Transcript and slide deck
Gustav Botha:
Good morning everybody and thank you for joining us. My name is Gustav Botha, I'm the SAP practise lead for SoftwareONE for UK, Ireland, Africa, and Nordics, and I'm here today with Kieran from Centiq and if you have been watching the press recently you would have noticed that SoftwareONE have recently acquired Centiq, we're super excited about all the capabilities and delivery expertise that Centiq bring, and bring to SoftwareONE. And actually we've just returned back from UK [inaudible 00:00:37] and one of the key themes that the Centiq stand had was around an agile enterprise. So Kieran, what is an agile enterprise and why should we care about that?
Kieran Fitzgerald:
Thank you. So yeah, what is an agile enterprise? I guess the problem that an agile enterprise is trying to address is that the business challenges they face today are unprecedented, right? It only takes ... if we could all just drop off now and look at the news, and see the amount of challenges that organisations are facing around Brexit, supply chain, COVID, and that pace of change is never going to slow down, and it's going to be a constant disruption for organisations.
So building an agile enterprise is, and being an agile enterprise is putting the foundations in place to be able to adapt and to be resilient to that disruption over time in a sustainable way and also for them to be able to take advantage of opportunities that come up in that space. So you know, we were really lucky, we had a customer present with us at the user group a luxury car manufacturer, a company that we were working with for the last couple of years to migrate over into Azure their STP systems.
And the difference that it's made to their organisation compared to where they were before is incredible. You know, more resilient, more available architecture, able to do much more innovation, free up their team to actually delivery those projects inline with their business, and actually save a significant amount of money, so they managed to save two million pounds over five years by migrating and improving the architecture. So you know that's a good sort of short example of how an organisation is sort of leveraging cloud to address that, and we're running a series of webinars now to tackle some of those themes, right?
Gustav:
That's really interesting, because sometimes when we speak to customers they go, "No actually I don't need to move to the cloud because running everything on premises is cheaper than running it in the cloud." Clearly I disagree with that based on some of the experiences that I've had, but it'd be interesting to kind of hear your views on how you managed to save some of that money.
Kieran:
Yeah absolutely. Yeah before we go into it, the focus today is going to be on how to save money in the cloud. We've worked with a number of organisations in the SAP space for years, and I was working with a retail company two years ago, two, three years ago, they were exploring migrating to cloud, and they kind of were on the fence with what to do, and they decided to stick on premises, so they looked at the hardware costs for additional on premises deployment they looked at the cloud costs and they decided that overall on premises looked cheaper, and then you can imagine the time scale.
So it's two, three years ago and then at the start of last year the pandemic hits and the business is massively disrupted and they needed to change strategy, they needed to deploy different types of applications quicker, they needed to ... they actually stopped using some.
And if you look back now five years back rather than five years forward of what does this cost look like, they would have saved significant money by being in the cloud because they would have been able to respond. I think that's a really key theme, and most organisations when they're doing that cost assessment are looking forward, what do the next five years look like, well there are so many unpredictable things in that space, actually what they should be doing is looking back and thinking in five years time what's going to happen to our business and what change will we need to drive, because there's just so many unknowns.
Gustav:
Yeah, so it's how quickly you can respond and react to the environment and everything that's going on as well.
Kieran:
Exactly. So it may appear on the surface that the actual raw infrastructure costs or support costs combined might not look like the sort of levels of cost savings that you see in the press or like our car manufacturer had shared, but the reality is due to that change, due to actually what happens in the real world over that five, six-year period, the savings can be really significant. So from our point of view, we've created a number of best practices that we use to guide our customers, and yeah, they're across here, so the standardisation, rationalization, modernization, and automation, these are the common themes we talk to our customers about.
Gustav:
And it's interesting because I've ... before joining SoftwareONE I did a lot of work in the kind of functional space, and when we talk to customers about transformation, we mention a lot of these things, you want to standardise processes, rationalise operations, but I've always had a very business lens on this, because you want to standardise things so people do things in a consistent, repeatable way, but from a technical architecture perspective, what does that look like?
Kieran:
Yeah. It's a great place to start. When you look at an SAP system in particular, it's not what you would describe as being a cloud native system, right? It's a monolith, every customer will describe SAP as being an expensive, large, complex system that doesn't move, and the reality is that that's largely down to the underlying technology.
So you know, we work with organisations on a daily basis who are sending us the information about their current architecture as part of that review of what's it going to look like to move this into the cloud, and consistently with every organisation we look at you've got multiple operating system versions, multiple database technologies, lots of different backup tools, lots of different ways to deliver DR, multiple authentication processes for all different types of activities, and they've grown this way and maybe something else has been added and another project's been added with a different underlying platform and it just makes it really complex to manage, and with complexity comes cost.
