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White PaperICT as a Service and dynamic delivery of SAP applications.SAP market trends and the benefits of partnering with an ICT service provider.

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Contents.

1. Introduction: the ICT market and SAP.

2. Understand what organizations need.2.1 Enabling business through lower costs and greater flexibility.2.2 Technological and environmental innovations.2.3 Governance, security and quality.

3. Support business processes better with ICT.3.1 Dynamic delivery and billing.3.2 Mobility, interoperability and in-memory computing. 3.3 Service level agreements, risk management and governance.

4. Case study: Dynamic Services for SAP® Solutions for Brenntag.

5. Case study: Access and permission management at Königin Elisabeth Herzberge Hospital.

6. Conclusions.

7. Table of figures.

8. Glossary.

9. Table of sources.

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1. Introduction: the ICT market and SAP.

Liquidity and profitability are core objectives for any company. To achieve them both, organizations have to contain costs and keep up with market growth. These challenges are not new. What has significantly increased in the past decade, however, is the pressure on businesses. Manufacturers and service providers are beset on all sides by slumping markets and dwindling order volumes, particularly in the wake of the Great Recession. Moreover, megatrends such as Web 2.0, personalization and mobility are chipping away at established power structures. They have fostered unprecedented global market transparency and empowered consumers like never before. And they have given rise to entirely new business and collaboration models. Product and service development cycles are shortening, making innovation even more critical for success. New markets and fiercer competition from emerging eco-nomies are accelerating the pace of business and corporate processes. At the same time, users and consumers are demanding greater personalization: products and services need to become more customized and differentiated.

In the global marketplace, the only way to succeed is through constant adaptation and operational excellence. “Company growth and restructuring go hand in hand,” according to PricewaterhouseCoopers. Agility is key. In the past, organizations were free to hone their competitive edge in multi-year restructuring cycles. Today, crisis or even bankruptcy can loom in a few short months. Nokia is a case in point. Even with its vast market share, the longstanding technology leader for cell phones still neglected a vital growth market: innovative smart phones. Competitors such as Apple, RIM and Google lost no time in moving into the gap. To sur-vive, organizations have to get better at spotting and entering new markets early on, which requires an instinct for innovation and a talent for quickly adapting processes as needed.

Organizations have a powerful ally in information technology. It gives them the tools they need to optimize structures, seize sales opportunities and, most importantly, make decisions quickly. Organizational structures and business processes are more agile and flexible when the entire ICT infrastructure is aligned with them. Consequentially, standardization, modularization and virtualization -- the main ingredients for greater agility – are on the increase. In addition, the risks, complexity and knowledge requirements of many important strategic projects are so high that more and more organizations are seeking partners. New models of internal and external collaboration are emerging – even between direct competitors. ICT is the key enabler of this network-based form of value creation. However, it brings CIOs face-to-face with new strategic dilemmas. They have to ensure compliance and process transpa-rency while continuing to reduce the costs and complexity of their ICT environment. This already daunting challenge is compound-ed by the current skill shortages in many areas.

The convergence of ICT and business has turned software solutions into a global growth market. Successful providers satisfy cus-tomers‘ demands for real-time processes, cloud computing, business intelligence and software for mobile devices. Many providers are looking ahead to several years of solid growth – including SAP. In 2010, SAP gained enormous ground in cloud computing, and particularly in software as a service (SaaS), by launching new products and enhancing its on-demand offering. Furthermore, thanks to its acquisition of Sybase, SAP can also provide mobile access to its applications.

“The global financial crisis has spotlighted the importance of efficiency, transparency and agility for companies.” [Jim Hagemann Snabe, Co-CEO, SAP]

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SAP customers can already choose between OnPremise (generally large SAP systems), OnDemand (solutions that are easy to order and extend) and OnDevice (mobile access) solutions. By mixing and matching these options, they can obtain extensive functionality with little effort. SAP promises to support business processes consistently over all three delivery channels (at the same time and with different levels of intensity) in a process known as “orchestration”.

SAP‘s importance is reflected in its deep market penetration and the growing use of SAP solutions in enterprises. According to a stu-dy by Avanade, nearly one-fifth of organizations plan to invest in ERP systems. PAC‘s analysts believe one-third of existing SAP cus- tomers are prepared to invest. SAP, for its part, expects rising growth rates, especially for dynamic solutions. In fact, SAP anticipates growth will reach 21% – ten times the rate for dedicated services, which are largely saturated at 2%.

SAP‘s product variety offers not just benefits, but also problems. Organizations need to invest heavily to remain on the cutting edge in terms of knowledge and technology. Many will have to reduce, not increase, the complexity of their legacy SAP environments to trim operating costs and gain sought-after flexibility. But can they accomplish this feat on their own? SAP touts its strong customer focus in its communications, but it is not easy, economically speaking, to be customer-centric with such a complex, diverse product portfo-lio. For that reason, SAP and user organizations often resort to independent third parties: external partners with suitable expertise.

It thus falls to ICT service providers to reconcile the complexity of SAP applications with the expectations of enterprises, users, and internal IT departments. Many third-party providers already support the various delivery models and have developed a wide range of new solutions. Against this background, it is clear that IT departments need more and more SAP expertise and experience just to evaluate and manage the many products, solutions and use cases on offer around SAP environments and new service-oriented architectures (SOAs). Acquiring this expertise is a constant struggle for CIOs. Many organizations lack the resources to recruit new people, while retraining usually takes a great deal of time and mistakes are unavoidable, especially at the start of the learning curve. Increasingly, organizations are looking to add to their own SAP resources via third-party providers or expert networks. However, part-ners must be chosen with care. A high-quality provider can maximize the return on investment in SAP solutions by variablizing fixed costs, enabling rapid changes with readily scalable systems, and transferring knowledge such as SAP best practices.

As the first in a series of white papers on SAP hosting and management, this document explains the business challenges involved in delivering and operating SAP environments. Chapter 2 outlines general trends and describes what decision-makers and users re-quire of SAP products and landscapes, with a focus on business enablement, innovation and quality. Chapter 3 examines implemen-tation issues. Chapter 4 describes a real-life consolidation project: T-Systems‘ Dynamic Services for SAP® Solutions for Brenntag. A second case study looks at the SAP access and permission management system at Königin Elisabeth Herzberge Hospital in Berlin. The final chapter draws attention to the importance of a holistic ICT and ERP strategy and offers criteria for selecting an external service provider.

