Research shows that companies are using less than half of the standard SAP code they pay for, wasting millions of euros each year as a result. We talk to one manager who is turning this around for his company. By Philip Smith, freelance journalist.
Saudi Basic Industries Corporation (SABIC) ICT manager Paul Ettridge ran a SAP optimisation programme, and was surprised to find exactly what was and wasn’t being used in his company’s system.
‘I’m not sure why more people don’t do this,’ Ettridge said about the optimisation process.
But plenty of companies don’t and potentially waste millions of euros every year as a result.
In the June 2007 edition of CIMA Insight, West Trax chief finance officer, Ken Gorf, wrote about customised developments in the enterprise resource system, SAP, that were maintained but never used.
He revealed research showing that less than 50% of the standard code in SAP for which companies were incurring licence and maintenance fees was used. Not only was the unused code slowing down company systems, it was costing companies money – it was just sitting there doing nothing.
How does this happen? Gorf argued that as businesses developed, priorities changed and that SAP systems often no longer supported businesses as intended.
He also argued that an optimised system based on current usage would reduce workload and costs.
SABIC puts the theory to the test
Ettridge at SABIC has put this optimisation theory into practice.
SABIC is a leading manufacturer of chemicals, fertilisers, plastic and metals. In June this year, the company took over Huntsman Petrochemicals, which is based in Teeside, UK. Ettridge was tasked with cloning the existing SAP system.
‘The Huntsman system was built to serve several businesses, so we knew that there was going to be a lot of surplus in there that was tailored for other Huntsman businesses,’ said Ettridge. ‘For example, there was custom code for calculating VAT in Italy, and we don't have anything in Italy.’
Tailored optimising for your company
Ettridge said he wanted to find a tool that would highlight what the company was using frequently and what was not being touched.
For an initial outlay of £10,000, Ettridge called on West Trax to carry out a preliminary scan of which transactions were being used, how frequently they were being used and the speed of response time.
‘For some custom code, it can take several minutes from the user pushing the button to actually getting what they need,’ explained Ettridge. He said that length of time could be very frustrating when there were many actions to be processed.
The scan analysed the transactional usage of SABIC’s system, and benchmarked its key performance indicators against other SAP systems worldwide.
Atrocious statistics
The process took about a week. ‘We had some pretty atrocious statistics,’ Ettridge admitted. 'Around 70% of our custom code wasn’t being used.’
That was just the beginning of the project. ‘We then had to move into a more detailed analysis,’ said Ettridge. SABIC collected further data for another few months, which West Trax used to provide an ‘extremely detailed analysis down to every item of code.’
‘At that point you have a spreadsheet that you start working through,’ said Ettridge. He now has two people carrying out the remedial work. Some of the code will be deleted and some will be archived. This depends on how the code is, or isn’t, being used.
Ettridge reckoned it would take about two or three people months of effort to get his system optimised. In total, the project has cost £40,000, plus the time of the two analysts ploughing their way through the report.
The company is planning a re-scan between March and April, which should reveal the improvements. Ettridge anticipated that the whole system would be upgraded a few months after that.
Every single piece of custom code would need to be scrutinised as part of that upgrade. Ettridge said that the optimisation programme would come into its own at that point as the code landscape will have been reduced by half.
It will have been money well spent, according to Ettridge. Any system that reduced the £1m that it cost to support 600 users would have to be a good thing. And yet, according to Gorf’s research, not many companies go down this route.
January 2008
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