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April 2010
Contents
Executive Summary ...................................................................................................... 1 Methodology .................................................................................................................. 2 A Framework for Evaluating Migration from Solaris to Windows .............................. 4 Framework Cost and Benefit Drivers .......................................................................................... 5 A Model for a Migration of SAP from SPARC/Solaris .................................................................. 5 The Business Case for Migration ................................................................................. 6 1. Summary Economic Analysis ............................................................................................... 7 2. Cash Flow Summary Analysis .............................................................................................. 8 3. Migration Cost Analysis ....................................................................................................... 9 4. Migration Cost Savings Analysis ........................................................................................ 10 5. Migration Value Drivers..................................................................................................... 12 6. Strategic OS Migration Drivers .......................................................................................... 13 Migrating to Windows Server vs. Linux ..................................................................... 14 Conclusions and Guidance ........................................................................................ 16 Appendix A: Description of Cost and Benefit Drivers .............................................. 17
Microsoft and Windows Server are trademarks of the Microsoft group of companies. Solaris is a registered trademark of Sun Microsystems, Inc. UNIX is a registered trademark of The Open Group. Linux is the registered trademark of Linus Torvalds in the U.S. and other countries. All other trademarks are property of their respective owners.
Executive Summary
Microsoft Windows Server is an increasingly popular platform for the hosting of enterprise application workloads such as SAP. More than 65,000 SAP installations run on Windows more than all other platforms combined and almost two-thirds of all new SAP installations are deployed on Windows. That being said, there are many customers with SAP installations running on proprietary Sun RISC-based (SPARC) hardware and the Solaris operating system that have migrated, or are now considering a migration, to Windows Server. There are numerous advantages as a result of this migration, ranging from hard cost savings to IT alignment with strategic initiatives. This paper provides a compelling business case for the migration of SAP from the The ROI of migrating SAP SPARC/Solaris platform to Windows Server on standard from SPARC/Solaris to hardware platforms. We present a cost and value model that clearly demonstrates the quantitative benefits of the Windows Server is 293% over server hardware, operating system and even database a 5-year time horizon, with a software platform migration. The benefits include both payback of 15 months; a tactical, hard costs savings as well as strategic, long-term migration to Windows Server benefits.
provides 110% better ROI Prior Pique Solutions survey research, as well as the than a migration to Linux. research participant screening as part of this project, indicates that more companies are migrating SAP from UNIX to Windows Server as compared to Linux. Our previous research indicated as much as a 3:1 ratio of companies moving to Windows over Linux.
Certainly, a key factor to explain this difference is the economic benefit of migration of the server operating system, and even the underlying SAP database, to Microsoft Windows Server and Microsoft SQL Server, respectively. As our business case demonstrates, a migration to Linux, despite the possible savings in operating system software licenses, clearly does not provide the level of cost savings and business value as compared to a migration to Windows Server. Pique Solutions research found the following key differences: The migration of SAP from SPARC/Solaris to Windows Server and SQL Server provides a rapid payback, an average of 15 months based on the companies studied. This payback even includes an upgrade to the SAP applications as part of the migration investment. The migration also provides a dramatic five-year return on investment of 293%, based on substantial cost savings and business value creation as compared to continuing with the legacy SPARC/Solaris-based installation of SAP. Key benefits include elimination of expensive support agreements, reduction in labor costs and database-related savings. The migration to a Microsoft operating system and database platform provides compelling advantages over a migration to Linux, including a 110% advantage in terms of ROI and a 6-month shorter payback. In addition to the compelling economic benefits, the migration to Windows Server is viewed as strategic, helping companies increase competitiveness, improve business agility and predict IT costs more accurately.
2010 Pique Solutions. All rights reserved. 1
With Suns year-over-year product revenues dropping by 32% last quarter, the longer-term uncertainties associated with the Oracle acquisition, and the grim UNIX server analyst forecasts, organizations evaluating their long term operating system investments would be wise to consider Windows Server and SQL Server for their deployments of SAP. The economic and strategic benefits are demonstrated in this White Paper.