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2. Understand what organizations need.

Today’s fast-paced global economy forces organizations to re-examine their market, product and sourcing strategies. IT depart-ments have a pivotal role to play. ICT not only boosts flexibility and agility, but it also safeguards competitiveness through techno-logy. Following the financial crisis, however, the picture is less than rosy. According to Gartner, IT budgets worldwide will shrink nearly 5% in 2011. CIOs will thus face a twofold challenge: turning ICT into a value driver while providing the leanest, most ver- satile, high-quality ICT infrastructure possible on a tighter budget. To deliver on both counts, they will have to focus relentlessly on business processes.

CIOs work within limits circumscribed by their users‘ needs, their management’s goals, and software providers such as SAP. To satisfy all these expectations, many ICT decision-makers turn to outside sources of support (expertise, resources, etc.). These tend be large, experienced service providers, mainly because they have industry-specific and implementation skills that smaller, pure-play technology companies do not.

The tasks of CIOs and IT departments can be grouped into three basic categories:Enabling business through lower costs and greater flexibility.Technological and environmental innovations.Governance, security and quality.

These three categories are described below.

2.1 Enabling business through lower costs and greater flexibility.

Today, flexibility in the marketplace always means flexibility in terms of in-house ICT, too: processing power, server capacity and bandwidth have to accommodate sudden slumps or spikes in demand. Unfortunately, the ICT at many enterprises is already too sluggish to keep pace with developments on the market. Changing demand cannot be catered for quickly enough; the latest tech-nology cannot be deployed; security solutions are no longer state-of-the-art. Instead of providing the best possible support for the business processes, ICT can easily become a bottleneck at critical times.

Due to greater mobility, business digitization and a high knowledge intensity in all corporate functions, much of our work now relies on inter-enterprise communications. According to the LIFE2 study, nearly 75% of ICT users in Germany cannot do their jobs without collaborating with others. 45% of German ICT users work in multisite teams, while 35% work in cross-enterprise project teams.

As a result, stand-alone IT solutions—such as those for specific corporate functions—have become obsolete. Instead, organiza-tions are looking to implement end-to-end ICT strategies for centrally managing the growing number of applications for, say, sales-force management or e-procurement. They want information to be available across multiple systems so ICT users and managers can be better informed about trends, key metrics, project progress, et cetera— whether they‘re in the office or on the road. That means the ICT department‘s job is to enable efficient project- and result-oriented work from any location. This can include suppor-ting smartphones, laptops or other devices requested by users, but not hosted by the organization itself.

“Flexibility, mobility and cooperation are the three big change issues.” [Christophe Châlons, Chief Analyst, PAC Group]

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Few SAP environments are sufficiently powerful or consolidated to support this kind of collaboration. Aggressive growth strat- egies, for example, require highly scalable infrastructure. This is hard to reconcile with the environments in place at many organi- zations. Having evolved over long periods, they are highly heterogeneous and thus limited in their ability to absorb peaks in de-mand. Restructuring to improve competitiveness appears to be the only option for many enterprises. But how can they achieve that with today‘s flat or shrinking ICT budgets? The only answer: by combining modernization with cost optimization.

Enterprises rely on ICT not only to be flexible, but also cost-effective. To trim costs, many of them have standardized their proc-esses or outsourced labor-intensive parts of their business to low-wage countries. Operational SAP services, for example, are highly labor-intensive, and so are ripe for cost-cutting. Using standard components and increasing the degree of automation can both increase flexibility and drive down the costs of an SAP system environment. Virtualization and cloud computing offer further savings potential. With these two delivery models, user organizations no longer need to buy ICT services. They can rent them and access them over a network instead, for example in special situations (M&As, etc.) or during sudden spikes in demand (seasonal peaks, etc.). This variablizes ICT costs and frees up capital that would otherwise be tied up in resources not required in quiet periods. These potential gains were cited by 70% of the ICT decision-makers surveyed in the LIFE2 study, who expect to see more flexible IT pricing models on a pay-per-use basis.

SAP and ICT providers have responded by offering platforms with ready-to-use product and service modules. Fees are charged in line with the capacity provided, allowing companies to reduce their capital expenditure. Hybrid solutions are also possible, where the enterprise handles basic services that experience little change in demand with dedicated, fully utilized resources. Additional resources required for temporary purposes (development, testing, user training, etc.), by contrast, are rented from the cloud.

Whichever solution is chosen, the service and pricing model should always be transparent and predictable during the entire contract term.

“IT budgets are shrinking. Many CIOs lack the resources to contri-bute proactively to the business. New ideas can provide room to maneuver, while harmonizing and modernizing application envi-ronments can lower costs.” [Dr. Ferri Abolhassan, T-Systems]

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“Quickly and flexibly synchronizing ICT services with business requirements turns fixed costs into variable ones. And that creates an edge in the global marketplace.” [Alexander Kraus, T-Systems]

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2.2 Technological and environmental innovations.

Many SAP environments already have to support and manage all of the organization‘s business processes – a highly demanding task. Interdependencies between applications and regular releases (ECC 6.0, CRM 7.0) add even more complexity, underscoring the need for professional management. The growing number of different SAP solutions and use cases, and the new service-orien-ted architecture (SOA) require IT departments to continually extend the SAP skills and experience available to them. Keeping up to date entails investing in knowledge and technology.

Budget-strapped CIOs may supplement in-house knowledge resources with expertise from external service providers. This broa-dens the scope of the providers‘ mission. Instead of just delivering systems and services in line with service level agreements and keeping them fully operational, they now also integrate new applications into the customer‘s legacy environment. The faster they do so, the more agile and flexible the organization becomes, and the more freedom it gains for strategic decision-making. But the structure of the existing ICT landscape determines the actual options available. More time and knowledge is needed to expand heterogeneous ICT systems that evolved over time than open, standardized ones.

Enterprises‘ agreements with ICT providers are generally based around a “modular” offering – i.e. mix-and-match components that can be hooked together over standardized interfaces. Delivery methods should be chosen in consultation with an experienced, independent ICT provider. Depending on the enterprise‘s structure, some methods are more effective than others at helping it achieve agility, flexibility and competitiveness.

Many CIOs also want to leverage ICT to make their organizations more innovative. Every ICT department, regardless of industry or company size, can support innovation. For example, ICT users want high-performance, user-friendly desktop systems that let them focus on their jobs. And they are not happy with high network latency or badly designed, less than intuitive user interfaces. To simp-lify communications, they would also like to see in the workplace the same Web 2.0 applications they employ in their leisure times.

