In this article you will get to know typical approaches to making a decision about the number of production instances of an ERP system (e.g. SAP S/4HANA) or other major SAP enterprise solution.
The current system architecture at customer running SAP environments reflects in many cases not the result of conscious architectural decisions but are historically grown and product of short-term necessities at certain points in time.
Going for a major transformation or renovation often raises the question of which instance strategy will be the best fit for the company’s future. We use the term Instance Strategy for the question how many repetitions of the same or almost the same system would serve the requirements best. The criteria and methodology given here can be applied to different SAP solutions. Typically, it’s assessed for SAP S/4HANA solution but also to SAP ERP, SAP Extended Warehouse Management, SAP Transportation Management, MII or other solutions.
The SAP services organization, including the authors of this article, offer guidance in the decision process along the methodology described here under the name Instance Strategy Service. We have a long record of these services as well as the experience and tools to make the process efficient and deliver the right set of documentation for a specific customer situation. But we also see that there are organizations that feel capable of performing it by themselves. With this article we want to support them.
We want to focus here on various patterns:
|1.||In this option there is only one instance that would serve all parts of the organization, across regions or divisions of the organization. It is often the desired to-go solution when doubts about its applicability can be overcome.|
|2.||In the regional instance strategy different regions of the organization are served from regional solution instances. Regions are often whole continents or continent groups in global companies but can also follow smaller localities such as single countries or even geographical areas within a country.|
|3.||In the divisional instance strategy, the application instances follow the division of a company. They can be by brand, product line, business model or along some ownership borders.|
|4.||There is a multitude of other options, mostly hybrids of the above and functional splits. The same criteria and method can be applied for them.|
SAP colleagues have written a whitepaper SAP Production System Strategy as best-practice document, summarizing trends and observations in the market and experiences from interactions with SAP customers who were in the process of considering different options. Please refer to the whitepaper as the information provided will not be repeated in this article.
The evaluation should be performed in a team approach bringing stakeholders and experts from different areas together, representing business, IT department, different LoBs, Enterpise and Solution Architects.
The methodology consists of a 5-step approach
Options should be technically viable. They should be described detailed enough so that pros and cons can be discussed. For that the number of instances should be concretely given as well as what parts of the business those would host. Besides production instance placement the options should also give some idea of the landscape of supporting development and quality systems. We recommend narrowing viable options down to a number of 3 options that can be considered and discussed in more detail.
A catalog of typical criteria is given below. They should be understood and evaluated in their suit for the specific situation. A relative weight can be introduced when it is felt that some criteria are more important than others.
An expert quorum looks at each of the criteria for each option and collects arguments in favor or against the model related to these criteria. They are noted down to document the decision finding process and allow reviewing.
A score of 0 to 5 points is assigned for each combination of criteria and options. 5 would be the most favorable rating, zero the least favorable. It is advised to use the whole spectrum, to make clear distinctions between the results.
The spreadsheet we provide below automatically creates some graphics on the results showing the total score and the score along the criteria. A typical result is that no option would win in all criteria but will have disadvantages in some. Together with the collected arguments a clear documentation of the decision on the instance strategy can be reached. If a quantitative assessment of scores ends up with a draw, qualitative arguments become of importance to illustrate the tradeoff and support a final decision.
The best-practice criteria are
Fit to corporate strategy
Does the solution support key corporate strategic and operational goals?
· Ability to support growth, internationalization, profitability objectives
· Strategic initiatives (mergers & acquisitions, cooperation, disinvestments, shared services, outsourcing, …)
Business fit and flexibility
Does the solution fulfill all of the future business requirements?
· Flexibility to support (future) global (or cross sites) processes
· Support for harmonized business processes and data – where required
· Ability to support sharing and adaption of best practices
· Support of global compliance requirements
Size, Scalability and Performance
Can all options support current and future demand on size, scalability and performance?
· Management of technical development complexity
· System and network performance
Software Change Management and Maintainability
Which approach is best from an IT process point of view?
· Software change mgmt. flexibility
· Availability and planned downtimes
· Integration to SAP and non-SAP systems
· Security aspects
Risk of operation
Which approach minimizes risk and risk impact the best?
Long-term IT costs
Which approach has the best IT cost model?
· HW, SW, labor costs (incl. cost for integration)
Cost and risk of transition
Which option has the least cost and risk of transition to the future state?
· Impact on project timelines
Under this LINK you will find the spreadsheet that you can use as accelerator for your decision-making in accordance with the principles described above.
We have empowered you to follow a best-practice methodology for the decision on the best instance strategy for your SAP solutions in simpler cases. We also provide a whitepaper with the typical talking points and a spreadsheet for download that can be used to guide the discussion and visualize results. For more sophisticated Instance Strategy decisions or to address those in connection with adjacent topics to this decision (e.g., Solution Architecture, Roll-out strategy, Change Management governance), we recommend contacting your SAP account executive or SAP Technical Quality Manager.