Develop an Availability and Capacity Management Plan

Manage capacity to increase uptime and reduce costs.

ANALYST PERSPECTIVE

The cloud changes the capacity manager’s job, but it doesn’t eliminate it.

"Nobody doubts the cloud’s transformative power. But will its ascent render “capacity manager” an archaic term to be carved into the walls of datacenters everywhere for future archaeologists to puzzle over? No. While it is true that the cloud has fundamentally changed how capacity managers do their jobs , the process is more important than ever. Managing capacity – and, by extent, availability – means minimizing costs while maximizing uptime. The cloud era is the era of unlimited capacity – and of infinite potential costs. If you put the infinity symbol on a purchase order… well, it’s probably not a good idea. Manage demand. Manage your capacity. Manage your availability. And, most importantly, keep your stakeholders happy. You won’t regret it."

Jeremy Roberts,

Consulting Analyst, Infrastructure Practice

Info-Tech Research Group

Availability and capacity management transcend IT

This Research Is Designed For:

✓ CIOs who want to increase uptime and reduce costs

✓ Infrastructure managers who want to deliver increased value to the business

✓ Enterprise architects who want to ensure stability of core IT services

✓ Dedicated capacity managers

This Research Will Help You:

✓ Develop a list of core services

✓ Establish visibility into your system

✓ Solicit business needs

✓ Project future demand

✓ Set SLAs

✓ Increase uptime

✓ Optimize spend

This Research Will Also Assist:

✓ Project managers

✓ Service desk staff

This Research Will Help Them:

✓ Plan IT projects

✓ Better manage availability incidents caused by lack of capacity

Executive summary

Situation

• IT infrastructure leaders are responsible for ensuring that the business has access to the technology needed to keep the organization humming along. This requires managing capacity and availability.
• Dependencies go undocumented. Services are provided on an ad hoc basis, and capacity/availability are managed reactively.

Complication

• Organizations are overprovisioning an average of 59% for compute, and 48% for storage. This is expensive. With budget pressure mounting, the cost of this approach can’t be ignored.
• Lead time to respond to demand is long. Half of organizations have experienced capacity-related downtime, and almost 60% wait 3+ months for additional capacity. (451 Research, 3)

Resolution

• Conduct a business impact analysis to determine which of your services are most critical, and require active capacity management that will reap more in benefits than it produces in costs.
• Establish visibility into your system. You can’t track what you can’t see, and you can’t see when you don’t have proper monitoring tools in place.
• Develop an understanding of business needs. Use a combination of historical trend analyses and consultation with line of business and project managers to separate wants from needs. Overprovisioning used to be necessary, but is no longer required.
• Project future needs in line with your hardware lifecycle. Never suffer availability issues as a result of a lack of capacity again.

Info-Tech Insight

1. Components are critical. The business doesn’t care about components. You, however, are not so lucky…
2. Ask what the business is working on, not what they need. If you ask them what they need, they’ll tell you – and it won’t be cheap. Find out what they’re going to do, and use your expertise to service those needs.
3. Cloud shmoud. The role of the capacity manager is changing with the cloud, but capacity management is as important as ever.

Save money and drive efficiency with an effective availability and capacity management plan

Overprovisioning happens because of the old style of infrastructure provisioning (hardware refresh cycles) and because capacity managers don’t know how much they need (either as a result of inaccurate or nonexistent information).

According to 451 Research, 59% of enterprises have had to wait 3+ months for new capacity. It is little wonder, then, that so many opt to overprovision. Capacity management is about ensuring that IT services are available, and with lead times like that, overprovisioning can be more attractive than the alternative. Fortunately there is hope. An effective availability and capacity management plan can help you:

• Identify your gold systems
• Establish visibility into them
• Project your future capacity needs

Balancing overprovisioning and spending is the capacity manager’s struggle.

Availability and capacity management go together like boots and feet

Availability and capacity are not the same, but they are related and can be effectively managed together as part of a single process.

If an IT department is unable to meet demand due to insufficient capacity, users will experience downtime or a degradation in service. To be clear, capacity is not the only factor in availability – reliability, serviceability, etc. are significant as well. But no organization can effectively manage availability without paying sufficient attention to capacity.

"Availability Management is concerned with the design, implementation, measurement and management of IT services to ensure that the stated business requirements for availability are consistently met."

– OGC, Best Practice for Service Delivery, 12

"Capacity management aims to balance supply and demand [of IT storage and computing services] cost-effectively…"

– OGC, Business Perspective, 90

Integrate the three levels of capacity management

Successful capacity management involves a holistic approach that incorporates all three levels.

The C-suite cares about business capacity as part of the organization’s strategic planning. Service leads care about their assigned services. IT infrastructure is concerned with components, but not for their own sake. Components mean services that are ultimately designed to facilitate business.

A healthcare organization practiced poor capacity management and suffered availability issues as a result

CASE STUDY

Industry: Healthcare

Source: Interview

New functionalities require new infrastructure

There was a project to implement an elastic search feature. This had to correlate all the organization’s member data from an Oracle data source and their own data warehouse, and pool them all into an elastic search index so that it could be used by the provider portal search function. In estimating the amount of space needed, the infrastructure team assumed that all the data would be shared in a single place. They didn’t account for the architecture of elastic search in which indexes are shared across multiple nodes and shards are often split up separately.

Beware underestimating demand and hardware sourcing lead times

As a result, they vastly underestimated the amount of space that was needed and ended up short by a terabyte. The infrastructure team frantically sourced more hardware, but the rush hardware order arrived physically damaged and had to be returned to the vendor.

Sufficient budget won’t ensure success without capacity planning

The project’s budget had been more than sufficient to pay for the extra necessary capacity, but because a lack of understanding of the infrastructure impact resulted in improper forecasting, the project ended up stuck in a standstill.

Manage availability and keep your stakeholders happy

If you run out of capacity, you will inevitably encounter availability issues like downtime and performance degradation . End users do not like downtime, and neither do their managers.

There are three variables that are monitored, measured, and analyzed as part of availability management more generally (Valentic).

1. Uptime:

The availability of a system is the percentage of time the system is “up,” (and not degraded) which can be calculated using the following formula: uptime/(uptime + downtime) x 100%. The more components there are in a system, the lower the availability, as a rule.

1. Reliability:

The length of time a component/service can go before there is an outage that brings it down, typically measured in hours.

1. Maintainability:

The amount of time it takes for a component/service to be restored in the event of an outage, also typically measured in hours.

Enter the cloud: changes in the capacity manager role

There can be no doubt – the rise of the public cloud has fundamentally changed the nature of capacity management.

Vendors will sell you the cloud as a solution to your capacity/availability problems

Traditionally, increases in capacity have come in bursts as a reaction to availability issues. This model inevitably results in overprovisioning, driving up costs. Access to the cloud changes the equation. On-demand capacity means that, ideally, nobody should pay for unused capacity.

Reality check: even in the cloud era, capacity management is necessary

You will likely find vendors to nurture the growth of a gap between your expectations and reality. That can be damaging.

The cloud reality does not look like the cloud ideal. Even with the ostensibly elastic cloud, vendors like the consistency that longer-term contracts offer. Enter reserved instances: in exchange for lower hourly rates, vendors offer the option to pay a fee for a reserved instance. Usage beyond the reserved will be billed at a higher hourly rate. In order to determine where that line should be drawn, you should engage in detailed capacity planning. Unfortunately, even when done right, this process will result in some overprovisioning, though it does provide convenience from an accounting perspective. The key is to use spot instances where demand is exceptional and bounded. Example: A university registration server that experiences exceptional demand at the start of term but at no other time.

Use best practices to optimize your cloud resources

Even in the era of elasticity, capacity planning is crucial. Spot instances – the spikes in the graph above – are more expensive, but if your capacity needs vary substantially, reserving instances for all of the space you need can cost even more money. Efficiently planning capacity will help you draw this line.

Evaluate business impact; not all systems are created equal

Limited resources are a reality. Detailed visibility into every single system is often not feasible and could be too much information.

Simple and effective. Sometimes a simple display can convey all of the information necessary to manage critical systems. In cars it is important to know your speed, how much fuel is in the tank, and whether or not you need to change your oil/check your engine.

Where to begin?! Specialized information is sometimes necessary, but it can be difficult to navigate.

Take advantage of a business impact analysis to define and understand your critical services

Ideally, downtime would be minimal. In reality, though, downtime is a part of IT life. It is important to have realistic expectations about its nature and likelihood.

Info-Tech Insight

According to end users, every system is critical and downtime is intolerable. Of course, once they see how much totally eliminating downtime can cost, they might change their tune. It is important to have this discussion to separate the critical from the less critical – but still important – services.

Establish visibility into critical systems

You may have seen “If you can’t measure it, you can’t manage it” or a variation thereof floating around the internet. This adage is consumable and makes sense…doesn’t it?

"It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth."

– W. Edwards Deming, statistician and management consultant, author of The New Economics

While it is true that total monitoring is not absolutely necessary for management, when it comes to availability and capacity – objectively quantifiable service characteristics – a monitoring strategy is unavoidable. Capturing fluctuations in demand, and adjusting for those fluctuations, is among the most important functions of a capacity manager, even if hovering over employees with a stopwatch is poor management.

Solicit needs from line of business managers

Unless you head the world’s most involved IT department (kudos if you do) you’re going to have to determine your needs from the business.

Demand: manage or be managed

You might think you can get away with uncritically accepting your users’ demands, but this is not best practice. If you provide it, they will use it.

The company meeting

“I don’t need this much RAM,” the application developer said, implausibly. Titters wafted above the assembled crowd as her IT colleagues muttered their surprise. Heads shook, eyes widened. In fact, as she sat pondering her utterance, the developer wasn’t so sure she believed it herself. Noticing her consternation, the infrastructure manager cut in and offered the RAM anyway, forestalling the inevitable crisis that occurs when seismic internal shifts rock fragile self-conceptions. Until next time, he thought.

"Work expands as to fill the resources available for its completion…"

– C. Northcote Parkinson, quoted in Klimek et al.

Combine historical data with the needs you’ve solicited to holistically project your future needs

Predicting the future is difficult, but when it comes to capacity management, foresight is necessary.

Critical inputs

In order to project your future needs, the following inputs are necessary.

1. Usage trends: While it is true that past performance is no indication of future demand, trends are still a good way to validate requests from the business.
2. Line of business requests: An understanding of the projects the business has in the pipes is important for projecting future demand.
3. Institutional knowledge: Read between the lines. As experts on information technology, the IT department is well-equipped to translate needs into requirements.

Follow best practice guidelines to maximize the efficiency of your availability and capacity management process

Understand how the key frameworks relate and interact

BA104: Manage availability and capacity

• Current state assessment
• Forecasting based on business requirements
• Risk assessment of planning and implementation of requirements

Availability management

• Determine business requirements
• Match requirements to capabilities
• Address any mismatch between requirements and capabilities in a cost-effective manner

Capacity management

• Monitoring services and components
• Tuning for efficiency
• Forecasting future requirements
• Influencing demand
• Producing a capacity plan

Availability and capacity management

• Conduct a business impact analysis
• Establish visibility into critical systems
• Solicit and incorporate business needs
• Identify and mitigate risks

Disaster recovery and business continuity planning are forms of availability management

The scope of this project is managing day-to-day availability, largely but not exclusively, in the context of capacity. For additional important information on availability, see the following Info-Tech projects.

• Develop a Business Continuity Plan

If your focus is on ensuring process continuity in the event of a disaster.

• Establish a Program to Enable Effective Performance Monitoring

If your focus is on flow mapping and transaction monitoring as part of a plan to engage APM vendors.

• Create a Right-Sized Disaster Recovery Plan

If your focus is on hardening your IT systems against major events.

Info-Tech’s approach to availability and capacity management is stakeholder-centered and cloud ready

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”

Guided Implementation

“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”

Workshop

“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”

Consulting

“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Availability & capacity management – project overview

Workshop overview

Contact your account representative or email Workshops@InfoTech.com for more information.

PHASE 1

Conduct a Business Impact Analysis

Step 1.1: Conduct a business impact analysis

This step will walk you through the following activities:

• Record applications and dependencies in the Business Impact Analysis Tool.
• Define a scale to estimate the impact of various applications’ downtime.
• Estimate the impact of applications’ downtime.

This involves the following participants:

• Capacity manager
• Infrastructure team

Outcomes of this step

• Estimated impact of downtime for various applications

Execute a business impact analysis (BIA) as part of a broader availability plan

1.1a Business Impact Analysis Tool

Business impact analyses are an invaluable part of a broader IT strategy. Conducting a BIA benefits a variety of processes, including disaster recovery, business continuity, and availability and capacity management

Info-Tech Insight

Engaging in detailed capacity planning for an insignificant service draws time and resources away from more critical capacity planning exercises. Time spent tracking and planning use of the ancient fax machine in the basement is time you’ll never get back.

Control the scope of your availability and capacity management planning project with a business impact analysis

Don’t avoid conducting a BIA because of a perception that it’s too onerous or not necessary. If properly managed, as described in this blueprint, the BIA does not need to be onerous and the benefits are tangible.

A BIA enables you to identify appropriate spend levels, continue to drive executive support, and prioritize disaster recovery planning for a more successful outcome. For example, an Info-Tech survey found that a BIA has a significant impact on setting appropriate recovery time objectives (RTOs) and appropriate spending.

Terms

No BIA: lack of a BIA, or a BIA bases solely on the perceived importance of IT services.

BIA: based on a detailed evaluation or estimated dollar impact of downtime.

Source: Info-Tech Research Group; N=70

Select the services you wish to evaluate with the Business Impact Analysis Tool

1.1b 1 hour

In large organizations especially, collating an exhaustive list of applications and services is going to be onerous. For the purposes of this project, a subset should suffice.

Instructions

1. Gather a diverse group of IT staff and end users in a room with a whiteboard.
2. Solicit feedback from the group. Questions to ask:

• What services do you regularly use? What do you see others using? (End users)
• Which service inspires the greatest number of service calls? (IT)
• What services are you most excited about? (Management)
• What services are the most critical for business operations? (Everybody)

Input

• Applications/services

Output

• Candidate applications for the business impact analysis

Materials

• Whiteboard
• Markers

Participants

• Infrastructure manager
• Enterprise architect
• Application owners
• End users

Info-Tech Insight

Include a variety of services in your analysis. While it might be tempting to jump ahead and preselect important applications, don’t. The process is inherently valuable, and besides, it might surprise you.

Record the applications and dependencies in the BIA tool

1.1c Use tab 1 of the Business Impact Analysis Tool

1. In the Application/System column, list the applications identified for this pilot as well as the Core Infrastructure category. Also indicate the Impact on the Business and Business Owner.
2. List the dependencies for each application in the appropriate columns:

• Hosted On-Premises (In-House) – If the physical equipment is in a facility you own, record it here, even if it is managed by a vendor.
• Hosted by a Co-Lo/MSP – List any dependencies hosted by a co-lo/MSP vendor.
• Cloud (includes "as a Service”) – List any dependencies hosted by a cloud vendor.

Note: If there are no dependencies for a particular category, leave it blank.

Example

ID is optional. It is a sequential number by default.

In-House, Co-Lo/MSP, and Cloud dependencies; leave blank if not applicable.

Add notes as applicable – e.g. critical support services.

Define a scoring scale to estimate different levels of impact

1.1d Use tab 2 of the Business Impact Analysis Tool

Modify the Business Impact Scales headings and Overall Criticality Rating terminology to suit your organization. For example, if you don’t have business partners, use that column to measure a different goodwill impact or just ignore that column in this tool (i.e. leave it blank). Estimate the different levels of potential impact (where four is the highest impact and zero is no impact) and record these in the Business Impact Scales columns.

Estimate the impact of downtime for each application

1.1e Use tab 3 of the Business Impact Analysis Tool

In the BIA tab columns for Direct Costs of Downtime, Impact on Goodwill, and Additional Criticality Factors, use the drop-down menu to assign a score of zero to four based on levels of impact defined in the Scoring Criteria tab. For example, if an organization’s ERP is down, and that affects call center sales operations (e.g. ability to access customer records and process orders), the impact might be as described below:

• Loss of Revenue might score a two or three depending on the proportion of overall sales lost due to the downtime.
• The Impact on Customers might be a one or two depending on the extent that existing customers might be using the call center to purchase new products or services, and are frustrated by the inability to process orders.
• The Legal/Regulatory Compliance and Health or Safety Risk might be a zero.