Recognizing the benefits of innovation management based on self-organization and bottom-up strategies, many organizations have begun rolling out Web 2.0 technologies in-house and in external communications. Social networks can play a key role in in-house knowledge management or the development of new products (e.g. via crowdsourcing). Additionally, organizations that emb-race the possibilities of the social Web are more successful at attracting top talent. In short, ICT is fast becoming an image factor.

Growing mobility is another challenge. Frequent business travelers want to be able to work on the road, instead of being cut off from business processes and applications. Not all central services and applications will be given mobile access, however – this decision lies with senior management and the IT department. The choices an enterprise makes in this regard and the speed at which it provides mobile applications lay the groundwork for new business models and new industries.

“The users want solutions that come ready to use and are easy to use. That people can work with any place, any time.” [Jim Hagemann Snabe, Co-CEO, SAP]

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Innovation and ICT go hand in hand – even when it comes to the environment. Green ICT solutions raise data center efficiency; managed office solutions restrict the variety of office devices (printers, scanners, copiers). As well as reducing carbon emissions, they offer financial benefits. In the LIFE2 study, 60% of ICT decision-makers cited cost savings as the main motivation for their interest in green ICT.

2.3 Governance, security and quality.

Governance refers to the rigor and the internal and external transparency of internal control systems. In the last decade, govern-ments have imposed countless statutory requirements and extensive reporting obligations on businesses, including SOX, Basel II, SAS70, ISO 27000 and the 8th EU Directive. They aim to prevent a recurrence of billion-dollar losses due to mismanagement, accounting fraud and unrealistic risk assessments. After the dot-com bubble burst in 2000, the Enron scandal broke in 2001 and the banking, financial and economic crisis erupted in 2007, investors have been joined by customers and the public in demanding transparency. Violations of data privacy laws and Transparency International‘s anti-corruption guidelines have made citizens and the media more vigilant, while offending companies face fines and sullied reputations. Complying with legal requirements does more than protect a company from bad publicity, though. It also provides deep insights into internal processes that can be used to boost efficiency.

Security is also a key issue for businesses, according to the LIFE2 survey. When asked to name the three most important IT trends of the next few years, respondents cited IT security more often than any other. However, IT security now goes far beyond antivirus software and firewalls. In the past, IT departments concentrated on avoiding data loss and securing infrastructure and end sys-tems; today, they focus on protecting knowledge and business processes. Knowledge loss and industrial espionage cost German companies more than €20 billion a year, according to estimates by the German Association for Security in Industry and Commer-ce. The greatest threat, according to Germany‘s Office for the Protection of the Constitution, is closer to home: employees who share information with third parties without authorization. Affected companies can quickly lose their development edge or suffer disadvantages when submitting tenders and proposals. Security should therefore always be viewed as an end-to-end activity.

Security solutions have a special relevance in mergers and acquisitions, integrated value networks and inter-enterprise partner-ships (joint ventures, etc.). As workers become more mobile and collaborate across enterprise boundaries, hardware, network, data and information security have to fulfil increasingly demanding requirements. Internal business processes and outsourcing relationships (cloud computing, etc.) will only work if the information is trusted and confidential. Consequently, organizations have to carefully manage digital identities and access permissions. Private clouds are the easiest option, but solutions for public clouds are now available, too (see T Systems‘ „Cloud Computing“ white paper to learn more about cloud computing).

But even when ICT departments take governance and security challenges very seriously, that does not relieve them of their duty to perform their basic tasks in accordance with requirements, i.e. in compliance with service level agreements. No organization can function without proven technology, highly available systems and needs-based delivery of IT services. Business processes have to be effectively supported 24/7 to enable international, network-based, cross-enterprise collaboration.

Shorter business cycles have also had an impact. Service delivery now has to be treated as an enduring value driver, not just a cost factor. That is why management now expects CIOs to understand the markets and the needs of customers. So not only do CIOs have to grapple with increasingly complex system environments, but they also are required to actively initiate projects, introduce new business processes and identify improvements to existing processes.

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3. Support business processes better with ICT.

Chapter 2 covered the three main challenges currently facing corporate ICT: business enablement, innovation and quality. CIOs have several avenues for achieving long-term benefits for their organizations without larger budgets.

3.1 Dynamic delivery and billing.

Most organizations have recognized that ICT can do far more than automate workflows and cut costs. Now, they expect ICT ser-vices to make a genuine contribution to value creation: by opening up new distribution channels, accelerating time to market for new products, or raising customer satisfaction. The main reason ICT plays such a vital role is that business processes have become inextricably intertwined with the technology that powers them. Fluctuations, whether in ICT service availability or other parameters, often directly impact companies‘ ability to do business. If a database, billing system, e-mail or sufficient bandwidth is unavailable, corporate processes will immediately suffer delays, adversely affecting dealings with third parties.

High-performance ICT services depend on a flexible, high-quality infrastructure. Unfortunately, many of today‘s ERP environments such as SAP, having frequently evolved over many years, are very difficult to modify. Organizations are left with a tangle of different infrastructure components, specialized modules distributed across multiple systems and third-party add-ons, all of which have to be managed and kept compatible at their interfaces. Due to their different origins (from off-the-shelf programs to entirely custom-developed software), the scripts are highly heterogeneous and often made-to-measure. In many cases, not even the IT department knows what scripts belong to which programs or how many background jobs are in use. They quickly discover the true scale of the complexity when they attempt to harmonize different systems following a merger or acquisition, for example. They find solutions that violate defined standards, special-purpose software with incomplete documentation, skipped updates or an unknown number of installed patches. As a result, the system as a whole is less stable and less secure. And wherever there is an unknown number of small programs, multiple interfaces and redundant data flows can significantly impact performance. It takes an enormous effort to identify these interfaces, define end-to-end processes and implement them in the system.

If, however, the interfaces are standardized, ERP systems adapt to change more easily. The obvious choice is the de facto standard IT Infrastructure Library (ITIL). ITIL compliance helps IT departments consolidate heterogeneous systems in a continuous improve-ment process (CIP). Service automation offers added benefits since tasks can be completed in end-to-end processes. Some servi-ces can even be handed over to the ICT users themselves, giving them greater control over their work and increasing productivity and user satisfaction. By combining standardization and partial process automation, organizations can, in many instances, achieve significant efficiency gains in application operation, maintenance and support.