Methodology
Pique Solutions approach to the project consisted of a detailed research and data gathering process which included developing and validating a cost and value model for evaluating the migration from SAP running on SPARC/Solaris to SAP running on Windows Server and/or Linux. The study hypothesis, based in part on extensive Pique Solutions survey research conducted earlier this year, was that there are substantial economic and strategic advantages of migrating SAP from SPARC/Solaris to Windows Server, and that these advantages are far greater relative to a migration to Linux. We constructed a preliminary migration cost, cost savings and business value model based on prior Pique Solutions research and input from SAP migration experts, including a large systems integration firm specializing in ERP migrations. Also included in developing the model was indepth input from two leading IT Advisory firms who analyze and forecast the server market. We selected ERP migration, specifically SAP, for several reasons. Firstly, it represents a businesscritical workload that has wide ranging, intra-company implications across business units, departments and functions. Due to the nature and scope of ERP applications, it also can affect supply and demand chain dynamics. These implications range from tactical cost cutting targets to long-term strategic initiatives. Secondly, in some cases it includes a migration of the SAP database and/or the underlying database operating system. This provides organizations an even greater opportunity for cost savings and business value generation. After a detailed screening process of a pool of 1,500+ potential candidates (a random sample of U.S. companies recruited via a proprietary panel of Sr. IT Decision Makers), we identified and qualified eight interviewees who participated in the detailed, blinded primary research and data gathering process. The data gathering consisted of two phases, a phone interview discussing the migration project, the high level before and after environment details, key cost and benefit information, and the qualitative migration story. The second phase of the interview involved populating a detailed data collection instrument which captured the migration costs, the actual/expected cost savings, the actual/expected business value drivers and the strategic benefits achieved after migration. A few details of the study participants are as follows: Participants were Sr. IT decision makers in companies with more than $1B in annual revenues. Industries represented included IT Systems Integration, IT Services, IT Advisory Services, Wholesale, Manufacturing, Telecommunications, Banking and Financial Services. The pre-migration ERP deployments ranged from a highly centralized, two very large server SAP data center deployment to a very distributed 500 SAP server migration based on a large number of company branches. All but one study participant experienced a server consolidation as the result of the migration project.
All of the participants upgraded to a newer version of SAP in conjunction with the server OS migration; half of the participants also performed a database, or database OS, migration in conjunction with the SAP migration. Based on the primary research and data collection, along with analyzing both private and publicly available secondary research, we revised the migration cost and value model to reflect the results of the primary and secondary research. We also uncovered interesting directional data in the screening process utilized to source study participants. Of the 1,556 potential research candidates for this study, more than 45% affirmatively responded that they had completed some form of migration from Sun Solaris to Windows Sever or Linux. Of those, 17.1% indicated that they had migrated SAP from Sun Solaris to Windows Server, while only 10.9% indicated that they had migrated SAP from Sun Solaris to Linux. Windows Server leads Linux also in the number of migrations of "Other Mission-Critical Workloads" with a compounded advantage of 11.2% over Linux. These results are illustrated in Figure 1. Figure 1. Migration Experience Based on Screener Results
N = 1,556
This directional data is consistent with prior Pique Solutions primary research which indicated an even greater difference in past migrations of ERP systems from the UNIX platform. In the case of Pique Solutions May 2009 survey on UNIX migration, nearly three times the number of participants migrated ERP to Windows Server as compared to Linux. Figure 2 presents the data for the respondents who have previously migrated ERP from UNIX. Figure 2. Number of Respondents who Migrated ERP to Windows vs. Linux
Target platform for those who have migrated ERP from UNIX
25 20 15 10 5 0 ERP UNIX to Windows only
20
7 ERP UNIX to Windows only 1 ERP UNIX to Linux ERP UNIX to only Windows & Linux
N = 28
The framework was designed to support our hypothesis that there is a spectrum of cost savings and value creation ranging from an incremental hardware refresh to a dramatic savings and value creation associated with a migration of SAP to Windows Server and SQL Server as the underlying SAP database. Some SAP customers running on Sun hardware and software may also evaluate a migration to Linux, so our framework quantifies and compares the relative cost and value of Windows Server vis--vis Linux. Figure 3 illustrates the decision points for SAP customers currently running on Sun SPARC hardware and Solaris and the impact of those decisions on cost savings and business value. Figure 3. A Framework for Evaluating a Migration of SAP from SPARC/Solaris
1. SPARC/Solaris to Windows Server Migration
Migration cost Cost savings Business value Strategic benefits
SAP
Windows Server
Database
(SQL Server)
SAP
SAP
Linux Database
(Oracle?)