On the other hand, if payroll processing is down, this may not impact revenue, but it certainly impacts internal goodwill and productivity.

Rank service criticality: gold, silver, and bronze

Gold

Mission critical services. An outage is catastrophic in terms of cost or public image/goodwill. Example: trading software at a financial institution.

Silver

Important to daily operations, but not mission critical. Example: email services at any large organization.

Bronze

Loss of these services is an inconvenience more than anything, though they do serve a purpose and will be missed if they are never brought back online. Example: ancient fax machines.

Info-Tech Best Practice

Info-Tech recommends gold, silver, and bronze because of this typology’s near universal recognition. If you would prefer a particular designation (it might help with internal comprehension), don’t hesitate to use that one instead.

Use the results of the business impact analysis to sort systems based on their criticality

1.1f 1 hour

Every organization has its own rules about how to categorize service importance. For some (consumer-facing businesses, perhaps) reputational damage may trump immediate costs.

Instructions

1. Gather a group of key stakeholders and project the completed Business Impact Analysis Tool onto a screen for them.
2. Share the definitions of gold, silver, and bronze services with them (if they are not familiar), and begin sorting the services by category,

• How long would it take to notice if a particular service went out?
• How important are the non-quantifiable damages that could come with an outage?

Input

• Results of the business impact analysis exercise

Output

• List of gold, silver, and bronze systems

Materials

• Projector
• Business Impact Analysis Tool
• Capacity Plan Template

Participants

• Infrastructure manager
• Enterprise architect

Leverage the rest of the BIA tool as part of your disaster recovery planning

Disaster recovery planning is a critical activity, and while it is a sort of availability management, it is beyond this project’s scope. You can complete the business impact analysis (including RTOs and RPOs) for the complete disaster recovery package.

See Info-Tech’s Create a Right-Sized Disaster Recovery Plan blueprint for instructions on how to complete your business impact analysis.

Step 1.2: Assign criticality ratings to services

This step will walk you through the following activities:

• Create a list of dependencies for your most important applications.
• Identify important sub-components.
• Use best practices to develop and negotiate SLAs.

This involves the following participants:

• Capacity manager
• Infrastructure team

Outcomes of this step

• List of dependencies of most important applications
• List of important sub-components
• SLAs based on best practices

Determine the base unit of the capacity you’re looking to purchase

Not every IT organization should approach capacity the same way. Needs scale, and larger organizations will inevitably deal in larger quantities.

"Cloud capacity management is not exactly the same as the ITIL version because ITIL has a focus on the component level. I actually don’t do that, because if I did I’d go crazy. There’s too many components in a cloud environment."

– Richie Mendoza, IT Consultant, SMITS Inc.

Consider the relationship between component capacity and service capacity

End users’ thoughts about IT are based on what they see. They are, in other words, concerned with service availability: does the organization have the ability to provide access to needed services?

Service

• Email
• CRM
• ERP

Component

• Switch
• SMTP server
• Archive database
• Storage

"You don’t ask the CEO or the guy in charge ‘What kind of response time is your requirement?’ He doesn’t really care. He just wants to make sure that all his customers are happy."

– Todd Evans, Capacity and Performance Management SME, IBM.

One telco solved its availability issues by addressing component capacity issues

CASE STUDY

Industry: Telecommunications

Source: Interview

Coffee and Wi-Fi – a match made in heaven

In tens of thousands of coffee shops around the world, patrons make ample use of complimentary Wi-Fi. Wi-Fi is an important part of customers’ coffee shop experience, whether they’re online to check their email, do a YouTube, or update their Googles. So when one telco that provided Wi-Fi access for thousands of coffee shops started encountering availability issues, the situation was serious.

Wi-Fi, whack-a-mole, and web woes

The team responsible for resolving the issue took an ad hoc approach to resolving complaints, fixing issues as they came up instead of taking a systematic approach.

Resolution

Looking at the network as a whole, the capacity manager took a proactive approach by using data to identify and rank the worst service areas, and then directing the team responsible to fix those areas in order of the worst first, then the next worst, and so on. Soon the availability of Wi-Fi service was restored across the network.

Create a list of dependencies for your most important applications

1.2a 1.5 hours

Instructions

1. Work your way down the list of services outlined in step 1, starting with your gold systems. During the first iteration of this exercise select only 3-5 of your most important systems.
2. Write the name of each application on a sticky note or at the top of a whiteboard (leaving ample space below for dependency mapping).
3. In the first tier below the application, include the specific services that the general service provides.

• This will vary based on the service in question, but an example for email is sending, retrieving, retrieving online, etc.

Input

• List of important applications

Output

• List of critical dependencies

Materials

• Whiteboard
• Markers
• Sticky notes

Participants

• Infrastructure manager
• Enterprise architect

Info-Tech Insight

Dependency mapping can be difficult. Make sure you don’t waste effort creating detailed dependency maps for relatively unimportant services.

Dependency mapping can be difficult. Make sure you don’t waste effort creating detailed dependency maps for relatively unimportant services.

Ride sharing cannot work, at least not at maximum effectiveness, without these constituent components. When one or more of these components are absent or degraded, the service will become unavailable. This example illustrates some challenges of capacity management; some of these components are necessary, but beyond the ride-sharing company’s control.

Leverage a sample dependency tree for a common service

Info-Tech Best Practice

Email is an example here not because it is necessarily a “gold system,” but because it is common across industries. This is a useful exercise for any service, but it can be quite onerous, so it should be conducted on the most important systems first.

Separate the wheat from the chaff; identify important sub-components and separate them from unimportant ones

1.2b 1.5 hours

Use the bottom layer of the pyramid drawn in step 1.2a for a list of important sub-components.

Instructions

1. Record a list of the gold services identified in the previous activity. Leave space next to each service for sub-components.
2. Go through each relevant sub-component. Highlight those that are critical and could reasonably be expected to cause problems.

• Has this sub-component caused a problem in the past?
• Is this sub-component a bottleneck?
• What could cause this component to fail? Is it such an occurrence feasible?

Input

• List of important applications

Output

• List of critical dependencies

Materials

• Whiteboard
• Markers

Participants

• Infrastructure manager
• Enterprise architect

Understand availability commitments with SLAs

With the rise of SaaS, cloud computing, and managed services, critical services and their components are increasingly external to IT.

• IT’s lack of access to the internal working of services does not let them off the hook for performance issues (as much as that might be the dream).
• Vendor management is availability management. Use the dependency map drawn earlier in this phase to highlight the components of critical services that rely on capacity that cannot be managed internally.
• For each of these services ensure that an appropriate SLA is in place. When acquiring new services, ensure that the vendor SLA meets business requirements.

In terms of service provision, capacity management is a form of availability management. Not all availability issues are capacity issues, but the inverse is true.

Info-Tech Insight

Capacity issues will always cause availability issues, but availability issues are not inherently capacity issues. Availability problems can stem from outages unrelated to capacity (e.g. power or vendor outages).

Use best practices to develop and negotiate SLAs

1.2c 20 minutes per service

When signing contracts with vendors, you will be presented with an SLA. Ensure that it meets your requirements.

1. Use the business impact analysis conducted in this project’s first step to determine your requirements. How much downtime can you tolerate for your critical services?
2. Once you have been presented with an SLA, be sure to scour it for tricks. Remember, just because a vendor offers “five nines” of availability doesn’t mean that you’ll actually get that much uptime. It could be that the vendor is comfortable eating the cost of downtime or that the contract includes provisions for planned maintenance. Whether or not the vendor anticipated your outage does little to mitigate the damage an outage can cause to your business, so be careful of these provisions.
3. Ensure that the person ultimately responsible for the SLA (the approver) understands the limitations of the agreement and the implications for availability.

Input

• List of external component dependencies

Output

• SLA requirements

Materials

• Whiteboard
• Markers

Participants

• Infrastructure manager
• Enterprise architect

Info-Tech Insight

Vendors are sometimes willing to eat the cost of violating SLAs if they think it will get them a contract. Be careful with negotiation. Just because the vendor says they can do something doesn’t make it true.

Negotiate internal SLAs using Info-Tech’s rigorous process

Talking past each other can drive misalignment between IT and the business, inconveniencing all involved. Quantify your needs through an internal SLA as part of a comprehensive availability management plan.

See Info-Tech’s Improve IT-Business Alignment Through an Internal SLA blueprint for instructions on why you should develop internal SLAs and the potential benefits they bring.

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop.

Book a workshop with our Info-Tech analysts:

• To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
• Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
• Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

1.2

Create a list of dependencies for your most important applications

Using the results of the business impact analysis, the analyst will guide workshop participants through a dependency mapping exercise that will eventually populate the Capacity Plan Template.

Phase 1 Guided Implementation

Call 1-888-670-8889 or email GuidedImplementations@InfoTech.com for more information.

Complete these steps on your own, or call us to complete a guided implementation. A guided implementation is a series of 2-3 advisory calls that help you execute each phase of a project. They are included in most advisory memberships.

PHASE 2

Establish Visibility Into Core Systems

Step 2.1: Define your monitoring strategy

This step will walk you through the following activities:

• Determine the indicators you should be tracking for each sub-component.

This involves the following participants:

• Capacity manager
• Infrastructure team

Outcomes of this step

• List of indicators to track for each sub-component

Data has its significance—but also its limitations

The rise of big data can be a boon for capacity managers, but be warned: not all data is created equal. Bad data can lead to bad decisions – and unemployed capacity managers.

Your findings are only as good as your data. Remember: garbage in, garbage out. There are three characteristics of good data:*

1. Accuracy: is the data exact and correct? More detail and confidence is better.
2. Reliability: is the data consistent? In other words, if you run the same test twice will you get the same results?
3. Validity: is the information gleaned believable and relevant?

*National College of Teaching & Leadership, “Reliability and Validity”

"Data is king. Good data is absolutely essential to [the capacity manager] role."

– Adrian Blant, Independent Capacity Consultant, IT Capability Solutions

Info-Tech Best Practice

Every organization’s data needs are different; your data needs are going to be dictated by your services, delivery model, and business requirements. Make sure you don’t confuse volume with quality, even if others in your organization make that mistake.

Take advantage of technology to establish visibility into your systems

Managing your availability and capacity involves important decisions about what to monitor and how thresholds should be set.

• Use the list of critical applications developed through the business impact analysis and the list of components identified in the dependency mapping exercise to produce a plan for effectively monitoring component availability and capacity.
• The nature of IT service provision – the multitude of vendors providing hardware and services necessary for even simple IT services to work effectively – means that it is unlikely that capacity management will be visible through a single pane of glass. In other words, “email” and “CRM” don’t have a defined capacity. It always depends.
• Establishing visibility into systems involves identifying what needs to be tracked for each component.

Too much monitoring can be as bad as the inverse

In 2013, a security breach at US retailer Target compromised more than 70 million customers’ data. The company received an alert, but it was thought to be a false positive because the monitoring system produced so many false and redundant alerts. As a result of the daily deluge, staff did not respond to the breach in time.

Info-Tech Insight

Don’t confuse monitoring with management. While establishing visibility is a crucial step, it is only part of the battle. Move on to this project’s next phase to explore opportunities to improve your capacity/availability management process.

Determine the indicators you should be tracking for each sub-component

2.1a Tab 3 of the Capacity Snapshot Tool

It is nearly impossible to overstate the importance of data to the process of availability and capacity management. But the wrong data will do you no good.

Instructions

1. Open the Capacity Snapshot Tool to tab 2. The tool should have been populated in step 1.2 as part of the component mapping exercise.
2. For each service, determine which metric(s) would most accurately tell the component’s story. Consider the following questions when completing this activity (you may end up with more than one metric):

• How would the component’s capacity be measured (storage space, RAM, bandwidth, vCPUs)?
• Is the metric in question actionable?

Info-Tech Insight

Bottlenecks are bad. Use the Capacity Snapshot Tool (or another tool like it) to ensure that when the capacity manager leaves (on vacation, to another role, for good) the knowledge that they have accumulated does not leave as well.

Understand the limitations of this approach

Although we’ve striven to make it as easy as possible, this process will inevitably be cumbersome for organizations with a complicated set of software, hardware, and cloud services.

Tracking every single component in significant detail will produce a lot of noise for each bit of signal. The approach outlined here addresses that concern in two ways:

• A focus on gold services
• A focus on sub-components that have a reasonable likelihood of being problematic in the future.

Despite this effort, however, managing capacity at the component level is a daunting task. Ultimately, tools provided by vendors like SolarWinds and AppDynamics will fill in some of the gaps. Nevertheless, an understanding of the conceptual framework underlying availability and capacity management is valuable.

Step 2.2: Implement your monitoring tool/aggregator

This step will walk you through the following activities:

• Clarify visibility.
• Determine whether or not you have sufficiently granular visibility.
• Develop strategies to .any visibility issues.

This involves the following participants:

• Capacity manager
• Infrastructure team
• Applications personnel

Outcomes of this step

• Method for measuring and monitoring critical sub-components

Companies struggle with performance monitoring because 95% of IT shops don’t have full visibility into their environments

CASE STUDY

Industry: Financial Services

Source: AppDynamics

Challenge

• Users are quick to provide feedback when there is downtime or application performance degradation.
• The challenge for IT teams is that while they can feel the pain, they don’t have visibility into the production environment and thus cannot identify where the pain is coming from.
• The most common solution that organizations rely on is leveraging the log files for issue diagnosis. However, this method is slow and often unable to pinpoint the problem areas, leading to delays in problem resolution.

Solution

• Application and infrastructure teams need to work together to develop infrastructure flow maps and transaction profiles.
• These diagrams will highlight the path that each transaction travels across your infrastructure.
• Ideally at this point, teams will also capture latency breakdowns across every tier that the business transaction flows through.
  • This will ultimately kick start the baselining process.

Results

• Ninety-five percent of IT departments don’t have full visibility into their production environment. As a result, a slow business transaction will often require a war-room approach where SMEs from across the organization gather to troubleshoot.
• Having visibility into the production environment through infrastructure flow mapping and transaction profiling will help IT teams pinpoint problems.
  • At the very least, teams will be able to identify common problem areas and expedite the root-cause analysis process.

Source: “Just how complex can a Login Transaction be? Answer: Very!,” AppDynamics

Monitor your critical sub-components

Establishing a monitoring plan for your capacity involves answering two questions: can I see what I need to see, and can I see it with sufficient granularity?

• Having the right tool for the job is an important step towards effective capacity and availability management.
• Application performance management tools (APMs) are essential to the process, but they tend to be highly specific and vertically oriented, like using a microscope.
• Some product families can cover a wider range of capacity monitoring functions (SolarWinds, for example). It is still important, however, to codify your monitoring needs.

"You don’t use a microscope to monitor an entire ant farm, but you might use many microscopes to monitor specific ants."

– Fred Chagnon, Research Director, Infrastructure Practice, Info-Tech Research Group

Monitor your sub-components: clarify visibility

2.2a Tab 2 of the Capacity Snapshot Tool

The next step in capacity management is establishing whether or not visibility (in the broad sense) is available into critical sub-components.

Instructions

1. Open the Capacity Snapshot Tool and record the list of sub-components identified in the previous step.
2. For each sub-component answer the following question:

• Do I have easy access to the information I need to monitor to ensure this component remains available?

• What tool provides the information? Where can it be found?

Monitor your sub-components; determine whether or not you have sufficient granular visibility

2.2b Tab 2 of the Capacity Snapshot Tool

Like ideas and watches, not all types of visibility are created equal. Ensure that you have access to the right information to make capacity decisions.

Instructions

1. For each of the sub-components clarify the appropriate level of granularity for the visibility gained to be useful. In the case of storage, for example, is raw usage (in gigabytes) sufficient, or do you need a breakdown of what exactly is taking up the space? The network might be more complicated.
2. Record the details of this ideation in the adjacent column.
3. Select “Yes” or “No” from the drop-down menu to track the status of each sub-component.