ICT service delivery and management must be automated to achieve industrial performance and transform ICT into a true value driver.

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ICT services can only effectively support business models if they respond to changing demand in the business processes. In other words, they have to adapt to ups and downs in business conditions and be made available quickly and easily for tasks such as setting up new processes or project groups. ICT services can meet these requirements by being individually consumable and billable. That maximizes cost efficiency. “Scalability” – the ability to readily scale resources up or down as needed – is another key requirement, no matter who provides the ICT – an internal department or an external provider. Outside providers are clearly the better choice for minimizing investment risk. It takes enormous upfront investments in hardware and software to build a highly scalable ICT infrastructure in-house. This incurs fixed costs whether the infrastructure is used or not. If the market or business stra-tegy suddenly shifts, the organization may not use its new ICT as much as it had expected. To avoid high upfront investments and the associated risks, enterprises can simply consume ICT services on demand from an outside provider, thereby variablizing costs.

More capacity can be deployed quickly with standardization and automation. This shortens times to market and lowers investment risks when integrating newly acquired business units.

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Limitations of a rigid operating environment.

Fig. 1.

High opportunity costs from tying up capital in unused IT

Ongoing IT costs(Replacements,operating, maintenance andIT staff costs)

Q1 Q2 Q3 Q4 Q1 Q2 Q3

Volatile business conditions(e.g. number of employeesand access to IT resources)

Self-hosting

Major productivity lossesDue to insufficient IT resources

High opportunity costs from tying up capital in unused IT

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All this is powered by a proven technology: virtualization. In virtualization, services previously provided locally are delivered over networks. Storage outsourcing is a prime example. Instead of being located physically in the same building as the enterprise, data storage resides somewhere “out there” in the world as a virtual unit. Many other services lend themselves equally well to virtualiza-tion, including processing power, desktop delivery or entire SAP development environments. Hardware, software or licenses used by customers over the network are fully scalable. Thus, when demand peaks, enterprises can promptly and effortlessly ramp up resources in response. When it ebbs, they can downsize again immediately, assuming they have a competent provider. This flexible approach to hardware and software use ensures that companies only pay for the services and resources they actually consume.

Two conditions must be met for pay-per-use billing to work. First, actual use or consumption must be measurable. Second, billing should be based on actual consumption. It is the ICT provider‘s responsibility to monitor and report consumption in sufficient de-tail. This gives customers the transparency needed to allocate costs more fairly and accurately, e.g. based on services, cost centers or business units. They can identify cost drivers and exploit savings potential.

By using resources dynamically, organizations make their ICT more energy- and resource-efficient and permanently reduce CO2 emissions, just as their corporate sustainability strategies require. Innovativeness and environmental responsibility go hand in hand, wherever enterprises implement advanced collaboration platforms, videoconferencing solutions, supply chain optimization or emissions and energy management systems. By conserving resources, enterprises can also “green” their image.

Any review of dynamic services has to look at not only virtualization, but also cloud computing. Cloud computing is more than the latest technology buzzword; it is a game-changer that will revolutionize the ICT industry.

Energy-efficient, eco-friendly use of operating resources.

Fig. 2. Source: T-Systems.

http://green-dynamics.t-systems.de/

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Time [years]

CO2 emissions [t] Simulated CO2 emissions of a sample company'sIT infrastructure.

Possible five-year reduction in energy, costs and CO2. Assuming the use of virtualization, pooling, optimized infrastructure. and energy-efficient hardware.

Green potential.

Up to 80% energy savings depending on the scenario.

Without virtualization

With virtualization

Dynamic services

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The basic idea: ICT resources (infrastructure, processors, storage, applications, data) are delivered, managed and billed dynamicallyover the Internet. IDC analysts estimate that cloud computing will account for 10% of global IT expenditure by 2013.

To achieve the cost and agility gains promised by cloud computing, organizations have to open up and standardize their ICT systems.Cloud services can only be combined across multiple vendors, platforms, applications and architectures if the interfaces, document-ation, network protocols, etc. are open and transparent.

There are essentially three hosting models for SAP environments, and each has a different impact on the relationship between business and IT: conventional, dynamic and cloud-based SAP hosting. In most cases, organizations deploy a mixture of the models to accommodate the wide variety of tools and capabilities available in their SAP environments.

Over 20% of German ICT decision-makers see cloud computing as one of the three biggest IT trends for the future, according to the LIFE2 study.

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Various hosting models: flexibility with dynamic, network-based services.

Fig. 3.

Pay what you order

Dedicated

Pay what you use

Shared

Pay as you grow

Network-based

Conventional

Hybrid (Conventional/Dynamic)

Dynamic

Hybrid (Dynamic/Cloud)

Cloud

Flexibility

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3.2 Mobility, interoperability and in-memory computing.

When ICT is viewed as a driver of process innovation, it automatically has to meet higher mobility and interoperability requirements. It needs to support and promote a variety of collaboration channels to enable people to work together in global value networks. Mobile technology, wireless communication and new sensors have integrated ICT even more deeply in the business world. Over 14 billion devices are now Internet-enabled. ICT users wish to work on their laptop or smartphone while sitting at home or waiting in an airport lounge. They want to access project data, watch training videos or communicate with co-workers. Users who have extensive mobile access to corporate data are far more productive, too. Many decision-makers are also keen to access enterprise systems while on the road so that they can approve orders, for example. Mobile decision-making cuts waiting times and accelerates processes.

No wonder CIOs are so interested in enabling mobile access to enterprise applications. In the LIFE2 study, seven out of ten respon-dents gave a high priority to „Providing anytime, anyplace, any device access to information and business applications“. Unfortuna-tely, few ERP solutions currently support full mobile access—SAP included. This is about to change: SAP‘s acquisition of Sybase has opened up new opportunities to display and manipulate enterprise data on smartphones. For example, users can now access the extensive SAP Business Suite on their iPhones, alongside a host of SAP products for other solutions: SAP xApps for Mobile Business, Duet (links Microsoft Office and SAP enterprise software) and Alloy (integrates Lotus Notes and SAP ERP).