In many cases, it is at the time of an SAP upgrade when the OS migration happens. The typical payback period for these SAP OS migrations is 1.5-2 years for Windows, and this is based solely on the cost savings." - $5B Global Systems Integration Firm
$1,561,618
$500,000 $0
$675,407
Migration Cost Cost Savings (Investment) Migration Cost (Investment) Cost Savings
$1,092,458
Business Value Business Value
Business Case Summary Migration Cost (Investment) Cost Savings (NPV* of Cash Flows) Business Value (NPV* of Cash Flows) Five Year Benefits (NPV*) Net Benefit (Return Less Investment) Return On Investment Estimated Payback (Months)
*Discount rate for NPV of cash flows = 10%
The financial impact of migrating to Windows was a lot more appetizing than the upgrade on Solaris. - $1B IT Services Firm
Year 1
Year 2
Year 3
Year 4
Year 5
Year 1 Migration Cost (Investment) Cost Savings Business Value Cost Savings + Business Value Cumulative Investment Cumulative Benefit
$675,407 $204,633 $147,787 $352,421 $675,407 $352,421
Year 2
$18,333 $429,730 $310,353 $740,084 $693,740 $1,092,504
Year 3
$18,333 $451,217 $325,871 $777,088 $712,074 $1,869,592
Year 4
$18,333 $545,444 $342,165 $887,609 $730,407 $2,757,201
Year 5
$18,333 $497,466 $359,273 $856,739 $748,740 $3,613,940
Cumulative Cost/Benefit
8
$1,000,000
$4,000,000
Cost Line Item Migration Planning Implementation (Internal) Implementation (3rd party) Training Hardware costs OS licensing costs OS support fees DB licensing costs Travel Admin/Misc. Total (actual; not NPV)
Cost (5YR)
DB licensing costs 3%
Travel 5%
Admin / Misc. 5%
$111,000 $168,000 $144,000 $75,000 $46,667 $24,000 $91,667 $24,500 $36,667 $36,667 $758,167
Hardware costs 6%
A few key elements of analysis from the migration cost research are listed below: The labor costs for the migration planning and implementation represent the majority of the cost of the migration, 56% of the total five-year cost. The primary reason for the substantial amount of cost is that the migration includes an upgrade of the SAP application itself as well as the underlying ERP database migration to Windows SQL Server/Windows Server. Software support fees are the next major cost element, primarily because this is a recurring annual cost of approximately $18K that amounts to about $92K over the fiveyear period. This cost amount is far less than the cost savings from the retirement and repurposing of the SPARC/Solaris OS servers, as illustrated in the next section. New hardware purchase represents 6% of the total five-year cost, with a cost of $46K. Server OS Licensing Costs represent only 3% of the total five-year cost, with a cost of $24K.
Hardware support/maintenance 8%
Cost Savings Line Item Software license (growth) Hardware support/ maintenance OS software support/ maintenance DBMS software support/ maintenance Management/ monitoring software Infrastructure software SAP/OS administration labor Database administration labor SAP/OS operations labor SAP/OS help desk labor Remote/extended workforce enablement Environmental (power/cooling) Platform leverage (integration, collaboration, BI, etc) Future upgrades/releases Other costs/savings Total (actual; not NPV)
2010 Pique Solutions. All rights reserved.
Cost (5YR) $142,393 $175,897 $251,282 $238,717 $25,128 $150,769 $301,873 $180,923 $103,193 $144,068 $117,265 $36,855 $175,897 $71,667 $12,564 $2,128,490
Based on an analysis of the cost savings of the SPARC/Solaris to Windows Server and SQL Server migration, following are the key points: There are a substantial number of cost-saving opportunities fifteen distinct costsaving line items quantified in our research for companies looking to migrate SAP from SPARC/Solaris to Windows. The largest single cost-saving line item results from the reduction in SAP/OS Administration labor at 14% of total five-year cost savings. In nearly all cases, companies were able to reduce the headcount required to support the SAP installation and leverage staffing from other IT projects.