For most mobile phone users, this breakdown is sufficient. For some, more granularity might be necessary.

Info-Tech Insight

Make note of monitoring tools and strategies. If anything changes, be sure to re-evaluate the visibility status. An outdated spreadsheet can lead to availability issues if management is unaware of looming problems.

Develop strategies to ameliorate any visibility issues

2.2c 1 hour

The Capacity Snapshot Tool color-codes your components by status. Green – visibility and granularity are both sufficient; yellow – visibility exists, though not at sufficient granularity; and red – visibility does not exist at all.

Instructions

1. Write each of the yellow and red sub-components on a whiteboard or piece of chart paper.
2. Brainstorm amelioration strategies for each of the problematic sub-components.

• Does the current monitoring tool have sufficient functionality?
• Does it need to be further configured/customized?
• Do we need a whole new tool?

Input

• Sub-components
• Capacity Snapshot Tool

Output

• Amelioration strategies

Materials

• Whiteboard
• Markers
• Capacity Snapshot Tool

Participants

• Infrastructure manager

Info-Tech Best Practice

It might be that there is no amelioration strategy. Make note of this difficulty and highlight it as part of the risk section of the Capacity Plan Template.

See Info-Tech’s projects on storage and network modernization for additional details

Leverage other products for additional details on how to modernize your network and storage services.

The process of modernizing the network is fraught with vestigial limitations. Develop a program to gather requirements and plan.

As part of the blueprint, Modernize Enterprise Storage, the Modernize Enterprise Storage Workbook includes a section on storage capacity planning.

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop.

Book a workshop with our Info-Tech analysts:

• To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
• Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
• Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

2.2

Develop strategies to ameliorate visibility issues

The analyst will guide workshop participants in brainstorming potential solutions to visibility issues and record them in the Capacity Snapshot Tool.

Phase 2 Guided Implementation

Call 1-888-670-8889 or email GuidedImplementations@InfoTech.com for more information.

Complete these steps on your own, or call us to complete a guided implementation. A guided implementation is a series of 2-3 advisory calls that help you execute each phase of a project. They are included in most advisory memberships.

PHASE 3

Solicit and Incorporate Business Needs

Step 3.1: Solicit business needs and gather data

This step will walk you through the following activities:

• Build relationships with business stakeholders.
• Analyze usage data and identify trends.
• Correlate usage trends with business needs.

This involves the following participants:

• Capacity manager
• Infrastructure team members
• Business stakeholders

Outcomes of this step

• System for involving business stakeholders in the capacity planning process
• Correlated data on business level, service level, and infrastructure level capacity usage

Summarize your capacity planning activities in the Capacity Plan Template

The availability and capacity management summary card pictured here is a handy way to capture the results of the activities undertaken in the following phases. Note its contents carefully, and be sure to record specific outputs where appropriate. One such card should be completed for each of the gold services identified in the project’s first phase. Make note of the results of the activities in the coming phase, and populate the Capacity Snapshot Tool. These will help you populate the tool.

Info-Tech Best Practice

The Capacity Plan Template is designed to be a part of a broader mapping strategy. It is not a replacement for a dedicated monitoring tool.

Analyze historical trends as a crucial source of data

The first place to look for information about your organization is not industry benchmarks or your gut (though those might both prove useful).

• Where better to look than internally? Use the data you’ve gathered from your APM tool or other sources to understand your historical capacity needs and to highlight any periods of unavailability.
• Consider monitoring the status of the capacity of each of your crucial components. The nature of this monitoring will vary based on the component in question. It can range from a rough Excel sheet all the way to a dedicated application performance monitoring tool.

"In all cases the very first thing to do is to look at trending…The old adage is ‘you don’t steer a boat by its wake,’ however it’s also true that if something is growing at, say, three percent a month and it has been growing at three percent a month for the last twelve months, there’s a fairly good possibility that it’s going to carry on going in that direction."

– Mike Lynch, Consultant, CapacityIQ

Gather relevant data at the business level

3.1a 2 hours per service

A holistic approach to capacity management involves peering beyond the beaded curtain partitioning IT from the rest of the organization and tracking business metrics.

Instructions

1. Your service/application owners know how changes in business activities impact their systems. Business level capacity management involves responding to those changes. Ask service/application owners what changes will impact their capacity. Examples include:

• Business volume (net new customers, number of transactions)
• Staff changes (new hires, exits, etc.)

Input

• Brainstorming
• List of gold services

Output

• Business level data

Materials

• In-house solution or commercial tool

Participants

• Capacity manager
• Application/service owners

Gather relevant data at the service level

3.1b 2 hours per service

One level of abstraction down is the service level. Service level capacity management, recall that service level capacity management is about ensuring that IT is meeting SLAs in its service provision.

Instructions

1. There should be internal SLAs for each service IT offers. (If not, that’s a good place to start. See Info-Tech’s research on the subject.) Prod each of your service owners for information on the metrics that are relevant for their SLAs. Consider the following:

• Peak hours, requests per second, etc.
• This will usually include some APM data.

Input

• Brainstorming
• List of gold services

Output

• Service level data

Materials

• In-house solution or commercial tool

Participants

• Capacity manager
• Application/service owners

Leverage the visibility into your infrastructure components and compare all of your data over time

You established visibility into your components in the second phase of this project. Use this data, and that gathered at the business and service levels, to begin analyzing your demand over time.

• Different organizations will approach this issue differently. Those with a complicated service catalog and a dedicated capacity manager might employ a tool like TeamQuest. If your operation is small, or you need to get your availability and capacity management activities underway as quickly as possible, you might consider using a simple spreadsheet software like Excel.
• If you choose the latter option, select a level of granularity (monthly, weekly, etc.) and produce a line graph in Excel.
• Example: Employee count (business metric)

Note: the strength of this approach is that it is easy to visualize. Use the same timescale to facilitate simple comparison.

Manage, don’t just monitor; mountains of data need to be turned into information

Information lets you make a decision. Understand the questions you don’t need to ask, and ask the right ones.

"Often what is really being offered by many analytics solutions is just more data or information – not insights."

– Brent Dykes, Director of Data Strategy, Domo

Info-Tech Best Practice

You can have all the data in the world and absolutely nothing valuable to add. Don’t fall for this trap. Use the activities in this phase to structure your data collection operation and ensure that your organization’s availability and capacity management plan is data driven.

Analyze historical trends and track your services’ status

3.1c Tab 3 of the Capacity Snapshot Tool

At-a-glance – it’s how most executives consume all but the most important information. Create a dashboard that tracks the status of your most important systems.

Instructions

1. Consult infrastructure leaders for information about lead times for new capacity for relevant sub-components and include that information in the tool.

• Look to historical lead times. (How long does it traditionally take to get more storage?)
• If you’re not sure, contact an in-house expert, or speak to your vendor

This tool collates and presents information gathered from other sources. It is not a substitute for a performance monitoring tool.

Build a list of key business stakeholders

3.1d 10 minutes

Stakeholder analysis is crucial. Lines of authority can be diffuse. Understand who needs to be involved in the capacity management process early on.

Instructions

1. With the infrastructure team, brainstorm a group of departments, roles, and people who may impact demand on capacity.
2. Go through the list with your team and identify stakeholders from two groups:

• Line of business: who in the business makes use of the service?
• Application owner: who in IT is responsible for ensuring the service is up?

Input

• Gold systems
• Personnel Information

Output

• List of key business stakeholders

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Best Practice

Consider which departments are most closely aligned with the business processes that fuel demand. Prioritize those that have the greatest impact. Consider the stakeholders who will make purchasing decisions for increasing infrastructure capacity.

Organize stakeholder meetings

3.1e 10 hours

Establishing a relationship with your stakeholders is a necessary step in managing your capacity and availability.

Instructions

1. Gather as many of the stakeholders identified in the previous activity as you can and present information on availability and capacity management

• If you can’t get everyone in the same room, a virtual meeting or even an email blast could get the job done.

• Consider highlighting the trade-offs between cost and availability.

Input

• List of business stakeholders
• Hard work

Output

• Working relationship, trust
• Regular meetings

Materials

• Work ethic
• Executive brief

Participants

• Capacity manager
• Business stakeholders

Info-Tech Insight

The best capacity managers develop new business processes that more closely align their role with business stakeholders. Building these relationships takes hard work, and you must first earn the trust of the business.

Bake stakeholders into the planning process

3.1f Ongoing

Convince, don’t coerce. Stakeholders want the same thing you do. Bake them into the planning process as a step towards this goal.

1. Develop a system to involve stakeholders regularly in the capacity planning process.

• Your system will vary depending on the structure and culture of your organization.
• See the case study on the following slide for ideas.
• It may be as simple as setting a recurring reminder in your own calendar to touch base with stakeholders.

• Ensure stakeholders have reasonable expectations about IT’s available resources, the costs of providing capacity, and the lead times required to source additional needed capacity.

Input

• List of business stakeholders
• Ideas

Output

• Capacity planning process that involves stakeholders

Materials

• Meeting rooms

Participants

• Capacity manager
• Business stakeholders
• Infrastructure team

A capacity manager in financial services wrangled stakeholders and produced results

CASE STUDY

Industry: Financial Services

Source: Interview

In financial services, availability is king

In the world of financial services, availability is absolutely crucial. High-value trades occur at all hours, and any institution that suffers outages runs the risk of losing tens of thousands of dollars, not to mention reputational damage.

People know what they want, but sometimes they have to be herded

While line of business managers and application owners understand the value of capacity management, it can be difficult to establish the working relationship necessary for a fruitful partnership.

Proactively building relationships keeps services available

He built relationships with all the department heads on the business side, and all the application owners.

• He met with department heads quarterly.
• He met with application owners and business liaisons monthly.

He established a steering committee for capacity.

He invited stakeholders to regular capacity planning meetings.

• The first half of each meeting was high-level outlook, such as business volume and IT capacity utilization, and included stakeholders from other departments.
• The second half of the meeting was more technical, serving the purpose for the infrastructure team.

He scheduled lunch and learn sessions with business analysts and project managers.

• These are the gatekeepers of information, and should know that IT needs to be involved when things come down the pipeline.

Step 3.2: Analyze data and project future needs

This step will walk you through the following activities:

• Solicit needs from the business.
• Map business needs to technical requirements, and technical requirements to infrastructure requirements.
• Identify inefficiencies in order to remedy them.
• Compare the data across business, component, and service levels, and project your capacity needs.

This involves the following participants:

• Capacity manager
• Infrastructure team members
• Business stakeholders

Outcomes of this step

• Model of how business processes relate to technical requirements and their demand on infrastructure
• Method for projecting future demand for your organization’s infrastructure
• Comparison of current capacity usage to projected demand

“Nobody tells me anything!” – the capacity manager’s lament

Sometimes “need to know” doesn’t register with sales or marketing. Nearly every infrastructure manager can share a story about a time when someone has made a decision that has critically impacted IT infrastructure without letting anyone in IT in on the “secret.”

In brief

Imagine working for a media company as an infrastructure capacity manager. Now imagine that the powers that be have decided to launch a content-focused web service. Seems like something they would do, right? Now imagine you find out about it the same way the company’s subscribers do. This actually happened – and it shouldn’t have. But a similar lack of alignment makes this a real possibility for any organization. If you don’t establish a systematic plan for soliciting and incorporating business requirements, prepare to lose a chunk of your free time. The business should never be able to say, in response to “nobody tells me anything,” “nobody asked.”

Pictured: an artist’s rendering of the capacity manager in question.

Directly solicit requirements from the business

3.2a 30 minutes per stakeholder

Once you’ve established, firmly, that everyone’s on the same team, meet individually with the stakeholders to assess capacity.

Instructions

1. Schedule a one-on-one meeting with each line of business manager (stakeholders identified in 3.1). Ideally this will be recurring.

• Experienced capacity managers suggest doing this monthly.

• What are some upcoming major initiatives?
• Is the department going to expand or contract in a noticeable way?
• Have customers taken to a particular product more than others?

Input

• Stakeholder opinions

Output

• Business requirements

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Insight

Sometimes line of business managers will evade or ignore you when you come knocking. They do this because they don’t know and they don’t want to give you the wrong information. Explain that a best guess is all you can ask for and allay their fears.

Below, you will find more details about what to look for when soliciting information from the line of business manager you’ve roped into your scheme.

1. Consider the following:

• Projected sales pipeline
• Business growth
• Seasonal cycles
• Marketing campaigns
• New applications and features
• New products and services

Directly solicit requirements from the business (optional)

3.2a 1 hour

IT staff and line of business staff come with different skillsets. This can lead to confusion, but it doesn’t have to. Develop effective information solicitation techniques.

Instructions

1. Gather your IT staff in a room with a whiteboard. As a group, select a gold service/line of business manager you would like to use as a “practice dummy.”
2. Have everyone write down a question they would ask of the line of business representative in a hypothetical business/service capacity discussion.
3. As a group discuss the merits of the questions posed:

• Are they likely to yield productive information?
• Are they too vague or specific?
• Is the person in question likely to know the answer?
• Is the information requested a guarded trade secret?

Input

• Workshop participants’ ideas

Output

• Interview skills

Materials

• Whiteboard
• Markers
• Sticky notes

Participants

• Capacity manager
• Infrastructure staff

Map business needs to technical requirements, and technical requirements to infrastructure requirements

3.2b 5 hours

When it comes to mapping technical requirements, IT alone has the ability to effectively translate business needs.

Instructions

1. Use your notes from stakeholder meetings to assess the impact of any changes on gold systems.
2. For each system brainstorm with infrastructure staff (and any technical experts as necessary) about what the information gleaned from stakeholder discussions. Consider the following discussion points:

• How has demand for the service been trending? Does it match what the business is telling us?
• Have we had availability issues in the past?
• Has the business been right with their estimates in the past?

• E.g. how much RAM does a new email user require?

Input

• Business needs

Output

• Technical and infrastructure requirements

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Insight

Adapt the analysis to the needs of your organization. One capacity manager called the one-to-one mapping of business process to infrastructure demand the Holy Grail of capacity management. If this level of precision isn’t attainable, develop your own working estimates using the higher-level data

Avoid putting too much faith in the cloud as a solution to your problem

Has the rise of on-demand, functionally unlimited services eliminated the need for capacity and availability management?

Info-Tech Insight

The cloud comes at the cost of detailed performance data. Sourcing a service through an SLA with a third party increases the need to perform your own performance testing of gold level applications. See performance monitoring.

Beware Parkinson’s law

A consequence of our infinite capacity for creativity, people have the enviable skill of making work. In 1955, C. Northcote Parkinson pointed out this fact in The Economist . What are the implications for capacity management?

"It is a commonplace observation that work expands so as to fill the time available for its completion. Thus, an elderly lady of leisure can spend the entire day in writing and despatching a postcard to her niece at Bognor Regis. An hour will be spent in finding the postcard, another in hunting for spectacles, half-an-hour in a search for the address, an hour and a quarter in composition, and twenty minutes in deciding whether or not to take an umbrella when going to the pillar-box in the next street."

C. Northcote Parkinson, The Economist, 1955

Info-Tech Insight

If you give people lots of capacity, they will use it. Most shops are overprovisioned, and in some cases that’s throwing perfectly good money away. Don’t be afraid to prod if someone requests something that doesn’t seem right.

Optimally align demand and capacity

When it comes to managing your capacity, look for any additional efficiencies.

Questions to ask:

• Are there any infrastructure services that are not being used to their full potential, sitting idle, or allocated to non-critical or zombie functions?
  • Are you managing your virtual servers? If, for example, you experience a seasonal spike in demand, are you leaving virtual machines running after the fact?
• Do your organization’s policies and your infrastructure setup allow for the use of development resources for production during periods of peak demand?
• Can you make organizational or process changes in order to satisfy demand more efficiently?

In brief

Who isn’t a sports fan? Big games mean big stakes for pool participants and armchair quarterbacks—along with pressure on the network as fans stream games from their work computers. One organization suffered from this problem, and, instead of taking a hardline and banning all streams, opted to stream the game on a large screen in a conference room where those interested could work for its duration. This alleviated strain on the network and kept staff happy.

