organisations matter, and they want to make sure that those good people are well serviced. Employees expect to be able to have access to data, and to do things online,” Brookes says. “There is a structural change in the channel in the HR community.”

Part of Presence of IT’s work with their clients over the last few years has been to initiate those cloud discussions, and work out a roadmap based on what they hope to achieve from a move to the cloud. Increasingly though, clients are actually taking the lead.

“We actively encourage our people to have that conversation, but we actually haven’t needed to,” Grobler says. “I doubt that there is any CIO or IT manager in Australia today who hasn’t thought about [the cloud], who hasn’t had a conversation about it, and isn’t considering

how they do it and what the implications are.”

Indeed, Brookes predicts that within five years, most organisations will want to have their payroll in the cloud, operating on a subscription-based model.

“Large organisations with more than 500 employees will look to those efficiencies, where you need robust tier one solutions, while smaller organisations tend to be able to get away with minimal HR and payroll, and they might use tier two products. But large companies really need to get to grips with it and take advantage of their workforce.”

Setting the standard Presence of IT has always placed high importance on its people, and has taken some perhaps unconventional steps to ensure it is truly focused on its clients – and a great place to work.

In addition to employee share plans and bonus structures tied to client success, the company has a flat structure.

“From day one, we have had an absolutely open structure. Internally, we don’t have titles – we sometimes have external titles – but it adds to a very happy workplace.

From the perspective of our culture, the least important person is probably me, and the most important people are my colleagues working with clients,” Brookes says.

The company is also very committed to encouraging collaboration.

“What we try to do is have our colleagues share information openly with each other, so that information becomes valuable to the marketplace – they don’t use the information in a hierarchical way to get promotion within the organisation. So people feel like they are growing. And when someone is on a project, they have 300 people behind them.”

Though Presence of IT is already 14 years old, Brookes feels that it is just coming of age, but he doesn’t cite any lofty headcount or revenue goals for the company’s next phase. Instead, he looks forward to maintaining their momentum and reaping the rewards of helping their clients to transform with the help of new technology.

“If we can move those clients to a new space, and they become successful, that’s the objective. There will be a natural size and a natural reward out of working through that process.”

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CASE STUDY

DB BREWERIES

Brewing online business New Zealand-based brewer DB Breweries was the first in the Asia-Pacific to implement SAP’s new web channel experience management solution, to provide a customer web shop for its beer and other merchandise. Eleanor Reader reports.

Background Since opening its doors in 1929, DB Breweries has established itself as one of New Zealand’s most well-known companies.

The second largest brewer in NZ operates as a 100 per cent subsidiary of parent company, Heineken N.V., and manages four breweries across the country – Monteith’s Brewery, Waitemata Brewery, Tui Brewery and Mainland Brewery.

DB has a long history with SAP, first implementing the software in 2003 and most recently upgrading its core SAP system to ECC 6.0.

Problems arose when they realised the level of service they were providing their customers wasn’t up to scratch, says Mike Rawson, knowledge management team leader, DB Breweries.

Purchasing merchandising material from the brewer was more difficult than necessary for DB’s trade customers, as orders were only able to be lodged during business hours and were being processed by a third party.

“We had a requirement to service our customers better

and also to give them more flexible hours of operations and get a better brand presence,” Rawson says.

DB engaged UXC Oxygen as the implementation partner to roll out a number of new SAP solutions aimed at improving business efficiency across its operations.

UXC Oxygen has previously worked with DB in the past, including on the latest ECC upgrade, so was the most obvious candidate for the project, according to Rawson.

“UXC Oxygen had a very good understanding of our landscape and they had good experience in web channel experience management (WCEM) or customer portals, so we felt quite comfortable with them and contracted them as a partner for that journey,” he says.

Rawson says selecting SAP’s latest web technology was a logical step forward for the brewery.

