Back to School for CIOs – Relearning the Value of AMS

Blog /Back to School for CIOs Relearning the Value of AMS
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AMS evolves from cost cutter to transformation partner

Let’s be honest, application management services (AMS) have never been a sexy component of the IT world. Typically outsourced, AMS have historically been viewed as ‘keeping the lights on’ work, but by helping organizations manage their business applications, AMS have always played an important role in increasing operational efficiency and containing costs. In addition, a big value driver for outsourcing AMS has always been freeing up internal resources to focus on more innovative and strategic initiatives.

Providing full lifecycle management — development, implementation, maintenance, optimization, support, modernization, migration, end-of-lifing, etc. — for the multitude of applications businesses rely on has never been an easy task. Today, however, when we consider the proliferation and ascension of technology in business, the accepted truism that every company is now a technology company, the blinding speed with which technology evolves and advances, and the wholesale business transformation technology is driving, AMS vendors with the right stuff are being re-discovered and re-embraced as strategic business partners vital to success, transformation and growth.

As such, CEOs, CIOs and CFOs and are going back to school on AMS, relearning how to get more value out of AMS spending, more value out of their technology investments, and more business impact from their digital transformation initiatives. To succeed on all of these fronts, internal IT and outsourced AMS must forge a new, tighter, more productive and strategic partnership.

Applications are at the heart of digital transformation, and the only constant in transformation is change. Applications are moving to the cloud. Agile and DevOps methodologies are reinventing the way development and operations teams design and deliver applications. New practices like design thinking and Kanban are elevating speed and time-to-value over lengthy, complex project cycles. Those in charge of enterprise applications must look beyond established practices and accelerate the pace of translating business needs into application opportunities.

The standard approaches to application development and management no longer suffice as the drive to be more agile and deliver solutions faster with higher quality at a lower price becomes stronger than ever.

The onus today is on IT and AMS to work in concert to investigate new technologies and trends, define the specific business opportunities they make possible for your organization, and continuously and quickly deliver iterative releases of multiple applications that delight end users and advance business. Change is constant, the stakes are high, complexity reigns, urgency prevails, and missteps at any point along the IT value chain can be disastrous.

AMS on the rise (and rising to the cloud)

In addition to the transformation pressures discussed above, when you consider that an estimated two of every three IT dollars is spent on day-to-day maintenance and support of existing technology, it is no surprise that outsourcing application management services is on the rise.

Grand View Research valued the global AMS market at $52.99 billion in 2015 and forecasts it to reach $86.60 billion by 2025. According to Technavio, the global AMS market reached $83.16 billion in 2016 and will experience CAGR of 4.75% to reach $105.02 billion by 2021.

Migrating your core business applications to the cloud is not a question of ‘if ‘but a complex riddle comprised of when, what, which order, how much and what flavor. There is no cookie-cutter template for cloud migration — each organization must map out a holistic, strategic plan for migration that best suites their specific IT needs and business goals.

Given this complexity (and the resulting confusion), an increasing number of businesses are looking to service providers with the requisite expertise, experience and resources to guide their cloud migration strategy, host their applications and provide the end-to-end managed services needed to accommodate dynamic business requirements and aggressive growth goals.

Pundits concur on the strong and growing market for cloud managed services:

  • MarketsandMarkets predicts the cloud managed services market size is estimated to grow from $35.54 billion in 2016 to $76.73 billion by 2021, at an estimated CAGR of 16.6%.
  • According to Technavio, the market for cloud-based managed services will have a 20% CAGR from 2016 to 2020.
  • A study conducted by 451 Research (as reported in Forbes) finds that 64% of IT leaders predict they will buy cloud management platforms from service providers in 2017, and 57% of IT leaders expect to partner with Managed Service Providers (MSP) and Managed Hosting Providers (MHP) for both hybrid cloud and multi-cloud initiatives.

Run SAP Like a Factory (on steroids) with SolMan 7.2

“Run SAP Like a Factory” is an approach developed by SAP (and adopted and refined by SAP partners) to efficiently operate and continuously improve the operations of customer’s productive SAP and non-SAP solutions. The objective is to operate SAP and other applications with minimal costs and effort leveraging SAP Solution Manager and Application Lifecycle Management Solutions. In its full extent, Run SAP Lke a Factory implements an Operations Control Center (OCC) at the customer side.

A comprehensive strategic management tool, SAP Solution Manager (SolMan in industry parlance) is a functionality-rich tool set that supports the entire life-cycle of SAP applications, centralizes management of entire IT landscapes and monitors vital business processes. SolMan benefits include lowering total cost of ownership, optimizing performance, and reducing risk associated with implementations, upgrades and additions to your SAP landscape.