Shutting off an idle cloud to cut costs

CASE STUDY

Industry:Professional Services

Source:Interview

24/7 AWS = round-the-clock costs

A senior developer realized that his development team had been leaving AWS instances running without any specific reason.

Why?

The development team appreciated the convenience of an always-on instance and, because the people spinning them up did not handle costs, the problem wasn’t immediately apparent.

Resolution

In his spare time over the course of a month, the senior developer wrote a program to manage the servers, including shutting them down during times when they were not in use and providing remote-access start-up when required. His team alone saved $30,000 in costs over the next six months, and his team lead reported that it would have been more than worth paying the team to implement such a project on company time.

Identify inefficiencies in order to remediate them

3.2c 20 minutes per service

Instructions

1. Gather the infrastructure team together and discuss existing capacity and demand. Use the inputs from your data analysis and stakeholder meetings to set the stage for your discussion.
2. Solicit ideas about potential inefficiencies from your participants:

• Are VMs effectively allocated? If you need 7 VMs to address a spike, are those VMs being reallocated post-spike?
• Are developers leaving instances running in the cloud?
• Are particular services massively overprovisioned?
• What are the biggest infrastructure line items? Are there obvious opportunities for cost reduction there?

Input

• Gold systems
• Data inputs

Output

• Inefficiencies

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Insight

The most effective capacity management takes a holistic approach and looks at the big picture in order to find ways to eliminate unnecessary infrastructure usage, or to find alternate or more efficient sources of required capacity.

Dodging the toll troll by rerouting traffic

CASE STUDY

Industry:Telecommunications

Source: Interview

High-cost lines

The capacity manager at a telecommunications provider mapped out his firm’s network traffic and discovered they were using a number of VP circuits (inter building cross connects) that were very expensive on the scale of their network.

Paying the toll troll

These VP circuits were supplying needed network services to the telecom provider’s clients, so there was no way to reduce this demand.

Resolution

The capacity manager analyzed where the traffic was going and compared this to the cost of the lines they were using. After performing the analysis, he found he could re-route much of the traffic away from the VP circuits and save on costs while delivering the same level of service to their users.

Compare the data across business, component, and service levels, and project your capacity needs

3.2d 2 hour session/meeting

Make informed decisions about capacity. Remember: retain all documentation. It might come in handy for the justification of purchases.

Instructions

1. Using either a dedicated tool or generic spreadsheet software like Excel or Sheets, evaluate capacity trends. Ask the following questions:

• Are there times when application performance degraded, and the service level was disrupted?
• Are there times when certain components or systems neared, reached, or exceeded available capacity?
• Are there seasonal variations in demand?
• Are there clear trends, such as ongoing growth of business activity or the usage of certain applications?
• What are the ramifications of trends or patterns in relation to infrastructure capacity?

Compare current capacity to your projections

3.2e Section 5 of the Capacity Plan Template

Capacity management (and, by extension, availability management) is a combination of two balancing acts: cost against capacity and supply and demand.*

Instructions

1. Compare your projections with your reality. You already know whether or not you have enough capacity given your lead times. But do you have too much? Compare your sub-component capacity projections to your current state.
2. Highlight any outliers. Is there a particular service that is massively overprovisioned?
3. Evaluate the reasons for the overprovisioning.

• Is the component critically important?
• Did you get a great deal on hardware?
• Is it an oversight?

*Office of Government Commerce 2001, 119.

In brief

The fractured nature of the capacity management space means that every organization is going to have a slightly different tooling strategy. No vendor has dominated, and every solution requires some level of customization. One capacity manager (a cloud provider, no less!) relayed a tale about a capacity management Excel sheet programmed with 5,000+ lines of code. As much work as that is, a bespoke solution is probably unavoidable.

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop.

Book a workshop with our Info-Tech analysts:

• To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
• Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
• Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

3.2

Map business needs to technical requirements and technical requirements to infrastructure requirements

The analyst will guide workshop participants in using their organization’s data to map out the relationships between applications, technical requirements, and the underlying infrastructure usage.

Phase 3 Guided Implementation

Call 1-888-670-8889 or email GuidedImplementations@InfoTech.com for more information.

Complete these steps on your own, or call us to complete a guided implementation. A guided implementation is a series of 2-3 advisory calls that help you execute each phase of a project. They are included in most advisory memberships.

PHASE 4

Identify and Mitigate Risks

Step 4.1: Identify and mitigate risks

This step will walk you through the following activities:

• Identify potential risks.
• Determine strategies to mitigate risks.
• Complete your capacity management plan.

This involves the following participants:

• Capacity manager
• Infrastructure team members
• Business stakeholders

Outcomes of this step

• Strategies for reducing risks
• Capacity management plan

Understand what happens when capacity/availability management fails

1. Services become unavailable. If availability and capacity management are not constantly practiced, an inevitable consequence is downtime or a reduction in the quality of that service. Critical sub-component failures can knock out important systems on their own.
2. Money is wasted. In response to fears about availability, it’s entirely possible to massively overprovision or switch entirely to a pay-as-you-go model. This, unfortunately, brings with it a whole host of other problems, including overspending. Remember: infinite capacity means infinite potential cost.
3. IT remains reactive and is unable to contribute more meaningfully to the organization. If IT is constantly putting out capacity/availability-related fires, there is no room for optimization and activities to increase organizational maturity. Effective availability and capacity management will allow IT to focus on other work.

Mitigate availability and capacity risks

Availability: how often a service is usable (that is to say up and not too degraded to be effective). Consequences of reduced availability can include financial losses, impacted customer goodwill, and reduced faith in IT more generally.

Causes of availability issues:

• Poor capacity management – a service becomes unavailable when there is insufficient supply to meet demand. This is the result of poor capacity management.
• Scheduled maintenance – services go down for maintenance with some regularity. This needs to be baked into service-level negotiations with vendors.
• Vendor outages – sometimes vendors experience unplanned outages. There is typically a contract provision that covers unplanned outages, but that doesn’t change the fact that your service will be interrupted.

Capacity: a particular component’s/service’s/business’ wiggle room. In other words, its usage ceiling.

Causes of capacity issues:

• Poor demand management – allowing users to run amok without any regard for how capacity is sourced and paid for.
• Massive changes in legitimate demand – more usage means more demand.
• Poor capacity planning – predictable changes in demand that go unaddressed can lead to capacity issues.

Add additional potential causes of availability and capacity risks as needed

4.1a 30 minutes

Availability and capacity issues can stem from a number of different causes. Include a list in your availability and capacity management plan.

Instructions

1. Gather the group together. Go around the room and have participants provide examples of incidents and problems that have been the result of availability and capacity issues.
2. Pose questions to the group about the source of those availability and capacity issues.

• What could have been done differently to avoid these issues?
• Was the availability/capacity issue a result of a faulty internal/external SLA?

Input

• Capacity Snapshot Tool results

Output

• Additional sources of availability and capacity risks

Materials

• Capacity Plan Template

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Insight

Availability and capacity problems result in incidents, critical incidents, and problems. These are addressed in a separate project (incident and problem management), but information about common causes can streamline that process.

Identify capacity risks and mitigate them

4.1b 30 minutes

Based on your understanding of your capacity needs (through written SLAs and informal but regular meetings with the business) highlight major risks you foresee.

Instructions

1. Make a chart with two columns on a whiteboard. They should be labelled “risk” and “mitigation” respectively.
2. Record risks to capacity you have identified in earlier activities.

• Refer to the Capacity Snapshot Tool for components that are highlighted in red and yellow. These are specific components that present special challenges. Identify the risk(s) in as much detail as possible. Include service and business risks as well.
• Examples: a marketing push will put pressure on the web server; a hiring push will require more Office 365 licenses; a downturn in registration will mean that fewer VMs will be required to run the service.

Input

• Capacity Snapshot Tool results

Output

• Inefficiencies

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Insight

It’s an old adage, but it checks out: don’t come to the table armed only with problems. Be a problem solver and prove IT’s value to the organization.

Identify capacity risks and mitigate them (cont.)

4.1b 1.5 hours

Instructions (cont.)

3. Begin developing mitigation strategies. Options for responding to known capacity risks fall into one of two camps:

• Acceptance: responding to the risk is costlier than acknowledging its existence without taking any action. For gold systems, acceptance is typically not acceptable.
• Mitigation: limiting/reducing, eliminating, or transferring risk (Herrera) comprise the sort of mitigation discussed here.
  • Limiting/reducing: taking steps to improve the capacity situation, but accepting some level of risk (spinning up a new VM, pushing back on demands from the business, promoting efficiency).
  • Eliminating: the most comprehensive (and most expensive) mitigation strategy, elimination could involve purchasing a new server or, at the extreme end, building a new datacenter.
  • Transfer: “robbing Peter to pay Paul,” in the words of capacity manager Todd Evans, is one potential way to limit your exposure. Is there a less critical service that can be sacrificed to keep your gold service online?

Input

• Capacity Snapshot Tool results

Output

• Capacity risk mitigations

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Insight

It’s an old adage, but it checks out: don’t come to the table armed only with problems. Be a problem solver and prove IT’s value to the organization.

Identify availability risks and mitigate them

4.1c 30 minutes

While capacity management is a form of availability management, it is not the only form. In this activity, outline the specific nature of threats to availability.

Instructions

1. Make a chart with two columns on a whiteboard. They should be labelled “risk” and “mitigation” respectively.
2. Begin brainstorming general availability risks based on the following sources of information/categories:

• Vendor outages
• Disaster recovery
• Historical availability issues

Input

• Capacity Snapshot Tool results

Output

• Availability risks and mitigations

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Info-Tech Best Practice

A dynamic central repository is a good way to ensure that availability issues stemming from a variety of causes are captured and mitigated.

Identify availability risks and mitigate them (cont.)

4.1c 1.5 hours

Although it is easier said than done, identifying potential mitigations is a crucial part of availability management as an activity.

Instructions (cont.)

3. Begin developing mitigation strategies. Options for responding to known capacity risks fall into one of two camps:

• Acceptance – responding to the risk is costlier than taking it on. Some unavailability is inevitable, between maintenance and unscheduled downtime. Record this, though it may not require immediate action.
• Mitigation strategies:
  • Limiting/reducing – taking steps to increase availability of critical systems. This could include hot spares for unreliable systems or engaging a new vendor.
  • Eliminating – the most comprehensive (and most expensive) mitigation strategy. It could include selling.
  • Transfer – “robbing Peter to pay Paul,” in the words of capacity manager Todd Evans, is one potential way to limit your exposure. Is there a less critical service that can be sacrificed to keep your gold service online?

Input

• Capacity Snapshot Tool results

Output

• Availability risks and mitigations

Materials

• Whiteboard
• Markers

Participants

• Capacity manager
• Infrastructure staff

Iterate on the process and present your completed availability and capacity management plan

The stakeholders consulted as part of the process will be interested in its results. Share them, either in person or through a collaboration tool.

The current status of your availability and capacity management plan should be on the agenda for every stakeholder meeting. Direct the stakeholders’ attention to the parts of the document that are relevant to them, and solicit their thoughts on the document’s accuracy. Over time you should get a pretty good idea of who among your stakeholder group is skilled at projecting demand, and who over- or underestimates, and by how much. This information will improve your projections and, therefore, your management over time.

Info-Tech Insight

Use the experience gained and the artifacts generated to build trust with the business. The meetings should be regular, and demonstrating that you’re actually using the information for good is likely to make hesitant participants in the process more likely to open up.

If you want additional support, have our analysts guide you through this phase as part of an Info-Tech workshop.

Book a workshop with our Info-Tech analysts:

• To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.
• Info-Tech analysts will join you and your team onsite at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.
• Contact your account manager (www.infotech.com/account), or email Workshops@InfoTech.com for more information.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

4.1

Identify capacity risks and mitigate them

The analyst will guide workshop participants in identifying potential risks to capacity and determining strategies for mitigating them.

Phase 4 Guided Implementation

Call 1-888-670-8889 or email GuidedImplementations@InfoTech.com for more information.

Complete these steps on your own, or call us to complete a guided implementation. A guided implementation is a series of 2-3 advisory calls that help you execute each phase of a project. They are included in most advisory memberships.

Insight breakdown

Insight 1

Components are critical to availability and capacity management.

The CEO doesn’t care about the SMTP server. She cares about meeting customer needs and producing profit. For IT capacity and availability managers, though, the devil is in the details. It only takes one faulty component to knock out a service. Keep track and keep the lights on.

Insight 2

Ask what the business is working on, not what they need.

If you ask them what they need, they’ll tell you – and it won’t be cheap. Find out what they’re going to do, and use your expertise to service those needs. Use your IT experience to estimate the impact of business and service level changes on the components that secure the availability you need.

Insight 3

Cloud shmoud.

The role of the capacity manager might be changing with the advent of the public cloud, but it has not disappeared. Capacity managers in the age of the cloud are responsible for managing vendor relationships, negotiating external SLAs, projecting costs and securing budgets, reining in prodigal divisions, and so on.

Summary of accomplishment

Knowledge Gained

• Impact of downtime on the organization
• Gold systems
• Key dependencies and sub-components
• Strategy for monitoring components
• Strategy for soliciting business needs
• Projected capacity needs
• Availability and capacity risks and mitigations

Processes Optimized

• Availability management
• Capacity management

Deliverables Completed

• Business Impact Analysis
• Capacity Plan Template

Project step summary

Client Project: Develop an Availability and Capacity Management Plan

1. Conduct a business impact analysis
2. Assign criticality ratings to services
3. Define your monitoring strategy
4. Implement your monitoring tool/aggregator
5. Solicit business needs and gather data
6. Analyze data and project future needs
7. Identify and mitigate risks

Info-Tech Insight

This project has the ability to fit the following formats:

• Onsite workshop by Info-Tech Research Group consulting analysts.
• Do-it-yourself with your team.
• Remote delivery via Info-Tech Guided Implementation.

Research contributors and experts

Adrian Blant, Independent Capacity Consultant, IT Capability Solutions

Adrian has over 15 years' experience in IT infrastructure. He has built capacity management business processes from the ground up, and focused on ensuring a productive dialogue between IT and the business.

James Zhang, Senior Manager Disaster Recovery, AIG Technology

James has over 20 years' experience in IT and 10 years' experience in capacity management. Throughout his career, he has focused on creating new business processes to deliver value and increase efficiency over the long term.

Mayank Banerjee, CTO, Global Supply Chain Management, HelloFresh

Mayank has over 15 years' experience across a wide range of technologies and industries. He has implemented highly automated capacity management processes as part of his role of owning and solving end-to-end business problems.

Mike Lynch, Consultant, CapacityIQ

Mike has over 20 years' experience in IT infrastructure. He takes a holistic approach to capacity management to identify and solve key problems, and has developed automated processes for mapping performance data to information that can inform business decisions.

Paul Waguespack, Manager of Application Systems Engineering, Tufts Health Plan

Paul has over 10 years' experience in IT. He has specialized in implementing new applications and functionalities throughout their entire lifecycle, and integrating with all aspects of IT operations.

Richie Mendoza, IT Consultant, SMITS Inc.

Richie has over 10 years' experience in IT infrastructure. He has specialized in using demand forecasting to guide infrastructure capacity purchasing decisions, to provide availability while avoiding costly overprovisioning.

Rob Thompson, President, IT Tools & Process

Rob has over 30 years’ IT experience. Throughout his career he has focused on making IT a generator of business value. He now runs a boutique consulting firm.

Todd Evans, Capacity and Performance Management SME, IBM

Todd has over 20 years' experience in capacity and performance management. At Kaiser Permanente, he established a well-defined mapping of the businesses workflow processes to technical requirements for applications and infrastructure.

Bibliography

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Frymire, Scott. "Capacity Planning vs. Capacity Analytics." ScienceLogic. 24 Oct. 2017. Web.

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Herrera, Michael. “Four Types of Risk Mitigation and BCM Governance, Risk and Compliance.” MHA Consulting. May 17, 2013.

Hill, Jon. How to Do Capacity Planning. TeamQuest. 24 Oct. 2017. Web.

