© 2009 Forrester Research, Inc. Reproduction Prohibited

ERP Optimization How to Save Cost And Gear Up For Business Innovation Simultaneously

Liz Herbert, Principal Analyst

June 2013

CAST Confidential 2

Speakers

Liz Herbert

Principal Analyst

Forrester Research

Chris Manuel

Director of Partner Solutions

CAST

Innovation and growth top technology spending priorities

Source: Forrsights Services Survey, Q2 2012

28%

30%

24%

38%

38%

34%

34%

41%

37%

35%

10%

17%

26%

21%

28%

34%

37%

31%

42%

50%

We are bringing in new, smaller, more innovative vendors to helpus implement new technologies

The increased reliance on predictive analytics to help informbetter and timelier business decisions

The need to grow/expand the business in new geographies anddeveloping countries

Business executives taking a more active role in the provisioningand decision-making for technology and IT services

The increased use of software, infrastructure or businessprocess as-a-service offerings

Consolidation of business units or streamlining operations

The increasing use of smartphones and tablets, as well as theapps on them

Senior business management's conservative approach tospending on large projects

The need to lower our IT operational costs

The need to innovate and grow our business

“How much of an impact do you believe the following changes and initiatives will have on your firm's IT services spending over the next 12

months?”

Moderate impact Significant impact

Base: 1,058 IT services decision-makers

Firms balance “run” with “innovate”

ERP is among the leading software investment categories

Source: Forrsights Software Survey, Q4 2012

CAST Confidential

POLL: How much do you spend on operations versus new development?

6

Balancing ERP Needs With Wants

© 2012 Forrester Research, Inc. Reproduction Prohibited

Future areas driving innovation investments

1. Cloud 2. Mobile 3. Social

4. Business

Flexibility

5. Big Data

Source: Forrester

© 2013 Forrester Research, Inc. Reproduction Prohibited 9

Too much customization increases cost and hurts innovation

CAST Confidential

POLL: How do you measure the extent of customizations?

10

* Respondents could select more than one answer

© 2013 Forrester Research, Inc. Reproduction Prohibited 11

Quantifying the customization problem

› Customization costs can equal or surpass ERP software

costs

• Services can run 10x or more of the ERP software costs, of

which customization is a big part.

› Organizations strive for vanilla implementations, no more

than 20% customization

• But valid reasons exist for some customization

• And managing business demands is tricky

› Outsourcing relationships could be structured to drive

out extensive custom code and to optimize

• But many are “your mess for less” model

© 2013 Forrester Research, Inc. Reproduction Prohibited 12

Why optimize / modernize?

Cost:

• Protect investment.

• Maintainability – long-term support and TCO.

• Deliver agility.

Innovation:

• Capitalize on new technologies.

• Exploit new markets and business models.

• Empower employees.

Optimize ERP ROI by:

› Move away from extensive custom code – revaluate

need for this and usefulness of customizations

› Technical upgrade to reduce maintenance and support

costs

› Functional upgrade to improve business value

› Consolidate instances where it makes sense

› Upgrade / modernize to be able to leverage new

features and add-ons

© 2013 Forrester Research, Inc. Reproduction Prohibited 14

Source: Forrester Research, The Business Applications Playbook

Forrester’s business applications strategy approach

• Define phasing

priorities.

• Assess buy versus

build alternatives.

• Determine candidate

software suppliers.

• Analyze project

dependencies and

time frames.

• Define the business

applications road

map.

• Calculate the (TEITM)

business case based

on costs, benefits,

risks, and flexibility.

• Define functional

architecture.

• Identify technology

characteristics and

deployment methods.

• Determine how

current apps fit into

future plans.

• Map integration and

data management

strategies.

• Define BI strategies

and performance

measures.

• Define the IT/BT

organizational model.

3. Define the

target

architecture.

• Articulate the vision

for business

processes.

• Define the

technology

innovation strategy

to support the

process vision.

• Define scope and

objectives of the

strategy.

• Develop a

preliminary

business case for

the transformation.

• Review business

and IT

strategies.

• Assess current

apps and

technology

environment.

• Assess process

capabilities.

• Determine gaps.

1. Assess apps

portfolio and

processes.

• Select apps

software and

delivery vendors.

• Implement specific

phases of the road

map.

• Manage ongoing

ownership costs.

• Measure results

achieved.

• Optimize staffing

resources and

vendor

relationships.

• Start the whole

process over.

4. Build

business

apps road

map.

5. Execute,

measure,

and

optimize.

2. Set the

strategy

and

vision.

Recommendations

1. Assess your packaged applications: how customized are

they, how much is this costing you, is the customization driving the

right business benefits, are people still using it

2. Optimize your packaged applications: understand where

you can reduce customization, modernize applications, reduce the

TCO, and increase the supportability and performance

3. Extend applications to drive business innovation: put

cost savings back into business value, extend applications into

new areas – mobile, cloud, analytics,

CAST Confidential

POLL: How many lines of ERP custom code do you have in your organization?

