Managing R/3: A New Approach for a New Millennium

As the need for strategic enterprise resource planning grows, SAP R/3 rises to the top of the ERP ladder, with its clent/server software used by nearly half of the world's Fortune 500 companies.

• 06/01/1999

Enterprise resource planning (ERP) applications, such as SAP AG’s R/3, are emerging as a corporation’s most strategic asset. The promise these programs hold is simple: By linking every part of a company’s operations, so that a single event triggers a chain reaction throughout the enterprise, ERP systems enable companies to speed orders, trim inventory, slash costs and more easily oversee global operations.

While the benefits of ERP applications are simple – more integrated systems, better information flow and lower costs – their implementation is not. An application like R/3 can take from several months to several years and millions of dollars to install, and maintaining it can be equally difficult and expensive.

Yet, despite the significant time and cost involved in implementing ERP systems, demand for them is growing. According to Advanced Manufacturing Research (Boston), an industry research firm, the market for enterprise application software is $14.8 billion, up from $7.2 billion in 1996. While there are several top players in this field, including Baan, PeopleSoft, J.D. Edwards and Oracle, it is SAP that currently dominates, with more than 36 percent market share and about $5 billion in total revenue for 1998. Today, SAP’s R/3, its client-server enterprise software, is used by nearly half of the world’s 500 largest companies.

SAP’s R3 enables companies to react quicker to competition and market opportunities, but it requires a complete re-engineering process that ultimately leads to total reliance on the system.

Once a corporation commits to R/3, there is no way out. Companies cannot backtrack after committing resources to consultants, technical staffing and finances to the costly process of R/3 implementation.

Once R/3 is up and running, it presents a whole new set of challenges in the form of managing the system so that it performs reliably and responsively, thereby increasing the return on investment.

Yet managing R/3 is often neglected, with disastrous consequences. A recent survey of 886 information systems managers by the MERIT (Maximizing the Efficiency of Resources in Information Technology) Project underscores this. The MERIT survey revealed that outages average 2.8 hours a week for enterprise resource planning systems. The toll on business and productivity is estimated at $39,950 per hour, for an overall average annualized loss of more than $5 million.

In large enterprises, R/3 is often implemented in a complex, distributed environment, potentially linking multiple environments and running different operating systems. Because of the complexity of multi-system and cross-platform environments, when transaction processing is slow, it can take at least a couple of hours just to find out where and what the problem is. The speed with which problems are detected and resolved can have a high financial impact. This is equally important for small businesses using a single R/3 system, as it is for much larger and more complex environments. No matter what the size of the company, poor system performance will ultimately affect its profitability.

In addition to the challenges inherent in the complexity of R/3, there is the further problem of technical support. SAP’s dramatic rise in sales of R/3 over the last six years has led to a pronounced shortfall in experienced consultants in all areas of R/3, which, in turn, has meant it is all the more difficult to retain qualified and experienced personnel. Technically skilled SAP resources are in short supply and high demand today (SAP specialists can command as much as a $70,000 salary with only one year’s experience with any ERP package).

Because of the complexities of deploying R/3, and the lack of skilled technical people, many companies are turning to outsourcers to run their R/3 systems. The advantage in an outsourcer running multiple systems for different companies is the collection of expertise they can use to address the same kinds of problems in different environments. The disadvantage is because they are managing and tuning so many systems, they apply many "rule of thumb" configuration settings and then only change them when a problem happens. Additionally, they do not provide service level reporting and management services, which are important requirements today.

As R/3 implementations increase, so does the need for R/3 management tools. More and more IT managers are turning to management tools for R/3 to improve the availability of the application and increase user productivity. These tools are also helping to alleviate the chronic lack of technical support by supplementing the skills of IT staffs.

Until recently, management tools for R/3 weren’t available or were limited in their effectiveness. For example, SAP’s CCMS (Computing Center Management System), its own built-in system management software for R/3, records service level data, but is difficult to navigate through and identify where problems lie. In addition, CCMS retains much of the data it captures for only a short period of time, making historical data or performance metric analysis virtually impossible.

Other third-party R/3 management products are designed for fault detection, to find out what’s wrong and bring alerts to a centralized location. The main problem with these solutions is that they are essentially passive; they monitor and report, but they do not resolve problems and are not end user-focused. Even if they provide some kind of alerts, they all ultimately require manual intervention to keep R/3 running at its maximum potential.

Today, a new generation of R/3 performance management solutions is emerging, providing simple, end-to-end management capabilities. This new generation of performance management tools are proactive, integrated solutions that identify and resolve problems in R/3 when they happen. They differ from previous products in that they do not just monitor and report on R3, but dynamically manage it. They react to events as they happen and automatically tune the system to improve throughput, extend system availability and improve user response times without requiring manual intervention, or, if manual intervention is necessary, provide assistance and all of the information required to resolve the problem immediately. They are easy to use, without requiring any significant training or customizing.

Among the features and capabilities of this new breed of performance management solutions are:

Better Data Collection/Presentation: The ability to collect data from R/3 and summarize it easily for IT managers is critical in a performance management tool. The best solutions collect data that already exists within R/3, without requiring transmitting and accumulating data in another depository, and then transmit it to systems administrators in a timely fashion so that they can identify problems and determine solutions quickly. In addition to automatic problem notification and analysis, these solutions can provide historical reporting and true root cause analysis to ease problem identification and resolution. They also offer a reporting environment that enables managers to produce and view service level reports on the current performance and usage of the system. This reporting can be done at the level of user, application, transaction and location. These tools can also track deviations in defined service levels and alert systems managers in real time. These solutions also offer availability management and reporting functions that detail the breakdown of response time across all components in R/3.

On-the-Fly Reconfiguration: To ensure maximum user availability and workload performance, a true performance management tool will analyze the system’s performance and automatically adjust R/3 and database parameter settings in real time based on actual use. Periodic reconfiguration, in which new parameter values are reconfigured based on actual use over a specific period of time, can also be performed.

Low System Overhead: Unlike the earlier generation of performance management tools, many of today’s solutions require minimal overhead. Some solutions work within R/3 itself, utilizing existing R/3 routines whenever possible, which reduce overhead to less than 0.5 percent. By residing within R/3, these solutions require no new programming languages to master, or new consoles or interfaces to deal with, eliminating training and installation.

While R/3 performance management tools have come a long way, in the future, as R/3’s architecture evolves into a flexible product suite that can be easily distributed, and a greater number of small-to-medium-size companies and vertical markets begin to implement it, performance management solutions will have to adapt even further.

About the Author: Joseph Garabed is President of OptiSystems, Inc. (Naples, Fla.), the United States subsidiary of the OptiSystems Solutions Ltd.