“We are an SAP-oriented vendor and we opted for the best technology available. Although the product was untested in the local market, we undertook a proof of concept at the start of the project to ensure we mitigated any potential issues.”

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Implementation and challenges The first step in the rollout was to implement a customer web shop – the first of its kind in the Asia Pacific – using SAP’s latest WCEM software.

The project had very clear objectives, says Rawson: “We needed to be able to offer the customers 24/7 flexibility for their ordering, needed a better brand experience and we needed to reuse some of the brand campaigns that were used on some of our other websites and the mydb.co.nz website.”

Rawson says the web shop was built to help DB better service customers by providing them with a more direct and consistent means of engagement with the brewer.

“Customers will be able to order from us through the web shop at any time of the day or night – not just during business hours. All our DB beer products as well as associated merchandise – such as glasses, coasters and other branded items – will be available for ordering online at a time that suits the customer.”

The project took three months and came in on time and on budget at the end of November 2012.

People have commented to Rawson that it was an impressively fast turnaround, but he says the short timeframe of the project was one of its biggest hurdles.

“It was challenging in the fact it touched multiple areas of the business, including finance and master data. It was quite a broad set of challenges that had to be coordinated right through the business,” he added.

UXC Oxygen and DB worked together to deploy SAP CRM and WCEM. The team consisted of three to four main core consultants from Oxygen, two full-time resources and a number of part-time resources from the business side.

The companies worked from a standard blueprint from the beginning, however their lack of experience with the new solution saw them adopting an agile process onsite.

“We decided that we would use agile to get a much sharper set of responses for the development we were doing, and that involved bringing customers in at quite an early stage in the development, so we could actually understand how they wanted to use the site. The most important thing we did know is you only get one chance to launch a website and it may be functionally good, but if the customers don’t like it, then it’s all over,” he says.

The go-live of the web shop went very smoothly and the transaction load is continuing to increase.

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Business benefits and future plans Customer feedback since the launch of the web shop has been extremely positive, with many impressed by the timeliness of the implementation and the ability to order products 24/7.

“It has been a successful first step in the implementation of our comprehensive CRM roadmap and the feedback we are getting from customers and users is very positive,” says Rawson.

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CASE STUDY

DB BREWERIES

“The products used to be sent out from our rep and it wasn’t that high on their priority list, so the customers have now got control of their destiny,” Rawson says.

UXC Oxygen CEO, Stuart Dickinson, says the implementation was an important one for both UXC Oxygen and SAP, who worked together closely to prepare the software for implementation at DB. “The solution provides a rich web experience for users and makes e-commerce easier to manage for both the vendor and the customer. It will be the solution SAP customers turn to if they want a straightforward means of deploying a B2B e-commerce capability that can be easily integrated with their existing financial and customer management functions,” he says.

The web shop launch in November was a reasonably soft one, however now they know the site is solid, DB is currently in the process of “ramping it up”, says Rawson.

Over the coming months, DB plans to deploy SAP CRM functionality further to provide field representatives with a user-friendly mobile sales application, improve contact centre operations and more easily manage trade promotions.

“We selected UXC Oxygen for this programme of work because they displayed the deepest understanding of what

we wanted to achieve and had customer experience relevant to our industry to back it up.”

In an effort to provide representatives with a user-friendly mobile sales application, DB has rolled out Sybase Unwired Platform 2.2 and Afaria.

In the same week, they rolled out phase two of their biller direct product, which allows customers to look at their financial statements and details online 24/7.

Following that, they planned to deliver the Retail Execution 3.0 solution, which deploys the infield apps that the reps will use to do all their visits to clients.

To improve customer centre operations, Interaction Centre to CRM will also be rolled out to its contact centre.

Rawson credits UXC Oxygen with being a very valuable business partner throughout the SRM journey so far.

“We know that when we go live with SUP and Afaria that next week it will transfer over to their AMS service, which basically does all the support functions for our landscape.

What we like about UXC Oxygen is the complete solution that we get from them.”

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