Increasing ROI of SAP systems

Maximizing savings potential

Cost pressures have been on the rise everywhere – in IT too. Cost cuts of up to 20 percent are not unusual. But how can you maintain efficiency while reducing IT operating costs? This is a difficult question to answer, as IT landscapes are often not transparent. Regular implementation of a usage analysis can provide lasting solutions.

An IT system’s operating costs can be regulated specifically with the aid of a usage analysis. The software company candle corp. proved this in the 80’s. IT experts systematically searched their IBM mainframes for unused programs that required licenses. The analysis enabled them to identify programs used frequently, to check ones used infrequently and to eliminate ones not used at all – saving costs without hurting business. This method is based on a system usage analysis that saves programs used intensively, questions the necessity of ones used rudimentarily and deletes unused programs cost-effectively. All PC users are familiar with the simplest type of usage analysis when they receive messages from their OS telling them there are links on their desktop that haven’t been accessed for a long time. When users keep only the links they access frequently, they work much more efficiently because search times are reduced, for instance.

Regular check-ups

Regular check-ups have proven advantages in health-care. Early diagnosis of disease results in considerably lower costs. And in the SAP community, regular system check-ups and diagnosis have also become increasingly important. That’s because SAP production systems are getting older. Over time, they have collected numerous company-own developments, superfluous third-party programs and obsolete authorization concepts. All this unnecessary ballast drives up the cost of running SAP systems.

It’s actually relatively easy to analyze an SAP system’s usage. The first step entails defining criteria for measuring an ERP system’s degree of usage. The second step is to take measures to reduce operating costs. The usage analysis is divided into license, user and system management categories. This is because license costs and the expenses for maintaining and operating an SAP system vary depending on how many users it has, its scope of functions, how company-specific and how complex it is, and which interfaces are implemented. These criteria are a good basis for identifying cost drivers.

Keep license costs to the required minimum

Active license management requires avoiding typical mistakes. Some common ones include forgetting to remove inactive users, not having enough license entries in the master data, allocating users to several categories in more than one system and assigning incorrect licenses.

For security reasons alone it’s important to deactivate all inactive users in the SAP system. And yet it’s amazing how negligent some organizations are in this crucial point. Results from around 800 RBE Plus usage analyses conducted by IBIS worldwide on SAP systems attest to this. The benchmark for the “valid and active users” indicator is only 85 percent. This means SAP license costs can be reduced by about 15 percent on average. SAP users may not be able to return their licenses, but at least they can cancel maintenance on unused ones.

It’s a far greater challenge to figure out which licenses you need. Each price list contains different license types, such as Professional or Limited Professional. Regardless of which price list applies, the registered license type has to correspond to actual system usage. Since many companies don’t have a reliable method for figuring this out, they tend to opt for the more expensive ones. They do this to avoid unpleasant surprises when it comes to official license checks. But that means nearly all SAP users are paying excessive license costs. Here too there is vast potential for cutting IT operating costs. 

Remember user management

Active user management is much more complex than license management because you have to figure out whether the company’s structure is compatible with the processes in the system. The phrase coined by Alfred Chandler, that "structure follows strategy", still remains true today. The structure of the organization has to match its business processes. Unfortunately some SAP systems – especially the older ones – often show discrepancies between their structure and the way their business processes are organized. This leads to unnecessary costs.

Two benchmarks distinctly show the condition SAP systems everywhere are in. The proportion of dialog users who execute fewer than three transactions in the SAP system is approximately 14 percent. In other words, they’re not maximizing their ERP system’s potential. Therefore, it’s generally a good idea to check license types of all dialog users. This includes examining the transactions used and usage intensity. Steps can then be taken to improve organization.

Another metric that reveals anomalies in organizational structure is the proportion of power users. Power users are ones who perform 80% of the work in their user department. If the number of power users is too low, logic suggests that a large number of these are occasional users. But occasional users require longer training times, resulting in inefficient execution of processes. Close examination is therefore essential. As an example, we can cite the benchmark for entering vendor invoices. The number of power users in this area is only 27 percent. This implies that the remaining 73 percent enter a mere 20 percent of the invoices. In view of the complexity of invoice entry, the proportion of occasional users is too high. Centralization of these tasks would enable more cost-effective system usage.

Aligning structure with processes

A targeted analysis of an SAP system’s structure and processes hinges on several factors. These make it possible to see just how complex a usage analysis can be in terms of active user management. It’s essential to ensure that available usage potential corresponds to process requirements. If the system offers too many or too few requirements, this drives costs unnecessarily and could have very expensive consequences.

A prime example of this are the terms of payment provided in an SAP system. If a company uses 20 different terms of payment, there’s no reason to keep 500 in the system. This type of discrepancy between usage potential and actual usage is one source of hidden costs. Whether time is wasted searching for the right term of payment when creating a vendor invoice, or whether 480 unused terms of payment have to be maintained and tested, these are costs that can be eliminated.

Strictly limit company-own developments

A simple benchmark like the “proportion of company-own transactions used in the SAP system” distinctly indicates where cost-cutting potential lies in many SAP systems. The proportion is 42 percent. According to this, 58 percent of the company-developed programs are not used. These may be required when the SAP release implemented does not contain specific functions in the standard version. But it becomes a problem when they no longer support current business processes. Unused programs require just as much maintenance as the indispensable company-own solutions. Each time systems are upgraded or consolidated, the ABAP code must be checked and adapted manually. This is why it’s so important to monitor user-specific developments regularly and delete unneeded programs.

Take full advantage of cost-cutting potential

The points outlined above clearly demonstrate how complex a usage analysis is – and how vital. It takes regular analysis and active license, user and system management to run SAP systems optimally and efficiently. This creates much-needed transparency and reduces the complexity of several influencing factors. The resulting cost savings is substantial. It’s IT’s responsibility to maximize this potential in the long term.