Many SAP experts would still like extremely open interfaces to connect subsystems (PLM, CRM, etc.) and all kinds of mobile devices to the ERP system. While desktop users can connect to subsystems such as CRM in real time using web services and a service-oriented architecture (SOA), mobile users often lack the necessary interfaces. The keys to solving this problem are stan-dardization and interoperability, i.e. all technical means to enable heterogeneous system environments to work in concert. There are untold benefits to interoperability: not only does it facilitate migration but it cuts implementation time and costs, lessens the administrative effort needed to operate the solution, and reduces the risk of vendor lock-in.

With recent technological advances, companies can generate and analyze vast volumes of information in a fraction of a second—even with real-time data or growing data volumes. The secret is in-memory computing. This special technology has given rise to novel databa-se structures (column-oriented versus vector-oriented data models) that make all programs run faster. Put simply, the system keeps much of the business data permanently in RAM. Column-oriented data storage reduces response times even further, producing speeds that compare favorably with a Google search. Hard drive access times are much slower by comparison.

“Unfortunately, ICT is often viewed solely as a cost-cutting tool, even though ICT-driven innovation shapes the organization‘s ability to compete in the future.” [Prof. Roman Beck, Goethe-Universität Frankfurt]

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Data can also be analyzed in real time if the software is designed for in-memory computing. Organizations can extend systems more easily and develop new types of software. In-memory technology loads transaction data from standard enterprise applica-tions (ERP) into RAM in order to access it more quickly and analyze it on the fly. It is even possible to move entire databases into RAM, which accelerates data analysis significantly.

For SAP, the Sybase acquisition not only opened the door to mobile functionality; it also gave SAP a non-disruptive introduction to the benefits of in-memory analytics. This technique involves running an analytical database that is a perfect duplicate of the ERP system’s live database side-by-side with it. The original database can still be used for reporting and other standard business intelligence tasks. This approach has much to recommend it: real-time data availability and freedom from time-consuming ETL (extract, transform, load) processes. Performance also improves significantly. Take SAP BusinessObjects Explorer, for example. With in-memory computing, it can search 366 million data records in 15 milliseconds. The same technology is also inside SAP Business Suite 7 and SAP Business ByDesign, an on-demand software solution. They are ideally suited to in-memory computing, since the gains in performance and scalability translate into faster speeds as well as lower costs. One caveat remains, though. Data quality can suffer, since many organizations have yet to implement a single source of truth in their ERP systems. This is often due to inadequate information governance. Better data quality is an essential prerequisite for better, faster decision-making. SAP and the implementing ICT provider should urge customers to establish SAP Solution Manager as their single source of truth.

3.3 Service level agreements, risk management and governance.

SAP installations generate large volumes of transaction data that has to be correlated and analyzed with respect to performance, availability and service level compliance. In many cases, systems are analyzed using monitoring tools that come with the solution. Unfortunately, these tools offer limited visibility into the health of individual systems, and the predefined reports cannot answer all the questions that users ask IT service managers.

Custom reports do a better job of identifying the root causes of performance issues in SAP applications. If all the monitoring infor- mation and processes are supported in one tool and presented in one user interface, this delivers greater transparency and enables faster decision-making. IT service managers can instantly pull up detailed information on the availability and performance of (mission- critical) applications. This high-level view of the SAP environment provides the framework for an early warning system. If perfor-mance falls below a minimum threshold, IT service managers can pinpoint the cause with the click of a mouse. Risks can thus be regularly identified, analyzed, evaluated and addressed in order to deliver lasting quality improvements.

“Next to availability, performance is the most important aspect of effective IT services.” [Thorsten Stelling, EJOT Holding]!

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Service level agreements (SLAs) play an important role in the customer‘s relationship with the ICT provider. According to a survey by Forrester, around 50% of respondents cited the improvement of service level performance as the main reason for the most recent restructuring. In addition, fluctuating business demands often require changes to the SLA.

Organizations may wish to have the ICT provider manage their entire SAP solution end-to-end. In these cases, the two sides will have to start by deciding exactly how the services will be delivered. The SLAs should be both comprehensive and comprehensible. Service type and quality should be clearly defined, while the various elements of the contract must be formulated clearly in con-crete terms. Service level agreements and service levels to ensure operational reliability must be easy to measure, continuously mo-nitored and integrated in a reporting system. Without this transparency, the two parties might sign the contract, but have different interpretations regarding the services to be delivered. Failing to specify key points is another significant risk: renegotiations and modifications can hurt the relationship. The two sides must make sure to agree on roles and responsibilities, define interfaces and handover points and ensure effective communications between the contractual parties and with the SAP users. In some cases, it is worthwhile complementing the IT services provided with standardized user training and similar programs. To ensure everyone involved is familiar with the same methodology and “speaks the same language”, organizations can institute ITIL-compliant processes. This investment pays off with lower error rates, improved responsiveness to problems and incidents, and systematic handling of system modifications. Moreover, a professional management team that employs pre-defined, automated processes, such as those that ITIL provides, delivers better compliance. As an aspect of IT governance, “compliance” refers to the practice of following information security rules and encompasses standards on data availability, data retention and data privacy. As noted in the previous chapter, compliance, IT governance and related obligations have begun attracting much more attention from directors, executives and officers. No wonder: violations of SOX, the EU directive on protection of personal data, and other regulations can result in steep fines and liability claims. Present-day ICT architecture has to be designed with compliance in mind. In other words, it has to include risk management, separation of duties, secure authorization systems, effective, transparent internal management and control systems and fully compliant handling of customer and business data.

SAP has combined all its standard software solutions for governance, risk management and compliance (GRC) in the SAP Busi- ness Objects portfolio. Business intelligence and information management solutions provide visibility into business processes and control their performance. Other solutions help comply with regulations, manage risks across the enterprise and address all central governance issues in an automated internal control system. Critical processes and events are monitored continuously, and appro-priate action can be taken from within the application. This allows the organization to establish automated controls in its business units and test the effectiveness of its security checks.

Compliance management also involves imposing special controls on data and application access. This often requires specialized tools and protective mechanisms, preferably in the form of integrated enterprise solutions, to deal with the many and complex pro-grams and databases employed. Major groups and corporations with high numbers of SAP users should also implement identity and access management to ensure the separation of duties and control data and information access. Organizations also need to use software to check that their global role and permission system is up and running, determine whether it is effective in practice, and perform organizational tasks. These checks are essential to prevent unauthorized access and data misuse.

To advise and assist its customers with governance issues, SAP established a GRC Collaborative Business Initiative. Its goal is to help SAP customers tackle their GRC challenges by providing effective, targeted solutions. SAP and its partners work closely du-ring the entire sales and product cycle. T-Systems, for example, is a member of the initiative and contributes its product, project and industry expertise as a system integration specialist.