And so what we're trying to do when migrating our customers to the cloud, is remove that complexity. And we do that with standardisation. So you know, what we're talking about here is trying to you know, fix old system disuse as you migrate over to standardise the operations, to run similar technology.
So trying to standardise organisations on the same database, the same operating system, the same backup technologies, and with cloud specifically we use all the native Azure services, so we're using Azure Monitor, Azure Backup, typically we'll use Windows or Linux if we're running on a high workload, and all of this means that we reduce the complexity and that makes the solution easier to build, maintain, and update moving forward. And by achieving that you're simply just taking cost out.
Gustav:
Yeah. So again, similar themes, so it makes total sense, yeah.
Kieran:
Yeah and on our side we're a managed service provider, so you know, to manage a more standardised set of technologies for our customers means that we need fewer skills, and fewer resources to do that as well, which means we pass on savings to the customer at the operational and managed service layer as well, and then I think the real value here is that you have the ability to change in the future, so it's not just that upfront, but because you've standardised, and we'll come onto this later in modernization, the way in which you can change is much easier.
Gustav:
Excellent.
Kieran:
So rationalisation so ... I guess another big problem with SAP is typically the size of the system, it'll be an ERP, the majority or certainly a lot of organisations migrating to the cloud are doing so as part of ... are either already running on HANA or migrating to S/4HANA and the biggest cost for the infrastructure is in memory, right? That drives the cost up significantly when you're running memory technologies anywhere, not just on the cloud but on premises as well, and you know, a lot of customers, typically on premises you would buy for sort of three, four, five years of growth and we've seen a few organisation bring that same mindset to the cloud, and the reality is you don't need to do that, you can scale if you build with standardisation, really simply.
So what we encourage customers to do is just pay for what you need, right? Really think about every system that you have, the size of it, the data that's in there, only bring what you need, because you know, customers, we talk about archiving quite a lot, and historically because customers have been buying for three, four, five years of growth, archiving ... the benefit is never really realised because you've kind of got the infrastructure there. When you're in cloud, the benefits of archiving and right sizing and tight sizing become tangible, you can physically see the difference in your bill as you optimise that data. It's just a great example of how you manage costs particularly for an SAP system.
Gustav:
It kind of comes back to that flexibility that you have as well, right? Because a lot of the clients we speak to are seasonal and they see kind of demand going up and down and needing to have the resources available to manage the flexibility from the customer's side, right? And again, not to go too overboard on COVID, but certain organisations had a massive slow down, right? So why would you have to pay for something that you're not using or you don't really need?
Kieran:
Absolutely. Yeah we had a large retailer who was running a programme at the time when COVID came, and they basically just focused that team on more resiliency-aligned initiatives to help support the business to work remotely, so they simply weren't using some of their systems, so we just shut them down, they stopped spending money, and at the same time their at-home business was growing astronomically because they weren't able to be ... customers weren't able to go out in the stores, and I think it grew about 25% in the first few months, and they were able to stand up and scale new infrastructure to support that rapid growth which kind of happened overnight. It's just two great examples of [inaudible 00:10:39] from the start around things happen and change comes and being able to respond and using only what you need when you need it, really does drive down costs and the mantra really here is you know, increase if you must, but decrease if you can, and it's not just upfront, it's not just looking at going, "Right what data are we going to migrate?"
Kieran:
But it's when you're there, really going into the detail regularly, around right, what's the size of these systems, what's the performance, can we optimise further? And you continue to take advantage of that and you'll really drop down your cost to run these systems.
Gustav:
Yeah great.
Kieran:
So in terms of modernization, the theme here really is about the way in which you can embrace change, most of our customers that we speak to when we do an assessment of their early watch reports for example, all the systems will be out of support and so you've got ... not only have you got a complex set of technologies, but a lot of them, because it's so difficult to patch and manage, are out of support. This is a real problem in terms of cost, because when you want to be the organisation that's able to change, to take advantage of some of the examples we've just shared, you need to make sure that you haven't got a bill of 250 grand just to do some pre-rec activities that are required to even enable the change. So we're helping, encouraging customers to ensure that when they move to cloud, you bring in this new mindset which is, "We're going to regularly patch and upgrade these systems."