From an immediate perspective, being able to eliminate 3 positions was a huge cost saving. Longer term, it is having consolidated servers and having the same consistent licensing across our locations. - $1B Wholesaler
OS Software support/maintenance (12% of total five-year cost savings) and hardware support/maintenance (8% of total five-year cost savings) collectively represent the largest reduction in cost (20%) and are related to the fact that companies are able to retire expensive SPARC hardware with costly annual hardware and OS software support agreements.
In the past, SAP just ran better on Solaris, but we found that the efficiencies gained from migrating to Windows now made it worthwhile. The cost of Solaris was going up, the cost of SPARC support was going up and, after doing some testing, the Windows version was able to handle it. - $1B IT Services Firm
The savings associated with migration of the database are also very significant, including $239K in savings in DBMS support/maintenance and $180K in Database Administration Labor.
We can save a huge amount on the UNIX box; the licensing fees and the Oracle licensing are more costly than the SQL Server licensing and the management cost is also a factor. In summary, migration of an SAP/ERP to Microsoft SQL Server provides a rapid return on investment and persuasive ongoing cost savings. - $1B Telecommunications Firm
Value (5YR)
$477,435
15%
$502,563
22%
$505,451
19%
$1,485,450
100%
Among the participants interviewed, the three key value drivers that were consistent across the SPARC/Solaris to Windows Server migration participants were increased availability, increased SAP user adoption, and improvements in key financial processes such as order entry. These three elements have roughly an equal impact on total fiveyear business value. The improvement in the order entry process cycle time ranged from 9 - 20%, with an average improvement of 15%. This positively impacts the OrderToCash business process and has direct economic implications in terms of time to cash. A 15% cycle-time improvement in the process can equate to over $500K in value based on the time value of money. Based on the performance and ease of use of the Windows Server-based SAP deployment, all of the interviewees cited an increase in user adoption after migration. The value associated with this is primarily the leverage of existing licenses.
We did not have a uniform system or a centralized system beforehand; so, naturally, when we went to a centralized system that was more uniform and more standard across the company, we had a lot more usage; I would probably estimate the additional usage at 20%. - $1B Wholesaler
All of the interviewees cited an improvement in unplanned downtime which has direct implications on business value, by eliminating the disruption to core financial and human resource business processes and reducing lost revenue for customer and partner facing applications.
Cost savings are not the only motivation to migrate. The resulting landscape is more reliable and scalable, with less unplanned downtime. - $1B Telecommunications Firm
Collaboration was probably one of the other strategic benefits, using SharePoint Server in conjunction with the CRM processes; we definitely see a lot more efficiency from the end users. - $1B Wholesaler
Figure 10 presents the relative advantage of migration from SPARC/Solaris to Windows Server (and SQL Server) as compared to Linux as the underlying OS. Based on our research and analysis: A migration from SAP on SPARC/Solaris to Windows Server offers a better return on investment and a shorter payback period than a migration to Linux, an average of 110% better ROI and a six month shorter payback, respectively. The five-year cost for a migration to Linux is just slightly less (1%) than a migration to Windows Server. Despite the server operating system and user access licensing costs for Windows Server, Linux ongoing subscription support costs are much higher in years two through five. A migration to Windows Server has the potential to improve cost savings by 53% over a migration to Linux. The key areas where a migration to Windows Server provides cost savings advantages over Linux are Administration Labor (OS and DBMS), Database Software Support/Maintenance and Platform Leverage. A migration to Linux does not offer the opportunity for savings from migration of the underlying SAP database and does not offer a significant savings in OS administration staffing cost because a migration to Linux does not present a significant staffing skill-level transition. A migration to Windows Server also provides potential advantages for business value generation. Based on our analysis, a migration to Windows Server can improve business value by 25% vis--vis a migration to Linux over five years.
