using core sap application services as a strategy for ... · using core sap application services as...

© 2017 Cognizant© 2017 Cognizant

May, 2017

Using Core SAP Application Services as a strategy for Digital Transformation

© 2017 Cognizant

1. Raise operating income growth target from $400 to $600-650 million by the end of fiscal 2018

2. Improve customer experience and productivity in all areas

CLIENT STATED GOAL

CurrentState

SAP non-SAP Build

InnovationsIOT, Sensor based distribution, Mobile Commerce, Customer Satisfaction

20 M$ Build Cost

TransformM&A IT integration(Modular, Scalable), Ecommerce + mobile digital transformation, SAP, SAP BI

Software Costs12 M$ Infrastructure, 18 M$ COTS Applications

SAP non-SAP Run

FTE (Internal/ Contractors)

80 M$ Running Cost

60 M$ Sysco + Brakes

5 M$ Acquisition costs

5 M$ Projects

10 M$ Run infrastructure

40 M$ Sysco

20 M$ Brakes

6 M$ Healthcare24 M$ Restaurants10 M$ Others

6 M$ UK10 M$ EMEA4 M$ Others


1895 1912 1937 1968

Breakthrough Event


- 30 - 35% Savings in a 3 year contract

- 40 - 45% Savings in a 5 year contract

- Savings applied to Digital Transformation

all that is possible

which can’t be eliminated

residual work silos

after synergizing

for business value

Eliminate

Automate

Synergize

Industrialize

Transform


5 years ago As is

Cognizant has and is taking clients here !

RunningCost

BuildCost

RunningCost

BuildCost

RunningCost

BuildCost

1. Contract was signed years ago

2. No incentive to deliver to the best in class services

3. Incumbents give contractual benefits while wanting

to maintain headcount and revenues

4. Innovations of cloud, automation, digital and other

SAP product roadmaps were not foreseen when the

contract was signed

Goal


“ZERO MAINTENANCE”

Engagement Mode

Spend

T&M

Zero

Mai

nten

ance

Managed Services

~$W+$X+$Y $0*

Contract Period: 3 Years

Managed Capacity

App Dev

Cogn

izan

t

Oth

ers

APP Support

+

Cogn

izan

t

App Dev

Cogn

izan

t

Oth

ers

Cogn

izan

t

QA+QA

Cogn

izan

t

Oth

ers

Infra

Cogn

izan

t

Oth

ers

Agreed minimum commitment on CTB spend | Accelerated Transformation | App Dev model maturity

So allow us to cannibalize our run the business (RTB) revenues, so you spend “zero” on maintaining your applications

Proposal Powered by

Zero Maintence App Support

Cogn

izan

t

Oth

ers

$W $X $Y $Z

Cogn

izan

t

Infra


Application changes to

support business growth

Technical Debt

Operational Debt

Functional Debt

Knowledge Debt

Compromised code quality

Lack of Process & Tools

Limited / No changes

No Documentation

Incidents

Manual Effort

Requests

Turnaround time

Mul

tiply

ing

inte

rest

Fuel business growth Procure loans Pay interest

Gating Process

Control Bad Debt

Proactive Services, CSI and Transformation

Reduce principle

Increase Maintenance spend for Business

Continuity

Keep paying interest

Manage Debt through….

ASSE

SSM

ENT

Maintenance Strategy

Avoidable debt

Unavoidable debt

Debt Classification

Residual debt

LEAD

ING

TO

Remediation

Holistically analyzes SAP and non SAP applications support as debt in four dimensions : i.e. Technical, Operational, Functional and Knowledge,

Industrialize

Cost Savings

IncreasedResiliency

Improved Time to ValueSynergize

Transformation StrategyApplication Portfolio Rationalization

CloudDevOps

Business Value Management

Innovation

Faster time to market

Manual effort reduction

Proof Point: By reducing overall debt by 54%, Cognizant achieved a TCO reduction of ~ 50% over 3 years for a major Retailer

Eliminate

Automate

Outcomes


- Intelligent Process Automation (IPA)

- IT Plan, Build & Run automations

-Automation BOT’s

- Incident Reduction

- App Strengthening

- Proactive monitoring

-RTB (DevOps, Cognitive Automation, Business Value Management)