“How to Create an SLA in 7 Easy Steps.” ITSM Perfection. 25 Oct. 2017. Web.

Hunter, John. “Myth: If You Can’t Measure It: You Can’t Manage It.” W. Edwards Deming Institute Blog. 13 Aug 2015. Web.

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Document Your Cloud Strategy

Get ready for the cloudy future with a consistent, proven strategy.

Analyst perspective

Any approach is better than no approach

Moving to the cloud is a big, scary transition, like moving from gas-powered to electric cars, or from cable to streaming, or even from the office to working from home. There are some undeniable benefits, but we must reorient our lives a bit to accommodate those changes, and the results aren’t always one-for-one. A strategy helps you make decisions about your future direction and how you should respond to changes and challenges. In Document Your Cloud Strategy we hope to help you accomplish just that: clarifying your overall mission and vision (as it relates to the cloud) and helping you develop an approach to changes in technology, people management, and, of course, governance. The cloud is not a panacea. Taken on its own, it will not solve your problems. But it can be an important tool in your IT toolkit, and you should aim to make the best use of it – whatever “best” happens to mean for you.

Jeremy Roberts

Research Director, Infrastructure and Operations

Info-Tech Research Group

Executive Summary

Your Challenge

The cloud is multifaceted. It can be complicated. It can be expensive. Everyone has an opinion on the best way to proceed – and in many cases has already begun the process without bothering to get clearance from IT. The core challenge is creating a coherent strategy to facilitate your overall goals while making the best use of cloud technology, your financial resources, and your people.

Common Obstacles

Despite the universally agreed-upon benefit of formulating a coherent strategy, several obstacles make execution difficult:

• Inconsistent understanding of what the cloud means
• Inability to come to a consensus on key decisions
• Ungoverned decision making
• Unclear understanding of cloud roles and responsibilities

Info-Tech’s Approach

A cloud strategy might seem like a big project, but it’s just a series of smaller conversations. The methodology presented here is designed to facilitate those conversations, using a curated list of topics, prompts, participant lists, and sample outcomes. We have divided the strategy into four key areas:

1. Vision and alignment
2. People
3. Governance
4. Technology

The answers might be different, but the questions are the same

Every organization will approach the cloud differently, but they all need to ask the same questions: When will we use the cloud? What forms will our cloud usage take? How will we manage governance? What will we do about people? How will we incorporate new technology into our environment? The answers to these questions are as numerous as there are people to answer them, but the questions must be asked.

Your challenge

This research is designed to help organizations that are facing these challenges or looking to:

• Ensure that the cloud strategy is complete and accurately reflects organizational goals and priorities.
• Develop a consistent and coherent approach to adopting cloud services.
• Design an approach to mitigate risks and challenges associated with adopting cloud services.
• Create a shared understanding of the expected benefits of cloud services and the steps required to realize those benefits.

Grappling with a cloud strategy is a top initiative: 43% of respondents report progressing on a cloud-first strategy as a top cloud initiative.

Source: Flexera, 2021.

Definition: Cloud strategy

A document providing a systematic overview of cloud services, their appropriate use, and the steps that an organization will take to maximize value and minimize risk.

Common obstacles

These barriers make this challenge difficult to address for many organizations:

• The cloud means different things to different people, and creating a strategy that is comprehensive enough to cover a multitude of use cases while also being written to be consumable by all stakeholders is difficult.
• The incentives to adopt the cloud differ based on the expected benefit for the individual customer. User-led decision making and historically ungoverned deployments can make it difficult to reset expectation and align with a formal strategy.
• Getting all the right people in a room together to agree on the key components of the strategy and the direction undertaken for each one is often difficult.

Info-Tech’s approach

Info-Tech’s approach

Your cloud strategy will comprise the elements listed under “vision and alignment,” “technology,” “governance,” and “people.” The Info-Tech methodology involves breaking the strategy down into subcomponents and going through a three-step process for each one. Start by reviewing a standard set of questions and understanding the goal of the exercise: What do we need to know? What are some common considerations and best practices? Once you’ve had a chance to review, discuss your current state and any gaps: What has been done? What still needs to be done? Finally, outline how you plan to go forward: What are your next steps? Who needs to be involved?

Review

• What questions do we need to answer to complete the discussion of this strategy component? What does the decision look like?
• What are some key terms and best practices we must understand before deciding?

Discuss

• What steps have we already taken to address this component?
• Does anything still need to be done?
• Is there anything we’re not sure about or need further guidance on?

Go forward

• What are the next steps?
• Who needs to be involved?
• What questions still need to be asked/answered?
• What should the document’s wording look like?

Info-Tech’s methodology for documenting your cloud strategy

Insight summary

Separate strategy from tactics

Separate strategy from tactics! A strategy requires building out the framework for ongoing decision making. It is meant to be high level and achieve a large goal. The outcome of a strategy is often a sense of commitment to the goal and better communication on the topic.

The cloud does not exist in a vacuum

Your cloud strategy flows from your cloud vision and should align with the broader IT strategy. It is also part of a pantheon of strategies and should exist harmoniously with other strategies – data, security, etc.

People problems needn’t preponderate

The cloud doesn’t have to be a great disruptor. If you handle the transition well, you can focus your people on doing more valuable work – and this is generally engaging.

Governance is a means to an end

Governing your deployment for its own sake will only frustrate your end users. Articulate the benefits users and the organization can expect to see and you’re more likely to receive the necessary buy-in.

Technology isn’t a panacea

Technology won’t solve all your problems. Technology is a force multiplier, but you will still have to design processes and train your people to fully leverage it.

Key deliverable

Cloud Strategy Document template

Inconsistency and informality are the enemies of efficiency. Capture the results of the cloud strategy generation exercises in the Cloud Strategy Document template.

• Record the results of the exercises undertaken as part of this blueprint in the Cloud Strategy Document template.
• It is important to remember that not every cloud strategy will look exactly the same, but this template represents an amalgamation of best practices and cloud strategy creation honed over several years of advisory service in the space.
• You know your audience better than anyone. If you would prefer a strategy delivered in a different way (e.g. presentation format) feel free to adapt the Cloud Vision Executive Presentation into a longer strategy presentation.
• Emphasis is an area where you should exercise discretion as well. A cost-oriented cloud strategy, or one that prioritizes one type of cloud (e.g. SaaS) at the exclusion of others, may benefit from more focus on some areas than others, or the introduction of relevant subcategories. Include as many of these as you think will be relevant.
• Parsimony is king – if you can distill a concept to its essence, start there. Include additional detail only as needed. You want your cloud strategy document to be read. If it’s too long or overly detailed, you’ll encounter readability issues.

Blueprint benefits

Measure the value of this blueprint

Don’t take our word for it:

• Document Your Cloud Strategy has been available for several years in various forms as both a workshop and as an analyst-led guided implementation.
• After each engagement, we send a survey that asks members how they benefited from the experience. Those who have worked through Info-Tech’s cloud strategy material have given overwhelmingly positive feedback.
• Additionally, members reported saving between 10 and 20 days and an average of $46,499.
• Measure the value by calculating the time saved as a result of using Info-Tech’s framework vs. a home-brewed cloud strategy alternative and by comparing the overall cost of a guided implementation or workshop with the equivalent offering from another firm. We’re confident you’ll come out ahead.

8.8/10 Average reported satisfaction

13 Days Average reported time savings

$46,499 Average cost savings

Executive Brief Case Study

INDUSTRY: Pharmaceuticals

SOURCE: Info-Tech workshop

Pharmaceutical company

The unnamed pharmaceutical company that is the subject of this case study was looking to make the transition to the cloud. In the absence of a coherent strategy, the organization had a few cloud deployments with no easily discernable overall approach. Representatives of several distinct functions (legal, infrastructure, data, etc.) all had opinions on the uses and abuses of cloud services, but it had been difficult to round everyone up and have the necessary conversations. As a result, the strategy exercise had not proceeded in a speedy or well-governed way. This lack of strategic readiness presented a roadblock to moving forward with the cloud strategy and to work with the cloud implementation partner, tasked with execution.

Results

The company engaged Info-Tech for a four-day workshop on cloud strategy documentation. Over the course of four days, participants drawn from across the organization discussed the strategic components and generated consensus statements and next steps. The team was able to formalize the cloud strategy and described the experience as saving 10 days.

Example output: Document your cloud strategy workshop exercise

Anything in green, the team was reasonably sure they had good alignment and next steps. Those yellow flags warranted more discussion and were not ready for documentation.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

"Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful."

Guided Implementation

"Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track."

Workshop

"We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place."

Consulting

"Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project."

Diagnostics and consistent frameworks are used throughout all four options.

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization. A typical GI is 4 to 6 calls over the course of 1 to 3 months

Workshop Overview

Contact your account representative for more information.

workshops@infotech.com 1-888-670-8889

Phase 1

Document Your Vision and Alignment

This phase will walk you through the following activities:

1. Record your cloud mission and vision
2. Document your cloud strategy’s alignment with other strategic plans
3. Record your cloud guiding principles
4. Define success

This phase has the following outcome:

• Documented strategy: vision and alignment

Record your mission and vision

Build on the work you’ve already done

Before formally documenting your cloud strategy, you should ensure that you have a good understanding of your overall cloud vision. How do you plan to leverage the cloud? What goals are you looking to accomplish? How will you distribute your workloads between different cloud service models (SaaS, PaaS, IaaS)? What will your preferred delivery model be (public, private, hybrid)? Will you support your cloud deployment internally or use the services of various consultants or managed service providers?

The answers to these questions will inform the first section of your cloud strategy. If you haven’t put much thought into this or think you could use a deep dive on the fundamentals of your cloud vision and cloud archetypes, consider reviewing Define Your Cloud Vision, the companion blueprint to this one.

Once you understand your cloud vision and what you’re trying to accomplish with your cloud strategy, this phase will walk you through aligning the strategy with other strategic initiatives. What decisions have others made that will impact the cloud strategy (or that the cloud strategy will impact)? Who must be involved/informed? What callouts must be involved at what point? Do users have access to the appropriate strategic documentation (and would they understand it if they did)?

You must also capture some guiding principles. A strategy by its nature provides direction, helping readers understand the decisions they should make and why those decisions align with organizational interests. Creating some top-level principles is a useful exercise because those principles facilitate comprehension and ensure the strategy’s applicability.

Finally, this phase will walk you through the process of measuring success. Once you know where you’d like to go, the principles that underpin your direction, and how your cloud strategy figures into the broader strategic pantheon, you should record what success actually means. If you’re looking to save money, overall cost should be a metric you track. If the cloud is all about productivity, generate appropriate productivity metrics. If you’re looking to expand into new technology or close a datacenter, you will need to track output specific to those overall goals.

Review: mission and vision

The overall organizational mission is a key foundational element of the cloud strategy. If you don’t understand where you’re going, how can you begin the journey to get there? This section of the strategy has four key parts that you should understand and incorporate into the beginning of the strategy document. If you haven’t already, review Define Your Cloud Vision for instructions on how to generate these elements.

Understand key cloud concepts: Archetype

Once you understand the value of the cloud, your workloads’ general suitability for the cloud, and your proposed risks and mitigations, the next step is to define your cloud archetype. Your organization’s cloud archetype is the strategic posture that IT adopts to best support the organization’s goals. Info-Tech’s model recognizes seven archetypes, divided into three high-level archetypes. After consultation with your stakeholders, and based on the results of the suitability and risk assessment activities, define your archetype. The archetype feeds into the overall cloud vision and provides simple insight into the cloud future state for all stakeholders. The cloud vision itself is captured in a “vision statement,” a short summary of the overall approach that includes the overall cloud archetype.

Define the Role of Project Management in Agile and Product-Centric Delivery

Projects and products are not mutually exclusive.

Table of Contents

3 Analyst Perspective

4 Executive Summary

7 Step 1.1: Clarify How You Want to Talk About Projects and Products

13 Step 1.2: Align Project Management and Agility

16 Step 1.3: Specify the Different Activities for Project Management

20 Step 1.4: Identify Key Differences in Funding of Products Instead of Projects

25 Where Do I Go Next?

26 Bibliography

Analyst Perspective

Project management still has an important role to play!

When moving to more product-centric delivery practices, many assume that projects are no longer necessary. That isn’t necessarily the case!

Product delivery can mean different things to different organizations, and in many cases it can involve the need to maintain both projects and project delivery.

Projects are a necessary vehicle in many organizations to drive value delivery, and the activities performed by project managers still need to be done by someone. It is the form and who is involved that will change the most.

Ari Glaizel Practice Lead, Applications Delivery and Management Info-Tech Research Group

Executive Summary

Info-Tech Insight

There is no one-size-fits-all approach to product delivery. For many organizations product delivery requires detailed project management practices, while for others it requires much less. Taking an outcome-first approach when planning your product transformation is critical to make the right decision on the balance between project and product management.

Your evolution of delivery practice is not a binary switch

1. PROJECTS WITH WATERFALL The project manager is accountable for delivery of the project, and the project manager owns resources and scope.
2. PROJECTS WITH AGILE DELIVERY A transitional state where the product owner is accountable for feature delivery and the project manager accountable for the overall project.
3. PRODUCTS WITH AGILE PROJECT AND OPERATIONAL DELIVERY The product owner is accountable for the delivery of the project and products, and the project manager plays a role of facilitator and enabler.
4. PRODUCTS WITH AGILE DELIVERY Delivery of products can happen without necessarily having projects. However, projects could be instantiated to cover major initiatives.

Info-Tech Insight

• Organizations do not need to go to full product and Agile delivery to improve delivery practices! Every organization needs to make its own determination on how far it needs to go. You can do it in one step or take each step and evaluate how well you are delivering against your goals and objectives.
• Many organizations will go to Products With Agile Project and Operational Delivery, and some will go to Products With Agile Delivery.

Activities to undertake as you transition to product-centric delivery

1. PROJECTS WITH WATERFALL
   • Clarify how you want to talk about projects and products. The center of the conversation will start to change.
2. PROJECTS WITH AGILE DELIVERY
   • Align project management and agility. They are not mutually exclusive (but not necessarily always aligned).
3. PRODUCTS WITH AGILE PROJECT AND OPERATIONAL DELIVERY
   • Specify the different activities for project management. As you mature your product practices, project management becomes a facilitator and collaborator.
4. PRODUCTS WITH AGILE DELIVERY
   • Identify key differences in funding. Delivering products instead of projects requires a change in the focus of your funding.

Step 1.1

Clarify How You Want to Talk About Projects and Products

Activities

• 1.1.1 Define “product” and “project” in your context
• 1.1.2 Brainstorm potential changes in the role of projects as you become Agile and product-centric

This step involves the following participants:

• Product owners
• Product managers
• Development team leads
• Portfolio managers
• Business analysts

Outcomes of this step

• An understanding of how the role can change through the evolution from project to more product-centric practices

Definition of terms

Project “A temporary endeavor undertaken to create a unique product, service, or result. The temporary nature of projects indicates a beginning and an end to the project work or a phase of the project work. Projects can stand alone or be part of a program or portfolio.” (PMBOK, PMI)

Product “A tangible solution, tool, or service (physical or digital) that enables the long-term and evolving delivery of value to customers and stakeholders based on business and user requirements.” (Deliver on Your Digital Product Vision, Info-Tech Research Group)

Info-Tech InsightLet these definitions be a guide, not necessarily to be taken verbatim. You need to define these terms in your context based on your particular needs and objectives. The only caveat is to be consistent with your usage of these terms in your organization.

1.1.1 Define “product” and “project” in your context

Output: Your enterprise/organizational definition of products and projects

Participants: Executives, Product/project managers, Applications teams

1. Discuss what “product” and “project” mean in your organization.
2. Create common, enterprise-wide definitions for “product” and “project.”

Agile and product management does not mean projects go away

Projects Within Products

Regardless of whether you recognize yourself as a “product-based” or “project-based” shop, the same basic principles should apply.

You go through a period or periods of project-like development to build or implement a version of an application or product.

You also have parallel services along with your project development that encompass the more product-based view. These may range from basic support and maintenance to full-fledged strategy teams or services like sales and marketing.

