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Client case: Apoteket Solution replacement using Oracle applications to reduce costs

Riga, 2011-11-03

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Understanding & reducing complexity

Accenture Application Portfolio Optimization Solution

IT Portfolio Management Challenges

Complex infrastructure and application architectures

Long lead times for system changes due to legacy application inflexibility

Lack of integration due to disparate, disconnected systems

Redundant applications and functionality create a complicated business and IT environment

Poor alignment with business goals

Inflated costs of hardware purchasing and maintenance

Increased non-discretionary spend allocated to maintenance and support

Limited budget and personnel available for strategic investments

End-to-end rationalization and optimization capabilities focused on business alignment

Evaluating existing applications to identify functionality which is overlapping or missing, or where application sustainment costs exceed the value provided to the business

Results:

Delivers a pragmatic plan for applications and technology that is aligned to the future business direction

Provides you with an actionable Cost Reduction roadmap that specifies whether to decommission, remediate, re-platform, consolidate or enhance applications

Implement a rigorous governance and portfolio management process to sustain the results of the Application Portfolio Optimization

Accenture Application Portfolio Optimization: a two-phased approach

Phase 1

Speed: Iterative approach to quickly establish an initial application roadmap and associated value case

Focus: Organize work to focus on high value opportunities

Flexibility: Structure a flexible approach that can be adjusted as objectives and scope are refined

Phase 2

Implement Recommended Disposition from Phase 1

Sustain

Decommission

Remediate

Re-platform

Replace

Consolidate

Enhance/Expand Sida 3

Distinct Application Dispositions

Disposition Description Characteristic

Sustain To leave as is and maintain Ultimate low cost solution

Decommission To retire (sunset) application Short-term cost

Long-term benefit

Remediate To improve code quality, developer productivity and overall reliability of application

Perfect-fit solution

Low training requirements

Re-Platform To port an application from one technical platform to another by reusing (partially or fully) the code asset in the target platform

Quick solution

Low training requirements

Supports platform rationalization

Replace Removing the existing application by decommissioning it and replacing it with something else

Increased business benefit

Longer deployment timeframe

Consolidate Replace an application with another existing application capable of scaling

Low cost

Low training requirements

Fastest deployment timeframe

Enhance/

Expand

Hybrid (Reuse and Extend via Development or Additional Software Components/Modules)

Low cost

Low training requirements

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IT Governance Results

5

Applications with overlapping functional coverage leads to redundant costs and delayed value

Years of modifications lead to tangled application code increasing costs and risk due to complexity

Point-to-point integration (leads to higher cost of change and increased risk of failure)

Obsolete technologies that are complex and costly to maintain

Moving from Moving to

Revitalized and renewed application architecture

Rationalized application and data landscape

Streamlined business processes and improved support of the strategic goals

Newer technologies with more available skills

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Replacement Case - Apoteket AB

It is Apotekets goal to inspire and help people achieve a life of health. The Group works with both consumers and operators on the nursing and health-care market.

Sida 7

Deregulation of the Swedish pharmacy industry during 2009 to 2010

930 pharmacy stores Monopoly on the consumer market 43 billion SEK revenue 11 000 employees

330 pharmacy stores 35 % of the consumer market Half the revenue Half the number of employees

From to

Implications to Apoteket AB:

Competitive situation

Sida 8

New prerequisites put demand on new IT solutions

IT systems supported 900 stores, revenue of 40 billion SEK and monopoly

Customized and expensive IT-systems

Modern IT solutions suitable for competitive market adapted to Apotekets new size

Cost efficient IT support (standard)

Flexible IT support

Before deregulation After deregulation

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Oracle Application Integration Architecture

Apotekets new IT solution

Oracle EBS and Financial Analytics Financials

REX Prescription management

Oracle Retail SIM Store inventory management

Oracle Retail RMS Merchandising, procurement, orders

Extenda Point of sale

Oracle Demantra Forecasting

Store processes

HQ core processes

Finance processes

External systems

Apotekens Service

Suppliers Banks Payex Loyalty club Gift cards Apoteket legacy

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Oracle Retail

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Oracle Retail

Oracle SIM Store inventory Good receipt Stock taking Shelf space allocation Shelf labels

Oracle RMS Assortment Price Suppliers and deals Purchase order Replenishment Inventory management

Oracle ReSA (parts of RMS) Consolidation of sales transactions Sales audit

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Phasing Approach

Apoteket chose Option D, since it was regulated that no stores could open on the old solution after 1st January 2011:

Could only open new stores on the new platform. Must have full functionality for this

Could not impact operations of existing stores

Cost

Ris

k

Low

High

High

Option B

Option A

Option D

Functionality

#Sto

res

Low

High

High

Option B Rarely Selected

Option A Large Retailers

Option D Small/ Medium Retailers

Option C Rarely Selected

Option C

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Use Retail standard

processes

Keep cost low, capacity

high

Aggressive go live

timing

Oracle Retail - Project Approach 1 2 3

Go

al

Stra

tegy

O

utc

om

e

Project delivered with over 50% of team offshore.

Significant amount of application scope delivered in a short time.

Development, System test completely done offshore; integration test onshore.

Delivery project start to finish from July, 2010 through February, 2011.

Quickly build team size

Minimize required customizations.

Minimize scope changes during delivery project.

Build a team with the right mix of onshore and offshore team members.

Keep defined components owned within a given shore (i.e. development completely done offshore).

Maintain ability to quickly staff up team in key skill areas.

Begin with approach that standard Oracle Retail processes will be leveraged as much as possible.

Use pre-created assets for Oracle Retail standard processes.

Keep any customizations outside of the standard processes.

Shortened scoping period by using predefined processes.

Customizations limited and performed outside of core processes.

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Integration

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New Integration Approach

Oracle eBS

Customer

Item Oracle Retail

POS

REX

Common Integration Datamodel Application

Specific Datamodels

Oracle AIA 11gR1

25 Different Business Objects (18 std AIA, 7 custom) 75 Integrations Implemented 50 AIA Web Service Integrations

ARTS

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Reuse Of Services Example: Sales Transaction Data

Oracle eBS

Oracle Retail

POS

Dose Package

Management

Oracle AIA 11gR1

Sales Transaction ARTS

REX

Loyalty Club

Business Intelligence

Apotekens Service

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Summary Apoteket objectives

Modern IT solutions suitable for competitive market adopted to Apotekets new size

Cost efficient IT support (standard)

Flexible IT support

Project Results

Standard solutions makes it possible to decrease maintenance costs

Shared development with others

Use of off-shore

New solution provides capabilities to be a competitive retailer

Flexible integration solution

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