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By working with an ICT provider, SAP customers avoid the need to acquire GRC expertise themselves. Multinational corporations face a particularly daunting challenge: not only do they have to comply with the laws, directives and technical standards in their home country, but they also have to follow the regulations in all their sales markets (regional compliance). Besides being a skilled consultant, ICT providers should also have the knowledge and skills needed to integrate SAP BusinessObjects GRC into the customer‘s legacy ICT infrastructure.

In the consulting and analysis phase, T-Systems examines all relevant ICT systems and processes and then defines the change measures and automatic control mechanisms in the internal control system. An interdepartmental approach reduces process risk and makes risk monitoring more efficient, while maturity assessments identify necessary changes and how extensive they should be. Many of the change programs call for harmonizing heterogeneous system environments – a process in which T-Systems has extensive expertise. T-Systems exploits this to implement SAP BusinessObjects GRC using proven methodologies. Its ultimate goal is to provide a coherent, reliable system for a reasonable cost. T-Systems and this SAP functionality are a winning combination: a powerful application and deep implementation knowledge.

Looking back at past implementations of identity and access management (IAM) solutions in a variety of industries, it is clear that projects also have to meet many non-technical requirements to succeed. One key lesson: the IT department cannot undertake the project on its own. The entire organization needs to be involved. All the stakeholders – from line managers, department managers and auditors to data privacy officers, labor law specialists and employee representatives – should be brought on board at an early stage to help formulate the implementation strategy. In addition, the project should be backed by senior management, who must be prepared to take responsibility for the outcome.

Once the GRC solution is up and running, the ICT provider assumes the task of continuously improving processes and services and evolving the infrastructure. The provider, not the CIO, is now responsible for keeping the systems updated, ensuring they com-ply with the latest statutory requirements, and actively and permanently resolving issues (problem management).

Overall, a rigorous approach to governance offers decisive advantages in IT management and monitoring. It provides clarity by supporting efficient risk management, capturing processes, structures and relationship mechanisms and defining issues relating to access and process control. ICT service providers can relieve SAP customers of much of the effort involved in implementing a GRC solution.

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4. Case study: Dynamic Services for SAP® Solutions for Brenntag.

Brenntag is a leading global distributor of industrial and specialty chemicals, supplying over 150,000 customers with more than 10,000 different products. It operates a global network with over 400 locations and employs around 11,000 people, and posts annual revenues in the region of €7 billion. The company offers one-stop, global supply chain management and an extensive portfolio of value-added services for customers and suppliers in 64 countries.

Brenntag was looking for a way to expand in the Asia-Pacific region with a highly flexible business model. It needed to standardize and consolidate its ICT platform to manage its future communications in the region while complying with the security policies applicable across the entire group.

Brenntag chose information and communications technology from T-Systems to expand its network. T-Systems is currently im-plementing an end-to-end solution comprising MPLS and Dynamic Services for SAP® Solutions. An ultra-high-performance data center in Singapore will deliver services for Singapore, Thailand, India, Australia, Taiwan, Malaysia, Indonesia, the Philippines and Vietnam. Brenntag can choose from flexible service levels ranging from “Office” to “High-Availability Disaster Recovery”.

By consuming SAP services dynamically in line with changing requirements, Brenntag Asia Pacific frees up the resources it needs to focus on local operations. Peaks in demand can be accommodated without keeping costly resources in reserve throughout the year. New sites can be connected quickly, and bandwidth provided on the fly. T-Systems also operates Brenntag‘s software systems and supplies the latest software and services tailored to the customer’s requirements. Brenntag, for its part, only pays for what it actually uses. Fixed costs are being replaced by flexible, transparent pricing with variable costs that make accurate long-term planning possible.

T-Systems could package all the ICT services in one solution—that settled it for Brenntag.!

Private cloud solution (Dynamic Services) for Brenntag.

Fig. 4.

T-Systems SAP Services Service Manager

Dynamic Services data center

Firewall Router

MPLSDC backbone/service point

Localloop

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Brenntag‘s situation illustrates how foreign acquisitions can rapidly multiply the number of technologies. This increase in IT complexity often produces bottlenecks. For Brenntag, Dynamic Services (combined with T-Systems‘ MPLS backbone) are a flexible, lower-cost solution that enables it to continue expanding (see Figure 6).

Dynamic Services for SAP® Solutions are an innovative solution for cost-effectively creating and effortlessly running complex SAP application environments. They are powered by resource virtualization: applications are no longer tied to particular servers, but can be restarted on other resources at any time. Computing resources are provided in the form of physical or logical servers, which optimizes capacity utilization. Once placed in a computing resource pool, the servers can host multiple applications for multiple cus-tomers in line with demand. However, resources remain securely segregated at all times, as certified by independent auditors. With the help of the associated SAP Services, resources can be operated flexibly and independently and optimally adapted to fluctuating business needs – from data center hardware to SAP user support. With demand for cloud solutions on the rise, T-Systems has taken an early lead with its Dynamic Services for SAP® Solutions. It has been delivering SAPS from the cloud since 2004. With its private cloud infrastructure, it easily meets key availability and security requirements.

Cost savings from Dynamic Services compared to in-house hosting.

Fig. 5.

30% savings

20% Application Management

10% Hardware

20% Integrated processes

20% Automation

30% Infrastructure

Where do Dynamic Services cut costs?

Use of standardized hardware products. Administrators can access infrastructure directly. Integrated processes boost efficiency. Better utilization of infrastructure — scalable resources. Higher degree of automation.

T-Systems offers something other SAP system operators do not:

Dynamic Services for SAP® Solutions. Market researchers are convinced that T-Systems' solution provides the highest degree of automation. Thanks to its close and ongoing relationship with SAP, T-Systems can integrate SAP Solution Manager into its own portfolio, expanding its offering. This creates many advantages, and these significantly improve service level reporting and SAP application lifecycle management. T-Systems “Run SAP” certification underscores the quality of its skill set.

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5. Case study: Access and permission management at Königin Elisabeth Herzberge Hospital.

Königin Elisabeth Herzberge Hospital (KEH) is a modern general hospital in Berlin. It has 607 beds and treatment stations in nine departments and two psychiatric day treatment centers. The Protestant-affiliated hospital with nearly 800 staff members mainly serves patients from East Berlin. In 2001, it reorganized as a non-profit corporation (gGmbH). T-Systems has served KEH since the two partners worked together to introduce SAP R/3 in 1999.