16

CAST Confidential 17

Industry Reflections – ERP Customization Size

• Total of 254 applications

• Total of 205,614,000 LOC

• Average 809,000 LOC

# o

f E

RP

ap

plic

ations a

na

lyze

d

Lines of Code (in thousands)

CAST Confidential

CAST Solutions – Powered by Products & Services

18

Highlight

Benchmarking

Application Intelligence Platform

Appmarq

• Software Analysis & Measurement As-A-Service

• Rapid profiling of large, complex portfolios

• Predict maintainability and technical debt

• Enterprise-grade software analysis & measurement

• Multi-tier, multi-technology, architectural analysis

• OMG-standardized automated function point counting

• CISQ Risk Drivers: Robustness, Efficiency & Security

• CISQ Cost Drivers: Maintainability & Technical Debt

• 1,500 applications, over 500 million lines of code

• Group by industry, domain, technology, geography

Application Portfolio Analysis

Productivity Measurement &

Improvement

IT Portfolio Prioritization &

Rationalization

IT Risk Identification

& Mitigation

Code Quality Management

Vendor Measurement Program

Consulting & Professional Services

• Industry expertise in software measurement, code quality

management, SAM services deployment

CAST Confidential 19

CAST Results in Actionable Visibility

The CAST Application Intelligence Center

Reports on application health,

team performance, benchmarking

CFOs, CIOs and VPs

Software characteristics, cost and

risk drivers, ARB, architectural

governance, root cause analysis…

PMs, QA, Architects

… and feedback & advice

on software quality

and engineering

Development Teams

Actionable visibility

across the IT organization

Application Source Code

• CICS, IMS, COBOL, DB2 z/OS

• J2EE, .NET and all Major RDBMS

• Web Apps, BI, EAI, C/C++, VB, PB

• Siebel, SAP, PSFT, OBS, Amdocs

Quality Measurement

& Functional Sizing

Compliance checks

Code, Architecture

and Data Structure

Analysis

AIP Analytical Engine

Engineering

Platform

Measurement

Platform

CAST Data

CAST Confidential

Driving Software Measurement in the ADM Industry

20

Key Influencers Recognize CAST

250 Global Leaders Rely on CAST

Institutions Engage CAST SIs Resell CAST SIs Use/Resell CAST

Elite technology

First in business IT

Largest benchmarking DB

CAST Confidential

Situation

Market leading energy provider

Multiple instances, multiple versions of SAP

Concerns around control over cost & quality

Development & maintenance provided by 3rd Party

Challenge

Consolidate instances based on global template

Upgrade older versions

Implement ongoing quality control program

Case Study: Realizing Better Quality at Lower Costs

CAST Confidential 22

Case Study: Realizing Better Quality at Lower Costs

Solution

Leverage CAST AIP output to establish quality baselines & measure ongoing deliverables

Measure vendor productivity against effort estimates

Provide coaching mechanism for vendors with regular feedback cycles

Benefits

Optimized upgrade by suppressing 50% of custom code

Reduced production support tickets related to customizations

Achieved cost savings in both upgrade activity and refactoring maintenance work to new ABAP development

HISPANO P70 (ECC5.0)

Average Market Range

Rank Values Rank Values Rank Values Rank Values Rank Values Rank Values

TURBOMECA PSI (ECC6.0) 1 3,02 1 2,87 1 2,67 10 3,11 1 3 11 3,18

SAFRAN IS P56 (ECC5.0) 2 2,97 2 2,86 8 2,04 2 3,25 2 2,97 2 3,36

SNECMA P83 (ECC6.0) 7 2,91 6 2,78 2 2,4 1 3,26 7 2,85 6 3,26

SNECMA P74 (ECC5.0) 8 2,9 7 2,77 3 2,37 8 3,19 3 2,87 5 3,27

HISPANO P70 (ECC5.0) 9 2,88 8 2,74 5 2,36 5 3,22 10 2,84 7 3,23

SAGEM P13 (ECC6.0) 3 2,96 8 2,74 3 2,37 9 3,13 3 2,87 10 3,2

MORPHO P07 (4.6c) 4 2,91 3 2,81 9 1,94 3 3,24 7 2,85 1 3,37

SAGEM INDUSTRIES P09 (4.6c) 5 2,93 3 2,81 10 1,89 4 3,23 5 2,86 2 3,36

SAGEM P03 (ECC6.0) 6 2,92 5 2,8 11 1,86 7 3,21 5 2,86 4 3,33

SNECMA P80 (ECC5.0) 10 2,86 8 2,74 5 2,36 5 3,22 10 2,84 7 3,23

AIRCELLE PRD (4.7) 11 2,82 11 2,65 7 2,08 11 3,02 7 2,85 9 3,21

3,33

TQI Robustness Performance Security Transferability Changeability

3,12 3,06 3,16 3,07 3,1

TINE P56 (ECC 6.0)

BRISBANO P13 (ECC 6.0) TINE P41 (ECC 5.0)

BOREAL PT2 (ECC 5.0) SCOOP P07 (ECC 6.0) DAISY P80 (ECC 6.0)

TINE P06 (4.6)

INERGY P65 (ECC 6.0)

TYHG-Z (ECC 5.0)

INERGY PRD (4.6)

SULO (4.6)

CAST Confidential

Contact details

Pete Pizzutillo

p.pizzutillo@castsoftware.com

www.castsoftware.com

blog.castsoftware.com

linkedin.com/company/cast

@OnQuality

slideshare.net/castsoftware