2010 Pique Solutions. All rights reserved. 14
$1,561,618
$1,092,458 $873,966
SPARC/Solaris to Linux
SPARC/Solaris to Linux
No, I didnt [evaluate Linux]. I do have 2 or 3 Linux boxes out there, but my opinion is that ERP should not be on an open code system for performance, security, peace of mind, and support considerations. - $1B IT Services Firm
2010 Pique Solutions. All rights reserved. 15
Organizations can achieve 110% greater 5-year ROI and a 6-month faster payback by migrating SAP from SPARC/Solaris to Windows Server rather than to Linux.
In addition to the economic and strategic reasons for migrating from Sun Solaris, the issue of risk mitigation is also of importance. Oracles pending acquisition of Sun Microsystems, heading toward a potentially lengthy dispute with the European Commission, presents many uncertainties as to the future of Sun products, and creates unnecessary risks for companies tied to Solaris and SPARC. Based on the results of this study, those organizations running SAP on Suns hardware and software would be well served to: Evaluate their current cost profile for the SPARC/Solaris SAP installation and determine the future year cost increases based on aging hardware and software; Analyze new hardware options that may offer dramatic price/performance increases and environmental cost savings over existing hardware, including servers utilizing multicore processors from Intel and AMD; Look at the opportunity to not just migrate the SAP applications to a new operating system and server platform, but also the underlying database housing the SAP data; Consider an operating system migration to Windows Server if evaluating an upgrade from a previous version to a new version of SAP; Compare the costs and benefits of a migration to Windows Server and SQL Server to a migration to Linux, utilizing a similar framework as presented here that incorporates a broad range of cost of ownership, business value and strategic considerations; and Analyze and monitor risks associated with the uncertainty around Sun Solaris created by the pending acquisition of Sun by Oracle.
Description
Planning costs prior to migration Internal labor for migration activities including installation, configuration and testing 3rd party labor for migration activities including installation, configuration and testing Training investment for new OS platform New hardware purchased for the SAP migration Server OS licensing costs and user access costs On-going server OS support costs (annual) Licensing costs for new database/database migration (if applicable) Travel costs associated with migration Admin/miscellaneous costs associated with migration
Description
Consolidation, virtualization and increased performance potentially reduce ERP and related server application software licensing fees SPARC retirement, consolidation, virtualization potentially reduce ERP hardware footprint and retire legacy hardware support agreements Solaris retirement, consolidation, virtualization potentially reduce ERP software footprint and retire legacy software support agreements Database retirement, consolidation, virtualization potentially reduce database software footprint and retire legacy software support agreements Potential elimination of 3rd party management/monitoring software & associated support agreements Potential elimination of 3rd party infrastructure software & support agreements Savings in OS administration/mgmt efficiency; lower headcount and better leverage for infrastructure stack Savings in DBMS administration/mgmt efficiency; lower headcount and better leverage for infrastructure stack Savings in operations efficiency; lower headcount and better leverage for infrastructure stack Savings from fewer support calls to help desk; better skill leverage for help desk (no need for specialized training) Savings to support remote/extended workforce; WS08 provides more automated tools for provisioning remote workers Savings associated with consolidation/better hardware performance (reduced space, power and cooling costs) Savings associated with leveraging Windows infrastructure (collaboration, business intelligence, desktop OS, etc.) Savings associated with OS upgrades/major releases
Description
Business value advantage based on the increased availability Business value of increased adoption rates of SAP and use of licenses previously purchased Certain business processes are completed faster resulting in process specific business value
Description
Improvements in ERP after migration improve the competitive position of a company, particularly as it relates to supply and demand chain improvements As ERP is a mission-critical element of the application infrastructure, time to market advantages in deployment can translate into enterprise level time to market advantages Microsoft licensing, software assurance and support policies provide long term predictability of IT costs Access to a broader and more affordable skill base of employees and certified partners Standardizing more of the IT infrastructure on Windows Server enables more consistency in the application of best practices for IT UNIX and Linux infrastructures, by nature, have a high degree of tailoring and customization which can introduce risk in terms of staffing, agility and IT management
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2010 Pique Solutions. All rights reserved. 18