Info-Tech Note

As your product transformation continues, projects can become optional and needed only as part of your organization’s overall delivery processes

Identify the differences between a project-centric and a product-centric organization

Info-Tech Insight

Product delivery requires significant shifts in the way you complete development and implementation work and deliver value to your users. Make the changes that support improving end-user value and enterprise alignment.

1.1.2 Brainstorm potential changes in the role of projects as you become Agile and product-centric

5-10 minutes

Output: Increased appreciation of the relationship between project and product delivery

Participants: Executives, Product/project managers, Applications teams

• Discuss as a group:
  • What stands out in the evolution from project to product?
  • What concerns do you have with the change?
  • What will remain the same?
  • Which changes feel the most impactful?
  

Step 1.2

Align Project Management and Agility

Activities

• 1.2.1 Explore gaps in Agile/product-centric delivery of projects

This step involves the following participants:

• Executives
• Product/Project managers
• Applications teams

Outcomes of this step

• A clearer view of how agility can be introduced into projects.

Challenges with the project management role in Agile and product-centric organizations

Many project managers feel left out in the cold. That should not be the case!

In product-centric, Agile teams, many roles that a project manager previously performed are now taken care of to different degrees by the product owner, delivery team, and process manager.

The overall change alters the role of project management from one that orchestrates all activities to one that supports, monitors, and escalates.

Product Owner

• Defines the “what” and heavily involved in the “when” and the “why”
• Accountable for delivery of value

Delivery team members

• Define the “how”
• Accountable for building and delivering high-quality deliverables
• Can include roles like user experience, interaction design, business analysis, architecture

Process Manager

• Facilitates the other teams to ensure valuable delivery
• Can potentially, in a Scrum environment, play the scrum master role, which involves leading scrums, retrospectives, and sprint reviews and working to resolve team issues and impediments
• Evolves into more of a facilitator and communicator role

1.2.1 Explore gaps in Agile/ product-centric delivery of projects

5-10 minutes

Output: An assessment of what is in the way to effectively deliver on Agile and product-focused projects

Participants: Executives, Product/project managers, Applications teams

• Discuss as a group:
  • What project management activities do you see in Agile/product roles?
  • What gaps do you see?
  • How can project management help Agile/product teams be successful?

Step 1.3

Specify the Different Activities for Project Management

Activities

• 1.3.1 Articulate the changes in a project manager’s role

This step involves the following participants:

• Executives
• Product/Project managers
• Applications teams

Outcomes of this step

• An understanding of the role of project management in an Agile and product context

Kicking off the project

Product-centric delivery still requires key activities to successfully deliver value. Where project managers get their information from does change.

Project Charter Project managers should still define a charter and capture the vision and scope. The vision and high-level scope is primarily defined by the product owner. Key Stakeholders and Communication Clearly defining stakeholders and communication needs is still important. However, they are defined based on significant input and cues by the product owner. Standardizing on Tools and Processes To ensure consistency across projects, project managers will want to align tools to how the team manages their backlog and workflow. This will smooth communication about status with stakeholders.

Info-Tech Insight

1. Product management plays a similar role to the one that was traditionally filled by the project sponsor except for a personal accountability to the product beyond the life of the project.
2. When fully transitioned to product-centric delivery, these activities could be replaced by a product canvas. See Deliver on Your Digital Product Vision for more information.

During the project: Three key activities

The role of project management evolves from a position of ownership to a position of communication, collaboration, and coordination.

Support Communicate Agile/product team needs to leadership Liaise and co-ordinate for non-Agile/product-focused parts of the organization Coach members of the team Monitoring Regular status updates to PMO still required Metrics aligned with Agile/product practices Leverage similar tooling and approaches to what is done locally on Agile/product teams (if possible) Escalation Still a key escalation point for roadblocks that go outside the product teams Collaborate closely with Agile/product team leadership and scrum masters (if applicable)

1.3.1: Articulate the changes in a project manager’s role

5-10 minutes

Output: Current understanding of the role of project management in Agile/product delivery

Participants: Executives, Product/project managers, Applications teams

Why is this important?

Project managers still have a role to play in Agile projects and products. Agreeing to what they should be doing is critical to successfully moving to a product-centric approach to delivery.

• Review how Info-Tech views the role of project management at project initiation and during the project.
• Review the state of your Agile and product transformation, paying special attention to who performs which roles.
• Discuss as a group:
  • What are the current activities of project managers in your organization?
  • Based on how you see delivery practices evolving, what do you see as the new role of project managers when it comes to Agile-centric and product-centric delivery.

Step 1.4

Identify Key Differences in Funding of Products Instead of Projects

Activities

• 1.4.1 Discuss traditional versus product-centric funding methods

This step involves the following participants:

• Executives
• Product owners
• Product managers
• Project managers
• Delivery managers

Outcomes of this step

• Identified differences in funding of products instead of projects

Planning and budgeting for products and families

Reward for delivering outcomes, not features

Autonomy Fund what delivers value Fund long-lived delivery of value through products (not projects). Give autonomy to the team to decide exactly what to build.

Flexibility Allocate iteratively Allocate to a pool based on higher-level business case. Provide funds in smaller amounts to different product teams and initiatives based on need.

Accountability Measure and adjust Product teams define metrics that contribute to given outcomes. Track progress and allocate more (or less) funds as appropriate.

Info-Tech Insight Changes to funding require changes to product and Agile practices to ensure product ownership and accountability.

(Adapted from Bain & Company)

Budgeting approaches must evolve as you mature your product operating environment

Info-Tech Insight

As you evolve your approach to product delivery, you will be decoupling the expected benefits, forecast, and budget. Managing them independently will improve your ability adapt to change and drive the right outcomes!

1.4.1 Discuss traditional versus product-centric funding methods

Output: Understanding of funding principles and challenges

Participants: Executives, Product owners, Product managers, Project managers, Delivery managers

1. Discuss how projects are currently funded.
2. Review how the Agile/product funding models differ from how you currently operate.
3. What changes do you need to consider to support a product delivery model?
4. For each change, identify the key stakeholders and list at least one action to take.

Case Study

Global Digital Financial Services Company This financial services company looked to drive better results by adopting more product-centric practices. Its projects exhibited: High complexity/strong dependencies between components High implementation effort High clarification/reconciliation (more than two departments involved) Multiple methodologies (Agile/Waterfall/Hybrid) The team recognized they could not get rid of projects entirely, but getting to a level where there was a coordinated delivery between projects and products being implemented is important. Results Moving several initiatives to more product-centric practices allowed for: Delivery within current assigned capacity Limited need for coordination across departments Lower complexity A unified Agile approach to delivery Through balancing the needs of projects and products, there were three key insights about the project management’s role: The role of project management changes depending on the context of the work. There is no one-size-fits-all definition. Project management played a much bigger role when work spanned multiple products and business units. Project management was used as a key coordinator when delivery became complicated and multilayered.

Where Do I Go Next?

Bibliography

Cobb, Chuck. “Are there Project Managers in Agile?” High Impact Project Management, n.d. Web.

Cohn, Mike. “What Is a Product?” Mountain Goat Software, 6 Sept. 2016. Web.

Cobb, Chuck. “Agile Project Manager Job Description.” High Impact Project Management, n.d. Web.

“How do you define a product?” Scrum.org, 4 April 2017. Web.

Johnson, Darren, et al. “How to Plan and Budget for Agile at Scale.” Bain & Company, 8 Oct. 2019. Web.

“Product Definition.” SlideShare, uploaded by Mark Curphey, 25 Feb. 2007. Web.

Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide). 7th ed., Project Management Institute, 2021.

Schuurman, Robbin. “Scrum Master vs Project Manager – An Overview of the Differences.” Scrum.org, 11 Feb 2020. Web.

Schuurman, Robbin. “Product Owner vs Project Manager.” Scrum.org, 12 March 2020. Web.

Vlaanderen, Kevin. “Towards Agile Product and Portfolio Management.” Academia.edu, 2010. Web.

“What is a Developer in Scrum?” Scrum.org, n.d. Web.

“What is a Scrum Master?” Scrum.org, n.d. Web.

“What is a Product Owner?” Scrum.org, n.d. Web.

Get the Most Out of Your SAP

In today’s connected world, the continuous optimization of enterprise applications to realize your digital strategy is key.

EXECUTIVE BRIEF

Analyst Perspective

Focus optimization on organizational value delivery.

	Chad Shortridge Senior Research Director, Enterprise Applications Info-Tech Research Group
	Lisa Highfield Research Director, Enterprise Applications Info-Tech Research Group

Enterprise resource planning (ERP) is a core tool that the business leverages to accomplish its goals. An ERP that is doing its job well is invisible to the business. The challenges come when the tool is no longer invisible. It has become a source of friction in the functioning of the business.

SAP systems are expensive, benefits can be difficult to quantify, and issues with the products can be difficult to understand. Over time, technology evolves, organizational goals change, and the health of these systems is often not monitored. This is complicated in today’s digital landscape with multiple integrations points, siloed data, and competing priorities.

Too often organizations jump into selecting replacement systems without understanding the health of their systems. We can do better than this.

IT leaders need to take a proactive approach to continually monitor and optimize their enterprise applications. Strategically re-align business goals, identify business application capabilities, complete a process assessment, evaluate user adoption, and create an optimization plan that will drive a cohesive technology strategy that delivers results.

Executive Summary

Info-Tech Insight

SAP ERP environments are changing, but we cannot stand still on our optimization efforts. Understand your product(s), processes, user satisfaction, integration points, and the availability of data to business decision makers. Examine these areas to develop a personalized SAP optimization roadmap that fits the needs of your organization. Incorporate these methodologies into an ongoing optimization strategy aimed at enabling the business, increasing productivity, and reducing costs.

Insight summary

Continuous assessment and optimization of your SAP ERP systems is critical to the success of your organization.

• Applications and the environments in which they live are constantly evolving.
• This blueprint provides business and application managers with a method to complete a health assessment of their ERP systems to identify areas for improvement and optimization.
• Put optimization practices into effect by:
  • Aligning and prioritizing key business and technology drivers.
  • Identifying ERP process classification and performing a gap analysis.
  • Measuring user satisfaction across key departments.
  • Evaluating vendor relations.
  • Understanding how data plays into the mix.
  • Pulling it all together into an optimization roadmap.

SAP enterprise resource planning (ERP) systems facilitate the flow of information across business units. It allows for the seamless integration of systems and creates a holistic view of the enterprise to support decision making. In many organizations, the SAP system is considered the lifeblood of the enterprise. Problems with this key operational system will have a dramatic impact on the ability of the enterprise to survive and grow. ERP implementation should not be a one-and-done exercise. There needs to be ongoing optimization to enable business processes and optimal organizational results.

SAP enterprise resource planning (ERP)

What is SAP?

SAP ERP systems facilitate the flow of information across business units. They allow for the seamless integration of systems and create a holistic view of the enterprise to support decision making.

In many organizations, the ERP system is considered the lifeblood of the enterprise. Problems with this key operational system will have a dramatic impact on the ability of the enterprise to survive and grow.

An ERP system:

• Automates processes, reducing the amount of manual, routine work.
• Integrates with core modules, eliminating the fragmentation of systems.
• Centralizes information for reporting from multiple parts of the value chain to a single point.

SAP use cases:

Product-Centric

Suitable for organizations that manufacture, assemble, distribute, or manage material goods.

Service-Centric

Suitable for organizations that provide and manage field services and/or professional services.

SAP Fast Facts

Product Description

• SAP has numerous ERP products. Products can be found under ERP, Finance, Customer Relations and Experience, Supply Chain Management, Human Resources, and Technology Platforms.
• SAP offers on-premises and cloud solutions for its ERP. In 2011, SAP released the HANA in-memory database. SAP ECC 6.0 reaches the end of life in 2027 (2030 extended support).
• Many organizations are facing mandatory transformation. This is an excellent opportunity to examine ERP portfolios for optimization opportunities.
• Now is the time to optimize to ensure you are prepared for the journey ahead.

Vendor Description

• SAP SE was founded in 1972 by five former IBM employees.
• The organization is focused on enterprise software that integrates all business processes and enables data processing in real-time.
• SAP stands for Systems, Applications, and Products in Data Processing.
• SAP offers more than 100 solutions covering all business functions.
• SAP operates 65 data centers at 35 locations in 16 countries.

SAP by the numbers

Only 72% of SAP S/4HANA clients were satisfied with the product’s business value in 2022. This was 9th out of 10 in the enterprise resource planning category.

Source: SoftwareReviews

As of 2022, 65% of SAP customers have not made the move to S/4HANA. These customers will continue to need to optimize the current ERP to meet the demanding needs of the business.

Source: Statista

Organizations will need to continue to support and optimize their SAP ERP portfolios. As of 2022, 42% of ASUG members were planning a move to S/4HANA but had not yet started to move.

Source: ASUG

Your challenge

This research is designed to help organizations who need to:

• Understand the multiple deployment models and the roadmap to successfully navigate a move to S/4HANA.
• Build a business case to understand the value behind a move.
• Map functionality to ensure future compatibility.
• Understand the process required to commercially navigate a move to S/4HANA.
• Avoid a costly audit due to missed requirements or SAP whiteboarding sessions.

HANA used to be primarily viewed as a commercial vehicle to realize legacy license model discounts. Now, however, SAP has built a roadmap to migrate all customers over to S/4HANA. While timelines may be delayed, the inevitable move is coming.

30-35% of SAP customers likely have underutilized assets. This can add up to millions in unused software and maintenance.

– Upperedge

SAP challenges and dissatisfaction

Finance, IT, Sales, and other users of the ERP system can only optimize ERP with the full support of each other. The cooperation of the departments is crucial when trying to improve ERP technology capabilities and customer interaction.

Info-Tech Insight

While technology is the key enabler of building strong customer experiences, there are many other drivers of dissatisfaction. IT must stand shoulder-to-shoulder with the business to develop a technology framework for ERP.

Where are applications leaders focusing?

Big growth numbers Year-over-year call topic requests	Other changes Year-over-year call topic requests
We are seeing applications leaders’ priorities change year over year, driven by a shift in their approach to problem solving. Leaders are moving from a process-centric approach to a collaborative approach that breaks down boundaries and brings teams together.	Software development lifecycle topics are tactical point solutions. Organizations have been “shifting left” to tackle the strategic issues such as product vision and Agile mindset to optimize the whole organization.

The S/4HANA journey

Optimization can play a role in your transition to S/4HANA.

• The business does not stop. Satisfy ongoing needs for business enablement.
• Build out a collaborative SAP optimization team across the business and IT.
• Engage the business to understand requirements.
• Discover applications and processes.
• Explore current-state capabilities and future-state needs.
• Evaluate optimization opportunities. Are there short-term wins? What are the long-term goals?
• Navigate the path to S/4HANA and develop some timelines and stage gates.
• Set your course and optimization roadmap.
• Capitalize on the methodologies for an ongoing optimization effort that can be continued after the S/4HANA go-live date.

Many organizations may be coming up against changes to their SAP ERP application portfolio.

Some challenges organizations may be dealing with include:

• Heavily customized instances
• Large volumes of data
• Lack of documentation
• Outdated business processes
• Looming end of life

Application optimization is risky without a plan

Avoid these common pitfalls:

• Not pursuing optimization because you are migrating to S/4HANA.
• Not considering how this plays into the short-, medium-, and long-term ERP strategy.
• Not considering application optimization as a business and IT partnership, which requires the continuous formal engagement of all participants.
• Not having a good understanding of your current state, including integration points and data.
• Not adequately accommodating feedback and changes after digital applications are deployed and employed.
• Not treating digital applications as a motivator for potential future IT optimization efforts and incorporating digital assets in strategic business planning.
• Not involving department leads, management, and other subject-matter experts to facilitate the organizational change digital applications bring.

“[A] successful application [optimization] strategy starts with the business need in mind and not from a technological point of view. No matter from which angle you look at it, modernizing a legacy application is a considerable undertaking that can’t be taken lightly. Your best approach is to begin the journey with baby steps.”