Hospitals have extremely strict data privacy rules. They have to constantly monitor and seamlessly document who has viewed and edited patient information. Admissions desk workers who use SAP IS-H (Industry Solution Healthcare), for example, are not allowed to see any patient data that might enable them to infer what disease the patient suffers from.

KEH decided to improve data security by deploying SAP BusinessObjects Access Control as an integral part of the SAP solutions for governance, risk and compliance (GRC). Its goal: to better visualize and control user access and permissions as well as profiles and roles in SAP and third-party systems. However, it also wanted to satisfy the requirements of the German Corporate Governance Code and support a transparent internal control system at the hospital. SAP BusinessObjects Access Control provides the kind of reliable information about the effectiveness of KEH‘s internal control system that auditors require. To review existing permissions, SAP BusinessObjects Access Control provides a comprehensive set of rules for identifying separation-of-duties conflicts, critical permissions and associated risks.

While SAP provides standard rule sets for manufacturers, it had no sets designed specifically for hospitals. T Systems closed this gap by running a pilot project in which it developed rules to help medium-sized hospitals handle permissions in SAP IS-H. It iden-tified critical permissions and separation-of-duties conflicts in SAP IS-H, and then imported the rule set into SAP BusinessObjects Access Control.

The implementation moved ahead in stages: from procuring hardware and installing the new SAP BusinessObjects GRC soluti-on to creating the rules and bringing them in line with requirements formulated by specialists in finance, accounting, IS-H, etc. to training staff and jointly testing the solution. T-Systems also made preparations to integrate a third-party system at a later date.

KEH is using the extended rule set from SAP BusinessObjects Access Control to analyze risks across the entire system and revise access permissions in SAP IS-H and other modules. With SAP BusinessObjects Access Control, it can promptly generate reports on current risks for new and existing SAP permissions. That makes it much easier for KEH to monitor and verify how it handles sensitive patient data – a crucial obligation for any hospital. Looking ahead, KEH feels well equipped to satisfy increasingly strict statutory and regulatory requirements.

“With the new solution, we can identify and address critical permissions and separation-of-duties conflicts much more quickly, easily and thoroughly—even when setting up new access permissions.”

[Ralf Korzendorfer, Head of IT at Königin Elisabeth Herzberge Hospital]

!

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6. Conclusions.

Organizations have to grow their businesses and cut costs to stay competitive. If they want to maintain a strong, permanent market position, they need much more: unique products, innovative skills and the right go-to-market strategy. An agile ICT environment can more easily be aligned with the demands of their business and processes. Moving ICT services to the cloud brings greater adaptability to the production, use and billing of those services.

While this approach puts business relationships on a more flexible footing, it also fundamentally changes how ICT works. Choo-sing the right ICT strategy was already difficult; the trends and conditions outlined in this white paper make it even more so. An all-encompassing ICT and ERP strategy offers the only way to reconcile conflicting quality, innovation and scalability requirements. It should form the basis of every organization‘s sourcing practices. Unfortunately, there is no universal playbook for developing this kind of strategy. What is clear, however, is that more organizations are turning to external specialists for much more than conventi-onal implementation consulting. These relationships can be more or less extensive in terms of hosting (including SLAs), technical components such as service and interface standardization (tool and process integration, etc.) or the overall scope of services.

CEOs, CIOs and employees expect a great deal from ICT providers:Seamless, entirely digital business processes.Anywhere access to applications.Transparent system environment without redundancies.End-to-end monitoring of key applications.Compliance with the most stringent security standards, with security standards and automatic updates.24/7 global availability.Improved cost structures by turning fixed into variable costs.Fair prices (ICT costs) – but without nasty surprises thanks to pay-per-use billing.

These standards apply to ICT in general, not just SAP. They can only be met by service providers who combine SAP expertise with knowledge and skills in many other areas, such as experience with workflows or change management. The providers should have a long project and implementation track record and be able to operate a high-performance SAP environment for a long period of time. That calls for business continuity, financial stability, and global delivery capability. Large ICT providers have the edge, because they not only boast broad skill sets and can provide one-stop service solutions – right up to managing entire ICT environ-ments. An end-to-end platform with robust service levels can deliver highly available mission-critical applications to any location worldwide. High availability depends on many factors: transparent, insightful monitoring, rapid component replacement and short backup and recovery times.

Visionary managers combine cost-cutting with strategically necessary investments to be better placed for the future.!

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If the ICT provider has all these competencies, everyone will benefit enormously from the relationship (see Figure 6). An experienced provider will acknowledge and address any doubts that organizations may have about handing over responsibility for their SAP environment. Typical fears include: Will costs explode after signing the contract? Will we be locked in to specific systems, interfaces, networks, et cetera? Will we lose valuable in-house expertise? Will employees oppose our plans? Many customers worry about main-taining quality and data security and are initially apprehensive about concepts such as virtualization and cloud computing.

There are, nonetheless, many reasons why organizations should partner with an ICT provider. They can cut and control costs better by turning capex into opex, which improves cash flow. At a strategic level, they can respond faster and focus on their core business. Finally, a competent ICT provider can not only maintain service quality – it can improve it through standardization, higher availabili-ty and state-of-the-art technologies. The following chart summarizes the benefits for all stakeholders.

Benefits of partnering with a large provider such as T-Systems.

Fig. 6.

Value-added for the customer’s management.

Value-added for the provider.

Value-added for the customer’susers.

Value-added for the customer’sCIO.

Focus on core business. More competency. Greater innovative power. ICT savings frees up resources. Cost transparency. Worldwide availability. Greater responsiveness to market changes. Certified security. Provider complies with locally applicable statutory requirements. Risk transfer.

Flexibility. Economies of scale in order to set viable prices. Cash flow.

New expertise thanks to project experience and transferred staff. Deeper industry expertise. References are powerful selling points.

Automation simplifies processes. Improves efficiency by eliminating steps that are potential points of failure. Faster problem resolution. Less downtime. Higher availability and stability. Key users can draw on expert knowledge.

Standardization reduces costs. Automated processes. State-of-the-art technology. Clearly defined service levels. New opportunities for development. Easy access to new technologies. Addressing problems and vulnerabilities. Visibility into system use, system performance and capacity utilization. Extends in-house expertise and frees up resources. Shorter development cycles and deployment times. Reduced complexity and maintenance costs by decoupling systems.