-CTB (Next Gen Infrastructure, Digital business, Advanced Analytics)

-Cyber Defense & Security)

-Lean / ISMO

-Shift Left L 1.5) & Shift Right (L 2.5)

-DevOps / Kanban enablement

AVMBase Cost

7%

6%

10%

7%

5%

10%

~55%Run Cost

- Right Shoring

- Consolidation

- Scale Efficiency

- Global delivery

100%

-Catalogue based Service

-Process, policies and procedures

-Tools adoption & Automation

-SLA / Outcome based service

Inde

x

Industrialize

Automate

Synergize

Transform

Eliminate

OR MORE

100%

0%

Rework on LeversSame Sequence

Potential - 40 - 45% or more Savings in a 5 year Engagement …


Eliminate Automate Synergize Industrialize Transform

Why it will be faster with Cognizant ?

Market Today

Key Reasons which prohibit “Elimination” in client SAP AVM environments

1. Protect Revenues mentality

2. Holistic framework to identify and deliver on “Elimination” opportunities

Cognizant's POV

1. Upfront Commitment : Cognizant commits to Eliminations in SAP AVM contracts and passes savings upfront (Do it or lose it model)

2. Case Study: For a large Life Sciences client, we saved 20M+ over 3 years through eliminating work that was avoidable

Eliminate

Automate

Synergie

Industrialise

Transform

7%

45%

Breaking down Savings & levers enabling it .. Eliminate


OUTPUTS

Workforce

Increased Service Levels

ImprovedAvailability

INPUTSIncidents

Process

SourceCode

SERVICE MANAGEMENT & DATA ANALYTICS

Influx Reduction ApproachSEGREGATION

Inch Deep Mile Wide- Duplicates- Redundant- Repeating- Reoccurring- False positives- Non actionable- Invalids

Inch Wide Mile Deep- Application stability- Architecture- Design flaws

Root Cause Analysis

Trend/ Pattern Analysis

Automations

Pro Active Monitoring

Architecture Analysis

Performance Analysis

INPUTSIncidents

Process

SourceCode

Incidents - Inch Deep Mile Wide(Large in #s, low complexity e. g Job

Failures, code erros)

Incidents - Inch Wide Mile Deep(Fewer, high complexity e. g Application

stability, Architecture)



Why it will be faster with Cognizant ?

Market Today

Key Reasons which prohibit “Automation” in client AVM environments

1. Inadequate focus on Change Management leading to take off and In-flight failures

2. SI Proprietary platforms that bring inflexibility and limitation in delivering on “Automate” Opportunity

Cognizant's POV

1. Open Architecture Automation Platform : Cognizant has an open architecture automation platform that allows us to use best of breed tools, reuse client innovation and avoids vendor lock in

2. Case Study: For a large retailer, Cognizant saved 7m USD due to automation in 18 months

Eliminate

Automate

Synergie

Industrialise

Transform

7%

45%

Breaking down Savings & levers enabling it .. Automate

10%


Premier Partnerships & Relationship

Open Architecture

Faster time to Market –3150+ Reusable Bots

Adaptable to client IT Landscape

Fit for Purpose

Avoid Vendor Lock In

Enterprise Automation Scalability

Capability Chain Integration




Why it will be faster with Cognizant

Market Today

Key Reasons which prohibit “Synergize” in client AVM environments

1. Silos at Service Provider and Client end … difficult to orchestrate Change Management

2. Multi Vendor scenarios allowing pursuit of only their own IT SLAs

Cognizant's POV

1. Synergized offering : Cognizant proactively leads discussion with clients to bridge gaps between silos irrespective of who the infrastructure partner is. Our SIAM office moves the organization to move away from SLAs to OLAs