– Medium

Info-Tech’s methodology for getting the most out of your ERP

Blueprint deliverables

Each step of this blueprint is accompanied by supporting deliverables to help you accomplish your goals:

Get the Most Out of Your SAP Workbook

Identify and prioritize your SAP optimization goals.

Application Portfolio Assessment

Assess IT-enabled user satisfaction across your SAP portfolio.

Key deliverable:

SAP Optimization Roadmap

Complete an assessment of processes, user satisfaction, data quality, and vendor management.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.

Guided Implementation

Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.

Workshop

We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.

Consulting

Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is series of calls with an Info-Tech analyst to help implement our best practices in your organization. A typical GI is 8 to 12 calls over the course of 4 to 6 months.

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com1-888-670-8889

Phase 1

Map Current-State Capabilities

This phase will guide you through the following activities:

• Align your organizational goals
• Gain a firm understanding of your current state
• Inventory ERP and related applications
• Confirm the organization’s capabilities

This phase involves the following participants:

• CFO
• Department Leads – Finance, Procurement, Asset Management
• Applications Director
• Senior Business Analyst
• Senior Developer
• Procurement Analysts

Step 1.1

Identify Stakeholders and Build Your Optimization Team

Activities

1.1.1 Identify stakeholders critical to success

1.1.2 Map your SAP optimization stakeholders

1.1.3 Determine your SAP optimization team

This step will guide you through the following activities:

• Identify ERP drivers and objectives
• Explore ERP challenges and pain points
• Discover ERP benefits and opportunities
• Align the ERP foundation with the corporate strategy

This step involves the following participants:

• Stakeholders
• Project sponsors and leaders

Outcomes of this step

• Stakeholder map
• SAP Optimization Team

ERP optimization stakeholders

• Understand the roles necessary to get the most out of your SAP.
• Understand the role of each player within your project structure. Look for listed participants on the activities slides to determine when each player should be involved.

Info-Tech Insight

Do not limit project input or participation. Include subject-matter experts and internal stakeholders at stages within the project. Such inputs can be solicited on a one-off basis as needed. This ensures you take a holistic approach to create your ERP optimization strategy.

1.1.1 Identify SAP optimization stakeholders

1 hour

1. Hold a meeting to identify the SAP optimization stakeholders.
2. Use next slide as a guide.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Understand how to navigate the complex web of stakeholders in ERP

Identify which stakeholders to include and what their level of involvement should be during requirements elicitation based on relevant topic expertise.

Large-scale ERP projects require the involvement of many stakeholders from all corners and levels of the organization, including project sponsors, IT, end users, and business stakeholders. Consider the influence and interest of stakeholders in contributing to the requirements elicitation process and involve them accordingly.

EXAMPLE: Stakeholder involvement during selection

Activity 1.1.2 Map your SAP optimization stakeholders

1 hour

1. Use the list of SAP optimization stakeholders.
2. Map each stakeholder on the quadrant based on their expected influence and involvement in the project.
3. [Optional] Color code the users using the scale below to quickly identify the group that the stakeholder belongs to.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Map the organization’s stakeholders

The SAP optimization team

Consider the core team functions when putting together the project team. Form a cross-functional team (i.e. across IT, Marketing, Sales, Service, Operations) to create a well-aligned ERP optimization strategy. Don’t let your project team become too large when trying to include all relevant stakeholders. Carefully limiting the size of the project team will enable effective decision making while still including functional business units such as Marketing, Sales, Service, and Finance as well as IT.

1.1.3 Determine your SAP optimization team

1 hour

1. Have the project manager and other key stakeholders discuss and determine who will be involved in the SAP optimization project.

• The size of the team will depend on the initiative and size of your organization.
• Key business leaders in key areas and IT representatives should be involved.

Note: Depending on your initiative and the size of your organization, the size of this team will vary.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Step 1.2

Build an SAP Strategy Model

Activities

1.2.1 Explore environmental factors and technology drivers

1.2.2 Consider potential barriers and challenges

1.2.3 Discuss enablers of success

1.2.4 Develop your SAP optimization goals

This step will guide you through the following activities:

• Identify ERP drivers and objectives
• Explore ERP challenges and pain points
• Discover ERP benefits and opportunities
• Align the ERP foundation with the corporate strategy

This step involves the following participants:

• SAP Optimization Team

Outcomes of this step

• ERP business model
• Strategy alignment

Align your SAP strategy with the corporate strategy

ERP projects are more successful when the management team understands the strategic importance and the criticality of alignment. Time needs to be spent upfront aligning business strategies with ERP capabilities. Effective alignment between IT and the business should happen daily. Alignment doesn’t just need to occur just at the executive level but at each level of the organization.

ERP Business Model Template

Conduct interviews to elicit the business context

Stakeholder Interviews

Begin by conducting interviews of your executive team. Interview the following leaders:

1. Chief Information Officer
2. Chief Executive Officer
3. Chief Financial Officer
4. Chief Revenue Officer/Sales Leader
5. Chief Operating Officer/Supply Chain & Logistics Leader
6. Chief Technology Officer/Chief Product Officer

INTERVIEWS MUST UNCOVER

1. Your organization’s top three business goals
2. Your organization’s top ten business initiatives
3. Your organization’s mission and vision

Understand the ERP drivers and organizational objectives

Info-Tech Insight

One of the biggest drivers for ERP adoption is the ability to make quicker decisions from timely information. This driver is a result of external considerations. Many industries today are highly competitive, uncertain, and rapidly changing. To succeed under these pressures, there needs to be timely information and visibility into all components of the organization.

1.2.1 Explore environmental factors and technology drivers

30 minutes

1. Identify business drivers that are contributing to the organization’s need for ERP.
2. Understand how the company is running today and what the organization’s future will look like. Try to identify the purpose for becoming an integrated organization. Use a whiteboard or flip charts and markers to capture key findings.
3. Consider external considerations, organizational drivers, technology drivers, and key functional requirements.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Create a realistic ERP foundation by identifying the challenges and barriers the project will bestow

There are several different factors that may stifle the success of an ERP implementation. Organizations that are creating an ERP foundation must scan their current environment to identify internal barriers and challenges.

Common Internal Barriers

ERP Business Model

What does success look like?

Top 15 critical success factors for ERP system implementation

Source: Epizitone and Olugbara, 2020; CC BY 4.0

Info-Tech Insight

Complement your ability to deliver on your critical success factors with the capabilities of your implementation partner to drive a successful ERP implementation.

“Implementation partners can play an important role in successful ERP implementations. They can work across the organizational departments and layers creating a synergy and a communications mechanism.” – Ayogeboh Epizitone, Durban University of Technology

1.2.2 Consider potential barriers and challenges

1-3 hours

• Open tab “1.2 Strategy & Goals,” in the Get the Most Out of Your SAP Workbook.
• Identify barriers to ERP optimization success.
• Review the ERP critical success factors and how they relate to your optimization efforts.
• Discuss potential barriers to successful ERP optimization.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

1.2.3 Discuss enablers of success

1-3 hours

1. Open tab “1.2 Strategy & Goals,” in the Get the Most Out of Your SAP Workbook.
2. Identify barriers to ERP optimization success.
3. Review the ERP critical success factors and how they relate to your optimization efforts.
4. Discuss potential barriers to successful ERP optimization.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

The Business Value Matrix

Rationalizing and quantifying the value of SAP

Benefits can be realized internally and externally to the organization or department and have different drivers of value.

• Financial benefits refer to the degree to which the value source can be measured through monetary metrics and are often quite tangible.
• Human benefits refer to how an application can deliver value through a user’s experience.
• Inward refers to value sources that have an internal impact and improve your organization’s effectiveness and efficiency in performing its operations.
• Outward refers to value sources that come from your interaction with external factors, such as the market or your customers.

Organizational Goals

• Increased Revenue

Application functions that are specifically related to the impact on your organization’s ability to generate revenue and deliver value to your customers.

• Reduced Costs

Reduction of overhead. The ways in which an application limits the operational costs of business functions.

• Enhanced Services

Functions that enable business capabilities that improve the organization’s ability to perform its internal operations.

• Reach Customers

Application functions that enable and improve the interaction with customers or produce market information and insights.

Business Value Matrix

Link SAP capabilities to organizational value

1.2.4 Define your SAP optimization goals

30 minutes

1. Discuss the ERP business model and ERP critical success factors.
2. Through the lens of corporate goals and objectives think about supporting ERP technology. How can the ERP system bring value to the organization? What are the top things that will make this initiative a success?
3. Develop five to ten optimization goals that will form the basis for the success of this initiative.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Step 1.3

Inventory Current System State

Activities

1.3.1 Inventory SAP applications and interactions

1.3.2 Draw your SAP system diagram

1.3.3 Inventory your SAP modules and business capabilities (or business processes)

1.3.4 Define your key SAP optimization modules and business capabilities

This step will guide you through the following activities:

• Inventory of applications
• Mapping interactions between systems

This step involves the following participants:

• SAP Optimization Team
• Enterprise Architect
• Data Architect

Outcomes of this step

• Systems inventory
• Systems diagram

1.3.1 Inventory SAP applications and interfaces

1-3+ hours

1. Enter your SAP systems, SAP extended applications, and integrated applications within scope.
2. Include any abbreviated names or nicknames.
3. List the application type or main function.
4. List the modules the organization has licensed.
5. List any integrations.

Record this information in the Get the Most Out of Your SAP Workbook.

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ERP Data Flow

Be sure to include enterprise applications that are not included in the ERP application portfolio. Popular systems to consider for POIs include billing, directory services, content management, and collaboration tools.

ERP – enterprise resource planning

Email – email system such as Microsoft Exchange

Calendar – calendar system such as Microsoft Outlook

WEM – web experience management

ECM – enterprise content management

When assessing the current application portfolio that supports your ERP, the tendency will be to focus on the applications under the ERP umbrella. These relate mostly to marketing, sales, and customer service. Be sure to include systems that act as input to, or benefit due to outputs from, ERP or similar applications.

1.3.2 Draw your SAP system diagram

1-3+ hours

1. From the SAP application inventory, diagram your network.

Include:

• Any internal or external systems
• Integration points
• Data flow

Download the Get the Most Out of Your SAP Workbook

Sample SAP and integrations map

Business capability map (Level 0)

In business architecture, the primary view of an organization is known as a business capability map. A business capability defines what a business does to enable value creation, rather than how.

Business capabilities:

• Represent stable business functions.
• Are unique and independent of each other.
• Will typically have a defined business outcome.

A business capability map provides details that help the business architecture practitioner direct attention to a specific area of the business for further assessment.

ERP process mapping

The operating model

An operating model is a framework that drives operating decisions. It helps to set the parameters for the scope of ERP and the processes that will be supported. The operating model will serve to group core operational processes. These groupings represent a set of interrelated, consecutive processes aimed at generating a common output. From your developed processes and your SAP license agreements you will be able to pinpoint the scope for investigation including the processes and modules.

APQC Framework

Help define your inventory of sales, marketing, and customer services processes.

Source: APQC

If you do not have a documented process model, you can use the APQC Framework to help define your inventory of sales business processes. APQC’s Process Classification Framework is a taxonomy of cross-functional business processes intended to allow the objective comparison of organizational performance within and among organizations.

APQC’s Process Classification Framework

The value stream

Value stream defined:

Value streams connect business goals to the organization’s value realization activities in the marketplace. Those activities are dependent on the specific industry segment in which an organization operates.

There are two types of value streams: core value streams and support value streams.

• Core value streams are mostly externally facing. They deliver value to either an external or internal customer and they tie to the customer perspective of the strategy map.
• Support value streams are internally facing and provide the foundational support for an organization to operate.

An effective method for ensuring all value streams have been considered is to understand that there can be different end-value receivers.

Process mapping hierarchy

Source: APQC

APQC provides a process classification framework. It allows organizations to effectively define their processes and manage them appropriately.

APQC’s Process Classification Framework

Cross-industry classification framework

Info-Tech Insight

Focus your initial assessment on the level 1 processes that matter to your organization. This allows you to target your scant resources on the areas of optimization that matter most to the organization and minimize the effort required from your business partners. You may need to iterate the assessment as challenges are identified. This allows you to be adaptive and deal with emerging issues more readily and become a more responsive partner to the business.

SAP modules and process enablement

Cloud/Hardware Fiori Analytics Integrations Extended Solutions

R&D Engineering Enterprise Portfolio and Project Management Product Development Foundation Enterprise Portfolio and Project Management Product Lifecycle Management Product Compliance Enterprise Portfolio and Project Management Product Safety and Stewardship Engineering Record Sourcing and Procurement Procurement Analytics Sourcing & Contract Management Operational Procurement Invoice Management Supplier Management Supply Chain Inventory Delivery & Transportation Warehousing Order Promising Asset Management Maintenance Operations Resource Scheduling Env, Health and Safety Maintenance Management

Finance Financial Planning and Analysis Accounting and Financial Close Treasury Management Financial Operations Governance, Risk & Compliance Commodity Management Human Resources Core HR Payroll Timesheets Organization Management Talent Management Sales Sales Support Order and Contract Management Agreement Management Performance Management Service Service Operations and Processes Basic Functions Workforce Management Case Management Professional Services Service Master Data Management Service Management

Beyond the core

1.3.3 Inventory your SAP modules and business capabilities

1-3+ hours

1. Look at the major functions or processes within the scope of ERP.
2. From the inventory of current systems, choose the submodules or processes that you want to investigate and are within scope for this optimization initiative.
3. Use tab 1.3 “SAP Capabilities” in Get the Most Out of Your SAP Workbook for a list of common SAP Level 1 and Level 2 modules/business capabilities.
4. List the top modules, capabilities, or processes that will be within the scope of this optimization initiative.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

1.3.4 Define your key SAP optimization modules and business capabilities

1-3+ hours

1. Look at the major functions or processes within the scope of ERP.
2. From the inventory of current systems, choose the submodules or processes for this optimization initiative. Base this on those that are most critical to the business, those with the lowest levels of satisfaction, or those that perhaps need more knowledge around them.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Step 1.4

Define Optimization Timeframe

Activities

1.4.1 Define SAP key dates and SAP optimization roadmap timeframe and structure

This step will guide you through the following activities:

• Defining key dates related to your optimization initiative
• Identifying key building blocks for your optimization roadmap

This step involves the following participants:

• SAP Optimization Team
• Vendor Management

Outcomes of this step

• Optimization Key Dates
• Optimization Roadmap Timeframe and Structure

1.4.1 Optimization roadmap timeframe and structure

1-3+ hours

1. Record key items and dates relevant to your optimization initiatives, such as any products reaching end of life or end of contract or budget proposal submission deadlines.
2. Enter the expected Optimization Initiative Start Date.
3. Enter the Roadmap Length. This is the total amount of time you expect to participate in the SAP optimization initiative.
4. This includes short-, medium- and long-term initiatives.
5. Enter your Roadmap Date markers: how you want dates displayed on the roadmap.
6. Enter Column time values: what level of granularity will be helpful for this initiative?
7. Enter the sprint or cycle timeframe; use this if following Agile.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Step 1.5

Understand SAP Costs

Activities

1.5.1 Document costs associated with SAP

This step will walk you through the following activities:

• Define your SAP direct and indirect costs
• List your SAP expense line items

This step involves the following participants:

• Finance Representatives
• SAP Optimization Team

Outcomes of this step

• Current SAP and related costs

1.5.1 Document costs associated with SAP

1-3 hours

Before you can make changes and optimization decisions, you need to understand the high-level costs associated with your current application architecture. This activity will help you identify the types of technology and people costs associated with your current systems.