SolMan is an ever-evolving tool set with decade-old roots. It is a solution that will continue to grow in complexity and functionality over the coming years. Mainstream maintenance of SolMan 7.1, which debuted in September 2011, is discontinued at the end of 2017. The general availability of SAP Solution Manager 7.2 was released on the 15th of August 2016 in the form of Service Pack 3 (SP3).

There are many compelling reasons for SAP customers to upgrade to SolMan 7.2. The most compelling of these reasons tightly synch with advancing your organizations’ digital transformation journey.

Here are just a few:

  • Revamped Business Process Management - A fresh business process management architecture and graphical process modeling significantly improves the communication between the business and IT and enables building and defining business processes beyond the 3-level hierarchy structure.
  • Agile Project Management – SolMan 7.2 supports the necessary feedback loops to allow for projects to run, be built and deployed in incremental phases. New real-time dashboards add new levels of reporting. The Focused Build Dashboard gives the project management team a real-time view of the project, including requirements tracking, issue logs and testing progress. The Focused Insights Dashboard provides real-time support for governance, operational and strategic initiatives.
  • Modernized UI – A Fiori-based user experience built on SAP UI5 technology enables end users to configure a personalized launchpad tailored to their specific needs and, for the first time, to access SolMan on their mobile devices.
  • Hybrid (On-premise/Cloud) Support – SolMan 7.2 supports hybrid architectures combining, by definition, on-premise and cloud environments, facilitating both administrating and supervising platforms, as well as implementation of functional hybrid scenarios which require complex interfaces.
  • SAP HANA Support – SolMan 7.2 supports SAP HANA, this means that SolMan 7.2 customers can use HANA’s database without additional license cost (the “material” part still needs to be financed of course). Accordingly, SolMan 7.2 can serve as your first HANA platform to test the waters, promote internal adoption, and familiarize yourself with its installation, operation and daily use. For good reasons, SolMan 7.2 is recommended by SAP for supporting an S/4 migration. Yet even without an S/4 project in the immediate future, the enhanced features, functionality and capabilities described above should make SolMan 7.2 a high priority among SAP application users and their outsourced SAP AMS providers, particularly those looking to accelerate transformation.

What to look for in your AMS provider

Outsourcing your SAP application management work to an experienced AMS provider affords the best (and perhaps fastest) way for your organization to reduce TCO, optimize application performance and accelerate transformation. But not all SAP AMS vendors are alike…

While cost is certainly important, it is only one factor that should be considered when selecting a vendor for SAP AMS services. Demonstrable implementation success, a proven track record with strategic, transformational consulting and industry-specific business process expertise are equally vital.

Here are a few key things to look for when looking to outsource part or all of your SAP application maintenance and support activities:

  • SolMan excellence - Any SAP AMS vendor worth their salt knows Solution Manager front-to-back and top-to-bottom. Solution Manager requires the honed technical skill of a BASIS rock star or two working closely with knowledgeable business process experts to yield maximum value. And BASIS rock stars and seasoned business process experts are not easy (or inexpensive) to come by, and are equally difficult to retain.
  • Beyond technical competency - Superior AMS vendors possess the experience-based know how to ensure upgrades or functional enhancements to business applications strictly align with immediate business needs as well as future growth targets. Knowing when to upgrade is only part of the success formula. In today’s era of transformation, AMS vendors that provide expert guidance on the whys, hows, whats and whens of upgrading or migrating are equally essential.
  • Experience & skin in the game – You want AMS consultants with deep understanding of SAP solutions past, present and future and the knowledge-transfer skills that ensure you fully utilize the software products offered via cloud delivery and take full advantage of integration possibilities.

You also want an AMS partner who has invested heavily in SAP, cloud and related technologies, as well as proprietary tools and accelerators, which will reduce project timelines and ensure your organization capitalizes on the very latest innovation possibilities.

Contact NTT DATA today if you want an outsourced AMS partner ready, willing and able to accelerate your transformation journey.

Post Date: 9/6/2017

NTT DATA Services Kennan Syverson Kennan Syverson

About the author

Kennan Syverson is the Senior Director of Sales Engineering for Enterprise Resource Planning (ERP) applications at NTT DATA. He has 30 years of project management, configuration, design, and implementation experience with ERP software packages and has played lead and supporting roles in numerous enterprise-wide ERP implementations across an array of industries. Mr. Syverson has deep experience in all stages of the ERP software package implementation and support.

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