2. Case Study: For a leading American retailer, Cognizant saved 20% costs by integrating a common L1.5 utility layer

Eliminate

Automate

Synergie

Industrialise

Transform

7%

45%

Breaking down Savings & levers enabling it .. Synergize

10%

5%


Southwest low cost carrier and is the largest purchaser of Boeing 737

Cost Savings from Simplified People, Process and Technology

KEDB

Left Shift - SOP addition to ISmO

ISmO

KEY BENEFITS

- Left Shift strategy to improve service efficiency

- KEDB Enrichment through SOP / Workaround /

Run book Automation

- Demand Reduction

- Delivering to common OLAs

Service Desk

Infra L2

Infra L3App L3

App L2





Market Today

Key Reasons which prohibit “Industrialization” in client AVM environments

1. Lack of Focus on “Fit for use” vs “Fit for purpose”

2. Execute on Industrialization in repeatable way over time

Cognizant's POV

1. Business Aligned Operating Model : Cognizant enables “best in class” services via a catalog based services model, driven by continual service improvement(CSI)

2. Case Study: For a large insurer, Cognizant saved 35% using service industrialization, while improving ticket resolution by over 15%

Eliminate

Automate

Synergize

Industrialise

Transform

7%

45%

Breaking down Savings & levers enabling it .. Industrialize

10%

5%

13%


Support Master Service Catalog

List of Services (Standardization)

- Service Catalog as the Point of Reference

- Support Service Catalog internalized in delivery

framework

Processes, Policies and Procedures

(Industrialization)- Industrialized Processes

- Standard Policy and Procedure manual

- Tied to Delivery Audit Framework

Tools adoption (Automation)- Service based Tools

architecture- Holistic tools vision &

implementation- Service analytics and

automation

SLA Maturity (Outcomes)- Integrated metrics Framework- Progressive outcome based

metrics maturity





Market Today

Key Reasons which prohibit “Transform” in client AVM environments

1. Lack of Focus on “Fit for use” vs “Fit for purpose”

2. Execute on Industrialization in repeatable way over time

Cognizant's POV

1. Transformation Levers: Cognizant utilizes its proprietary SimpliFIT framework to assess opportunities around Simplifications, modernizations and security (e.g. Application portfolio rationalization, cloud enablement, DevOps, cognitive automation etc) followed by Best in Class execution

2. Case Study: For a large auto manufacturer we enabled 20% Opex reduction via a Simplifit implementation and enabled a 10% faster time to market

10%

5%

15%

8%

Eliminate

Automate

Synergie

Industrialise

Transform

7%

45%

Breaking down Savings & levers enabling it .. Transform

10%

5%

13%

10%


BUSINESS PROCESS

APPLICATION

DATA

INFRASTRUCTURE

Tech

nolo

gy S

tack

implify ITS odernize ITM ecure ITS

IT OPERATING MODEL TRANSFORMATION

1

CYBER DEFENSE & SECURITY

6

IT OPTIMIZATION & MODERNIZATION

2

INTELLIGENT AUTOMATION

NEXT-GEN INFRASTRUCTURE

ADVANCED DATA & INFORMATION

ANALYTICS

3 4 5

Helps enterprise transition to future ready nimble & agile organization

Helps to simplify IT ecosystem to run at optimal TCO and modernize to enable Digital front-end

Architect Next-Gen IT infrastructure that is every ready and auto-scalable

Helps customers to predict behavior and unlock high value

Accelerates speed to responses through Cognitive Intelligence

Helps enhance Enterprise IT

security for advance cyber

threats

Run the business Transformation

Change the business Transformation

Commercial model transformation

10 – 40% productivity savings passed upfront – Risk is on us!

Constantly Ready Infrastructure

Optimized Legacy environment

Secure & Resilient Operations

Digitally ready , Lean IT Portfolio

Assess Implement Measure



IT OPERATING MODEL

TRANSFORMATION

CYBER DEFENSE & SECURITY

IT OPTIMIZATION & MODERNIZATION

INTELLIGENT AUTOMATION

NEXT-GEN INFRASTRUCTURE

ADVANCED DATA & INFORMATION

ANALYTICS

Assess Implement Measure

SimpliFIT

Application Portfolio Rationalization (APR)

Agile/DevOps

Cloud Readiness

IT Process, tools & Architecture

IT Org redesign

Zero Maintenance

Performance, Security & Compliance

ASSERT ProcessNEXT QA maturity

Tools, processes & architecture assessment

SDLC & Tools

OneAgility DevOps Maturity

What is the organization Agile & DevOps maturity?