1. Identify the types of technology costs associated with each current system:
1. System Maintenance
2. Annual Renewal
3. Licensing
2. Identify the cost of people associated with each current system:
1. Full-Time Employees
2. Application Support Staff
3. Help Desk Tickets

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Phase 2

Assess Your Current State

This phase will walk you through the following activities:

• Determine process relevance
• Perform a gap analysis
• Perform a user satisfaction survey
• Assess software and vendor satisfaction

This phase involves the following participants:

• SAP Optimization Team
• Users across functional areas of your ERP and related technologies

Step 2.1

Assess SAP Capabilities

Activities

2.1.1 Rate capability relevance to organizational goals

2.1.2 Complete an SAP application portfolio assessment

2.1.3 (Optional) Assess SAP process maturity

This step will guide you through the following activities:

• Capability relevance
• Process gap analysis
• Application Portfolio Assessment

This step involves the following participants:

• SAP Users

Outcomes of this step

• SAP Capability Assessment

Benefits of the Application Portfolio Assessment

	Assess the health of the application portfolio Get a full 360-degree view of the effectiveness, criticality, and prevalence of all relevant applications to get a comprehensive view of the health of the applications portfolio. Identify opportunities to drive more value from effective applications, retire nonessential applications, and immediately address at-risk applications that are not meeting expectations.
	Provide targeted department feedback Share end-user satisfaction and importance ratings for core IT services, IT communications, and business enablement to focus on the right end-user groups or lines of business, and ramp up satisfaction and productivity.
	Gain insight into the state of data quality Data quality is one of the key issues causing poor CRM user satisfaction and business results. This can include the relevance, accuracy, timeliness, or usability of the organization’s data. Targeted, open-ended feedback around data quality will provide insight into where optimization efforts should be focused.

2.1.1 Complete a current-state assessment (via the Application Portfolio Assessment)

3 hours

Option 1: Use Info-Tech’s Application Portfolio Assessment to generate your user satisfaction score. This tool not only measures application satisfaction but also elicits great feedback from users regarding the support they receive from the IT team around SAP.

1. Download the ERP Application Inventory Tool.
2. Complete the “Demographics” tab (tab 2).
3. Complete the “Inventory” tab (tab 3).
1. Complete the inventory by treating each module within your SAP system as an application.
2. Treat every department as a separate column in the department section. Feel free to add, remove, or modify department names to match your organization.
3. Include data quality for all applications applicable.

Option 2: Create a survey manually.

1. Use tab (Reference) 2.1 “APA Questions” as a guide for creating your survey.
2. Send out surveys to end users.
3. Modify tab 2.1, “SAP Assessment,” if required.

Record Results

Record this information in the Get the Most Out of Your SAP Workbook.

Download the ERP Application Inventory Tool

Download the Get the Most Out of Your SAP Workbook

Sample Report from Application Portfolio Assessment.

2.1.2 (Optional) Assess SAP process and technical maturity

1-3 hours

1. As with any ERP system, the issues encountered may not be related to the system itself but processes that have developed over time.
2. Use this opportunity to interview key stakeholders to learn about deeper capability processes.

• Identify key stakeholders.
• Hold sessions to document deeper processes.
• Discuss processes and technical enablement in each area.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Process Maturity Assessment

Step 2.2

Review Your Satisfaction With the Vendor/Product and Willingness for Change

Activities

2.2.1 Rate your vendor and product satisfaction

2.2.2 Review SAP product scores (if applicable)

2.2.3 Evaluate your product satisfaction

2.2.4 Check your business process change tolerance

This step will guide you through the following activities:

• Rate your vendor and product satisfaction
• Compare with survey data from SoftwareReviews

This step involves the following participants:

• SAP Product Owner(s)
• Procurement Representative
• Vendor Contracts Manager

Outcomes of this step

• Quantified satisfaction with vendor and product

2.2.1 Rate your vendor and product satisfaction

30 minutes

Use Info-Tech’s vendor satisfaction survey to identify optimization areas with your ERP product(s) and vendor(s).

1. Option 1 (recommended): Conduct a satisfaction survey using SoftwareReviews. This option allows you to see your results in the context of the vendor landscape.
2. Option 2: Use the Get the Most Out of Your SAP Workbook to review your satisfaction with your SAP software.

Record this information in the Get the Most Out of Your SAP Workbook.

SoftwareReviews’ Enterprise Resource Planning Category

Download the Get the Most Out of Your SAP Workbook

2.2.2 Review SAP product scores (if applicable)

30 minutes

1. Download the scorecard for your SAP product from the SoftwareReviews website. (Note: Not all products are represented or have sufficient data, so a scorecard may not be available.)
2. Use the Get the Most Out of Your SAP Workbook tab 2.2 “Vend. & Prod. Sat” to record the scorecard results.
3. Use your Get the Most Out of Your SAP Workbook to flag areas where your score may be lower than the product scorecard. Brainstorm ideas for optimization.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

SoftwareReviews’ Enterprise Resource Planning Category

2.2.3 How does your satisfaction compare with your peers?

Use SoftwareReviews to explore product features, vendor experience, and capability satisfaction.

Source: SoftwareReviews ERP Mid-Market, April 2022	Source: SoftwareReviews ERP Enterprise, April 2022

2.2.4 Check your business process change tolerance

1 hours

1. As a group, review the level 0 business capabilities on the previous slide.
2. Assess the department’s willingness for change and the risk of maintaining the status quo.
3. Color-code the level 0 business capabilities based on:

• Green – Willing to follow best practices
• Yellow – May be challenging or unique business model
• Red – Low tolerance for change

Download Get the Most Out of Your SAP Workbook for additional process levels

Heat map representing desire for best practice or those having the least tolerance for change

Determine the areas of risk to conform to best practice and minimize customization. These will be areas needing focus from the vendor supporting change and guiding best practice. For example: Must be able to support our unique process manufacturing capabilities and enhance planning and visibility to detailed costing.

Phase 3

Identify Key Optimization Opportunities

This phase will walk you through the following activities:

• Identify key optimization areas
• Create an optimization roadmap

This phase involves the following participants:

• SAP Optimization Team

Assessing application business value

In this context…business value is

the value of the business outcome that the application produces. Additionally, it is how effective the application is at producing that outcome.

Business value is not

the user’s experience or satisfaction with the application.

First, the authorities on business value need to define and weigh their value drivers that describe the priorities of the organization. This will allow the applications team to apply a consistent, objective, and strategically aligned evaluation of applications across the organization.

Brainstorm IT initiatives to enable high areas of opportunity to support the business

Brainstorm ERP optimization initiatives in each area. Ensure you are looking for all-encompassing opportunities within the context of IT, the business, and SAP systems.

Capabilities are what the system and business does that creates value for the organization. Optimization initiatives are projects with a definitive start and end date, and they enhance, create, maintain, or remove capabilities with the goal of increasing value.

Info-Tech Insight

Enabling a high-performing organization requires excellent management practices and continuous optimization efforts. Your technology portfolio and architecture are important, but we must go deeper. Taking a holistic view of ERP technologies in the environments in which they operate allows for the inclusion of people and process improvements – this is key to maximizing business results. Using a formal ERP optimization initiative will drive business-IT alignment, identify IT automation priorities, and dig deep into continuous process improvement.

Address process gaps:

• ERP and related technologies are invaluable to the goal of organizational enablement, but they must have supported processes driven by business goals.
• Identify areas where capabilities need to be improved and work toward optimization.

Support user satisfaction:

• The best technology in the world won’t deliver business results if it’s not working for the users who need it.
• Understand concerns, communicate improvements, and support users in all roles.

Improve data quality:

• Data quality is unique to each business unit and requires tolerance, not perfection.
• Implement data quality initiatives that are aligned with overall business objectives and aimed at addressing data practices and the data itself.

Proactively manage vendors:

• Vendor management is a critical component of technology enablement and IT satisfaction.
• Assess your current satisfaction against that of your peers and work toward building a process that is best fit for your organization.

Step 3.1

Prioritize Optimization Opportunities

Activities

3.1.1 Prioritize optimization capability areas

This step will guide you through the following activities:

• Explore existing process gaps
• Identify the impact of processes on user satisfaction
• Identify the impact of data quality on user satisfaction
• Review your overall product satisfaction and vendor management

This step involves the following participants:

• SAP Optimization Team

Outcomes of this step

• Application optimization plan

The Business Value Matrix

Rationalizing and quantifying the value of SAP

Benefits can be realized internally and externally to the organization or department and have different drivers of value.

• Financial benefits refer to the degree to which the value source can be measured through monetary metrics and are often quite tangible.
• Human benefits refer to how an application can deliver value through a user’s experience.
• Inward refers to value sources that have an internal impact and improve your organization’s effectiveness and efficiency in performing its operations.
• Outward refers to value sources that come from your interaction with external factors, such as the market or your customers.

Organizational Goals

• Increased Revenue

Application functions that are specifically related to the impact on your organization’s ability to generate revenue and deliver value to your customers.

• Reduced Costs

Reduction of overhead. The ways in which an application limits the operational costs of business functions.

• Enhanced Services

Functions that enable business capabilities that improve the organization’s ability to perform its internal operations.

• Reach Customers

Application functions that enable and improve the interaction with customers or produce market information and insights.

Business Value Matrix

Prioritize SAP optimization areas that will bring the most value to the organization

Review your ERP capability areas and rate them according to relevance to organizational goals. This will allow you to eliminate optimization ideas that may not bring value to the organization.

3.1.1 Prioritize and rate optimization capability areas

1-3 hours

1. From the SAP capabilities, discuss areas of scope for the SAP optimization initiative.
2. Discuss the four areas of the business value matrix and identify how each module, along with organizational goals, can bring value to the organization.
3. Rate each of your SAP capabilities for the level of importance to your organization. The levels of importance are:

• Crucial
• Important
• Secondary
• Unimportant
• Not applicable

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Step 3.2

Discover Optimization Initiatives

Activities

3.2.1 Discover product and vendor satisfaction opportunities

3.2.2 Discover capability and feature optimization opportunities

3.2.3 Discover process optimization opportunities

3.2.4 Discover integration optimization opportunities

3.2.5 Discover data optimization opportunities

3.2.6 Discover SAP cost-saving opportunities

This step will guide you through the following activities:

• Explore existing process gaps
• Identify the impact of processes on user satisfaction
• Identify the impact of data quality on user satisfaction
• Review your overall product satisfaction and vendor management

This step involves the following participants:

• SAP Optimization Team

Outcomes of this step

• Application optimization plan

Satisfaction with SAP product

Improving vendor management

Create a right-size, right-fit strategy for managing the vendors relevant to your organization.

Info-Tech Insight

A vendor management initiative (VMI) is an organization’s formalized process for evaluating, selecting, managing, and optimizing third-party providers of goods and services.

The amount of resources you assign to managing vendors depends on the number and value of your organization’s relationships. Before optimizing your vendor management program around the best practices presented in Info-Tech’s Jump Start Your Vendor Management Initiative blueprint, assess your current maturity and build the process around a model that reflects the needs of your organization.

Note: Info-Tech uses VMI interchangeably with the terms “vendor management office (VMO),” “vendor management function,” “vendor management process,” and “vendor management program.”

Jump Start Your Vendor Management Initiative

3.2.1 Discover product and vendor satisfaction

1-2 hours

1. Use tab 3.1 “Optimization Priorities” and tab 2.2 “Vend. & Prod. Sat” to review the capabilities and features of your SAP system.
2. Answer the following questions:
1. Document overall product satisfaction.
2. How does your satisfaction compare with your peers?
3. Is the overall system fit for use?
4. Do you have a proactive vendor management strategy in place?
5. Is the product dissatisfaction at the point that you need to evaluate if it is time to replace the product?
6. Could your vendor or Systems Integrator help you achieve better results?
3. Review the Value Effort Matrix for each initiative.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Examples from Application Portfolio Assessment

3.2.2 Discover capability and feature optimization opportunities

1-2 hours

1. Use tab 3.1 “Optimization Priorities” and tab 2.2 “Vend. & Prod. Sat” to review the capabilities and features of your SAP system.
2. Answer the following questions:
1. What capabilities and features are performing the worst?
2. Do other organizations and users struggle with these areas?
3. Why is it not performing well?
4. Is there an opportunity for improvement?
5. What are some optimization initiatives that could be undertaken?
3. Review the Value Effort Matrix for each initiative.

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Process optimization: the hidden goldmine

In ~90% of SAP business process analysis reports, SAP identified significant potential for improving the existing SAP implementation, i.e. the large majority of customers are not yet using their SAP Business Suite to the full extent.

3.2.3 Discover process optimization opportunities

1-2 hours

1. Use exercise 2.13 and tab 2.1 “SAP Current State Assessment” to assess process optimization opportunities.
2. List underperforming capabilities around process.
3. Answer the following:
1. What is the state of the current processes?
2. Is there an opportunity for process improvement?
3. What are some optimization initiatives that could be undertaken in this area?

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

Integration provides long-term usability

Balance the need for secure, compliant data availability with organizational agility.

Common integration and consolidation scenarios

For more information: Implement a Multi-site ERP

3.2.4 Discover integration optimization opportunities

1-2 hours

1. Use tab 1.3.1 “SAP Application Inventory” to discuss integrations and how they are related to capability areas that are not performing well.
2. List capabilities that might be affected by integration issues. Think about exercise 3.2.1 and discuss how integrations could be affecting overall product satisfaction.
3. Answer the following:
1. Are there some areas where integration could be improved?
2. Is there an opportunity for process improvement?
3. What are some optimization initiatives that could be undertaken in this area?

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

System and data optimization

Consolidating your business and technology requires an overall system and data migration plan.

Info-Tech Insight

Have an overall data migration plan before beginning your systems consolidation journey to S/4HANA.

Use a data strategy that fixes the enterprise-wide data management issues

Your data management must allow for flexibility and scalability for future needs.

IT has several concerns around ERP data and wide dissemination of that data across sites. Large organizations can benefit from building a data warehouse or at least adopting some of the principles of data warehousing. The optimal way to deal with the issue of integration is to design a metadata-driven data warehouse that acts as a central repository for all ERP data. They serve as the storage facility for millions of transactions, formatted to allow analysis and comparison.

Key considerations:

• Technical: At what stage does data move to the warehouse? Can processes be automated to dump data or to do a scheduled data movement?
• Process: Data integration requires some level of historical context for all data. Ensure that all data has multiple metadata tags to future-proof the data.
• People: Who will be accessing the data and what are the key items that users will need to adapt to the data warehouse process?

Info-Tech Insight

Data warehouse solutions can be expensive. See Info-Tech’s Build a Data Warehouse on a Solid Foundation for guidance on what options are available to meet your budget and data needs.

Optimizing SAP data, additional considerations

Data Optimization

Organizations are faced with challenges associated with changing data landscapes.

Data migrations should not be taken lightly. It requires an overall data governance to assure data integrity for the move to S/4HANA and beyond.

Have a solid plan before engaging S/4HANA Migration Cockpit.

Develop a Master Data Management Strategy and Roadmap

• Master data management (MDM) is complex in practice and requires investments in governance, technology, and planning.
• Develop a MDM strategy and initiative roadmap using Info-Tech’s MDM framework, which takes data governance, architecture, and other critical data capabilities into consideration.

Establish Data Governance

• Ensure your data governance program delivers measurable business value by aligning the associated data governance initiatives with the business architecture.
• Data governance must continuously align with the organization’s enterprise governance function. It should not be perceived as a pet project of IT but rather as an enterprise-wide, business-driven initiative.

3.2.5 Discover data optimization opportunities

1-2 hours

1. Use your APA or user satisfaction survey to understand issues related to data.
   Note: Data issues happen for a number of reasons:

• Poor underlying data in the system
• More than one source of truth
• Inability to consolidate data
• Inability to measure KPIs effectively
• Reporting that is cumbersome or non-existent

1. What are some underlying issues?
2. Is there an opportunity for data improvement?
3. What are some optimization initiatives that could be undertaken in this area?

Record this information in the Get the Most Out of Your SAP Workbook.

Download the Get the Most Out of Your SAP Workbook

SAP cost savings

SAP cost savings does not have to be complicated.

Look for quick wins:

• Evaluate user licensing:
• Ensure you are not double paying for employees or paying for employees who are no longer with the organization.
• Verify user activity – if users are accessing the system very infrequently it does not make sense to license them as full users.
• Audit your user classifications – ensure title positions and associated licenses are up to date.
• Curb data sprawl.
• Consolidate applications.

30-35% of SAP customers likely have underutilized assets. This can add up to millions in unused software and maintenance.

-Riley et al.

20% Only 20 percent of companies manage to capture more than half the projected benefits from ERP systems.

-McKinsey

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