Greater competitiveness Innovative powerHigher user satisfaction

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7. Table of figures.

Figure 1:

Figure 2:

Figure 3:

Figure 4:

Figure 5:

Figure 6:

Limitations of a rigid operating environment.

Energy-efficient, eco-friendly use of operating resources.

Various hosting models: flexibility with dynamic, network-based services.

Private cloud solution (Dynamic Services) for Brenntag.

Cost savings from Dynamic Services compared to in-house hosting.

Benefits of partnering with a large provider such as T-Systems.

No. Name

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8. Glossary.

Application lifecycle Lifecycle of an application, from the initial idea to phase-out.

Billing A business process encompassing every step from receipt of usage data (e.g. landline, mobile line or Internet) to producing the invoice.

Business continuity Maintenance of critical business processes immediately following a disaster and/or gradual restoration of all operations during emergency situations of longer duration.

Business intelligence (BI) A collection of methods for extracting valuable information from unstructured data.

CIO Short for „chief information officer“. The CIO is responsible for strategic and operational IT manage-ment.

Compliance (IT) The process of following regulations, corporate policies and contractual terms relating to in-house IT.

CRM Short for „customer relationship management“. CRM systems are used to manage and cultivate custo-mer contacts.

Crowdsourcing Delegating business tasks to the intelligence and manpower of a large community of unpaid workers on the Internet.

Deployment time Time needed to distribute and install software.

Disaster recovery (DR) Measures taken by the IT organization after a disaster.

Downsizing Reducing the scale of resources while maintaining performance. Downsizing takes advantage of the fact that customers typically need far less than what can theoretically be delivered.

End-to-end A provider working from a central point of control takes responsibility for a particular product- or solution-related process from start to finish in compliance with agreed quality standards.

E-procurement Procurement of goods and services over the Internet.

ERP Enterprise resource planning.

ETL Short for „extract, transform, load“. Refers to extracting, transforming, loading and combining data from several data sources into a target database.

Firewall An external network or hardware firewall connects two networks in a controlled way. It monitors data traffic and decides what data packets to let through based on preset rules.

(IT) governance A framework for addressing the strategic alignment of IT operations, performance measurement (ser-vice levels), risk management, value creation (costs) and resource management.

Interoperability The ability of independent, heterogeneous systems to work seamlessly together. Information is exchanged efficiently between the systems, with each sending messages in a form that the other can interpret and process correctly.

Term Definition

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ITIL Short for “IT Infrastructure Library”. A collection of service management best practices and the global de facto standard.

Legacy system An old system that continues to be used despite the existence of new systems.

M&A Mergers and acquisitions.

MPLS Multiprotocol Label Switching.

Outsourcing Delegation of business tasks and structures to outside companies.

Pay-per-use Payment based on the number of units used.

Pooling Logical grouping of server and storage units into large collections.

Root cause analysis The examination of the reasons for process variances. A component of SAP Solution Manager.

SAP Solution Manager An application suite that integrates all content, tools and methods that an organization needs to techni-cally implement, administer and monitor its SAP system environment.

Term Definition

Service levelagreement (SLA)

Formal agreement between the customer and the IT provider about services to be provided and what quality they should be provided in.

Service level reporting The reporting of incidents covered by an SLA and measurements documenting compliance with ser-vice levels.

Scalability Ability of a hardware or software solution to adapt precisely and flexibly to the customer‘s requirements.

Time to market Period between developing a product and launching it on the market.

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9. Table of sources.

Bu-Wi 2009 IT der Unternehmensstruktur anpassen, business-wissen.de, August 17, 2009.

COWO 2010 Rechenzentrum der Zukunft - Welche Trends das Data Center verändern, Wolfgang Herrmann, Computer-woche, January 2010.

CRN 2009 Outsourcing - Wege zu mehr Handlungsspielraum, Lars Bube, Computer Reseller News, June 2009.

CRN 2010 Sieben goldene Regeln für IT-Sourcing, Markus Bereszewski, Hartmut Jaeger, Computer Reseller News, July 16, 2010.

DSAG 2010 Zukunftstrends der SAP: Funktionale Entwicklungen und Technologietrends, Angelika Jung, DSAG-CIOS, February 2010.

Forrester 2009 Outsourcing SAP Operations Expands With Economic Uncertainty, Bill Martorelli and Liz Herbert for Sourcing & Vendor Management Professionals, Forrester, August 2009

Forrester 2010 The Evolving Infrastructure And Operations Organization, Rachel A. Dines and Marc Cecere for Infrastruc-ture & Operations Professionals, Forrester, April 2010.

Gartner 2010 Key Issues for IT Operation Management, 2010, Kirs Brittain, Gartner, April 2010.

Gartner 2010 (2) IT Infrastructure and Operations Key Initiatives, 2010 and 2011, Jay E. Pultz, Gartner, March 2010.

Kurzlechner 2010 GRC-Welten wachsen zusammen - Governance, Risk und Compliance: Business und T Hand in Hand, Werner Kurzlechner, CIO, June 2010.

LIFE2 2010 LIFE2 – Vernetztes Arbeiten in Wirtschaft und Gesellschaft, Prof. Tobias Kretschmar, Ph.D., LMU Munich, August 2010.

IDC 2010 The Consumerization of IT: How Are CIOs Managing the Complexitiy?, Lionel Lamy, Nicholas Mc Quire, IDC, October 2010.

Otto 2010 Freiräume schaffen mit IT-Outsourcing, Jörg Otto, Siemens AG, Siemens IT Solutions and Services, article in Outsourcing Competence Site, March 2010.

SAP 2010 The Real-Time Machine, Stephan Magura, SAP Spectrum, 3/2010. SAP 2010 (2) Room for More, Marcus Winkler, SAP Spectrum, 3/2010.

Source Document

ICT

as a

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SAP

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2011

Contact:T-Systems International GmbHMarket IntelligenceHolger WächtershäuserHahnstrasse 43d60328 Frankfurt am MainE-mail: Holger.Waechtershaeuser@t-systems.com

T-Systems International GmbHIT/ICT Solution MarketingSibylle BeckerBöhringer Str. 5078315 RadolfzellE-mail: Sibylle.Becker@t-systems.com

Published by: T-Systems International GmbHHahnstr. 43d60528 Frankfurt am Main

Responsible for content:IT/ICT Solution Marketing