Organization Change ManagementAs-Is org state

Tech Debt Baseline - CAST

ACE -Platform based APR

What apps to Retire/ Retain/Reengineer and

Replace

Cloud readiness Assessment

On-prem vs Cloud ( IAAS/SAAS/PAAS)

decisionReplace/Re-factor/Re-engineer/Re-host/Re-platform

Saas->PaaS->Iaas

Debt Management

Text analytics

Zero Ops automation assessment

AM, Infrastructure & QA Automation opportunity

QA Automation

Risk, vulnerability & threat management assessment

Performance Baselining

Compliance –PCI, FDA, HIPAA..

Performance , security & compliance baseline

As-Is Org baseline and change required for to-be

organization

IT – Business Alignment BVM

Enterprise Architecture



Due Diligence5 weeks

Due Diligence Play Back1 week

Proposal Update1 week

Complete a zero maintenance framework analysis

Present Summary of key findings across industrialization, automation & transformation

Summary of key solution tenets

Present proposal on Application services on agreed scope

Completed data collection

Identification of debts

Ticket analysis of L1/L2/L3 & L4

Automation opportunities

Transformation opportunities

Play back of key findings Cognizant proposal on RTB aligned to outcomes

Activ

ities

Key

Deliv

erab

les

Fixed Price 120K

proposal


Based on the digital footprint diagnostics we found out….

… Meeting Order delivery timelines is very crucial for Retail Customer’s business.

…delay in order delivery results in significant losses and end customer dissatisfaction

… no clear cut calibration of order delivery TAT (Scientifically not done)

Benchmarking current performance & identifying targets….

We studied existing business process, identified KPIs,benchmarked and calculated the targets to meet Business Outcome

Order delivery SLA’S are not

met 100% across all order types

100%

• Business processes mapped to IT components viz. Application, Infrastructure

% on time delivery of Orders

92.5% 95%

Bring down the current process cycle time to BIC target

Current StateBest in Class Industry Avg.

Key inferences….

Process variations, breaches/hotspots identified

Suggested improvements in cleaning up obsolete business

rules in OMS, Waving performance improvements

Manual processes increasing order delivery timelines across

all order types

Some orders are found to be getting struck with

vendor checks

Delays due to inventory sync issues, processing delay @ stores,

scheduling delays

Location optimization in warehouse by reserve

balancing and slotting -help in travel reduction

for picking & replenishing

Potential improvements

Standard OrdersApprox 43 Mins

Priority 1 & 2 Orders Approx 35Mins

BOPUS Orders5 Mins

An large North American

department store retail chain


Engagement Maturity• Capacity based service model.

• Scope of services managed based on Volume of Tickets.

• Need to move to a higher level of maturity from an initial co-sourced model to an end-to-end Managed Services Model.

Operating Model

Cog. Presence / Scope• Fixed capacity for the scope of services.

Engagement Maturity

Operating Model

• Services cataloged into menu card of services defining fulfillment needs and coverage.

• Outcome based SLA.• Business variability based finance model.

• Outcome based Service Model.

Before AfterLevers Applied (Solution)

• Enhanced end user experience through 200% increase in First level Resolution.• 30% Cumulative TCO reduction over last 3 years.• Estate Rationalization – Application inventory reduced by 40%.• 71% of First Level Resolution rate.• 17% Y-o-Y reduction on total incidents.• 23% reduction in MTTR in the last year.

Bene

fits

Services AMS (L1, L2 and L3 Support)

Biz. Life Sciences

FTE s 750+

$ Saving $20M savings - 3 Yrs.

Location Multi Geographical presence

Tech Unix, Oracle, SQL Server, AIS & MIIS, BIIS, Wintel

People• Resource independent model.• Left Shift approach.

Process• Catalogue based delivery.• End to End Service Management.• Service Based pricing Model.• Portfolio Rationalization.• Business Aligned Service Delivery.

Tools• eServe– Automation of Application specific

monitoring.• FeatherLite – Constant House Keeping of

Incidents/Problems.

EngagementCharacteristics

using core sap application services as a strategy for ... · using core sap application services as...

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