And clearly it's on partners like us to help architect a system that can deliver that change without much business impact, and yeah, that mindset makes a big change, because we don't want to do, we don't want our customers to move to the cloud on day one, be in a fantastic position, but do nothing for two years so that when they want to take advantage of the agility of cloud, they can't because they've got this huge bill to catch up on two years of technical debt. If you just get rid of that and keep technical debt low, the cost of change drops dramatically and that's where the ... as we said at the start, that's where the real TCI comes in.
Gustav:
Great. No that again, makes total sense. And I think with the standardisation, rationalisation it's kind of the next step right?
Kieran:
Absolutely.
Gustav:
Does automation come after you've done the standardisation and rationalisation or is it something that kind of happens as and when you move along?
Kieran:
Yeah. So I guess standardisation and rationalisation are principles that we bring to an architecture for the cloud. Modernization is more a sort of operating principle of when you're there around how you take advantage of that, but if you could imagine what we're saying to customers here, coming from a world of SAP where things are slow to change and don't really move that much, and that's quite hard to manage, we're saying change more, do a lot of the stuff that at the moment you think are quite painful, more regularly to get benefit. That's just going to potentially overwhelm people.
How are you able to do more and drive down the costs? Well the reality is particularly with cloud, that you can leverage automation and not only then ... so you're automating the way that you've designed and built the architecture, but you're also automating some of the processes to run them, so like patching and upgrades can be managed, start and shut down of systems can be automated so that you're not putting in all that extra effort, because otherwise you wouldn't get the cost benefits if it was all that extra time and energy. So automation really is the enabler of all of these things together to just de-risk the build, take out the cost, and reduce human error.
And again you know, being able to respond fast and to requirements is where the real cost savings come and automation is the most important of these in terms of how you achieve and unlock that.
Gustav:
Yeah, and now we're going to talk about saving time in terms of moving to the cloud as well, but I guess this is another aspect of it, right? By automating certain utilities you're freeing up resources, they can start focusing on innovation, doing some more value adding tasks-
Kieran:
Absolutely, yeah.
Gustav:
Rather than running through routines or activities that-
Kieran:
Absolutely. So yeah, the theme across all here, the technical layer is just enabling that perpetual state of readiness, and what we're going to tackle in some of our upcoming webinars is okay, so you have a platform that enables that change, now what is your team going to do and how do you de-risk that whole process, and how do you drive further innovation for your business. And the last point that we just wanted to capture naturally as two ... and one combined service provider in the space, and Gartner recently released this blog around six ways cloud costs go off the rails, so you know, an important thing to share as part of the theme of this session, and the number one topic that they've highlighted as being the thing that increases cost is the wrong team, and working with the wrong partner.
So you know the points they raised the choice of migration partner is a critical component to the success of your cloud strategy, many customers select a migration partner based on familiarity, so someone who maybe knows them quite well or goes in with a lower cost at an RFP rather than experience. Others try to do it in-house with an internal team who are perhaps not ready or not that exposed yet to the new world of cloud. And ultimately what that often leads to is mistakes and rework, and that's where the cost increase comes, so you know, the RFP response might have been lower in terms of that first cost but the reality of the customer's experience once it's migrated is that that can have a real impact. So we're obviously quite proud of our reputation in the market as being one of the sort of leading and most experienced partners delivering this and being able to talk with the customer at the user group last weekend about those savings that have been achieved and the agility that it's enabled is a great example of that I think.
Gustav:
No I absolutely agree and clearly that's one of the reasons SoftwareONE acquire Centiq is that long track record of delivering successfully. I think the other two that just stand out, my kind of two favourite ones and my bug bear that I keep talking about is number three which is the kind of rushed application assessment and the importance of planning properly, making sure that you get on the right roadmap, and I think we talk about some pilot programmes later on in the webinar session as well. And then the design as well right? I think taking some time upfront to make sure you have the right design, you have the right roadmap, you have the right route to the cloud, is so important.
Kieran:
Yeah, absolutely.
Gustav:
To avoid those kind of false starts that we often see and people wasting time and running off in the wrong direction, so comparing properly is kind of one of my favourite bug bears to talk about.
Kieran:
Yeah the if the foundations aren't there, then all the exciting stuff that you were trying to achieve, that the business wants out of cloud, it simply just won't happen, and lots of money will be wasted and lots of disappointment to stakeholders too who are trying to, I guess, deliver better value for their customers and internal stakeholders.
Gustav:
Great. Well that was very insightful and I guess thank you to everybody that joined, and hopefully you can join us for some of the next ones where we talk about saving time, some innovation, and some more time around the pilot programme. So thanks for joining us today. Thanks Kieran.
Kieran:
Thank you. Yeah. Take care. Good stuff. Bye bye.
Gustav:
Bye.
