In our last blog on “3 key areas to optimize SAP costs and value in 2021”, we looked at how companies can modernize infrastructure and adapt their approaches in order to reduce capital and SAP operating costs.
This provided much food for thought for our readers and also stimulated a raft of questions. The greatest interest was around the cost of moving to the AWS cloud and how quickly companies were seeing a return on their investment.
While the potential cost savings of SAP in the cloud are impressive, convincing leadership that it’s possible to migrate business-critical software without major disruption and risk is not easy. And, in our experience, the true benefits of running your SAP workloads in the cloud are realized during the Operate phase, where “business as usual” becomes a thing of the past.
In this blog, we’re going to look at how companies can calculate the costs of migrating and operating their SAP workloads on the AWS cloud in order to develop a cost-benefit analysis and incorporate this into a business case.
Now, before we go too far, we need to be completely transparent about some key points:
- Migrating SAP workloads to AWS does not need to be expensive – it can often be cost-neutral or near to cost-neutral.
- Where the migration is not cost-neutral, typically, the savings generated from operating SAP workloads on AWS often pay for the project within the first 12 months.
- Quantifying the cost savings and benefits, then documenting the business case, is easily achievable for all companies. The true challenge is ensuring your company (with/without a partner) is able to actively deliver or enable those savings and benefits.
The business benefits of moving SAP to AWS are multi-faceted covering people, process as well as technology benefits. This means the business case for cloud adoption requires detailed information about the expected ongoing benefits (lower operations costs), the one-time up-front migration costs, the write-off or depreciation run-off costs for the legacy assets, and the financial justification and ROI for the investment.
Just estimating the migration costs alone requires a broad set of skills and experience. It’s much more than the “smart tin” label many mistakenly apply. You must understand the full scope of the need, review the application and server portfolio, create the architecture and general design of the cloud solution, and complete a detailed application design, factoring in any remediation costs.
This type of thorough planning and consideration upfront ensures that you don’t preclude some of the most valuable benefits delivered by Cloud. The migration itself requires experience and expertise to complete without accumulating unnecessary costs and risking severe disruption.
Cost optimization business cases are often highly personalized. For example, are you looking at this purely as a procurement centric cost-saving activity, or to fix a current problem area, or to accelerate access to platform innovation, or just because you have a change window coming up (like a hardware refresh) and it’s the right time to take a look at Cloud economics? In our experience, the usual answer to these questions is “Yes, to all of the above.”
So, let’s break down some of the key benefit areas:
- Architect SAP for AWS: Lifting & shifting, whilst perceived as the simplest way of moving from A to B, always yields the lowest cost savings. When you’re not constrained by infrastructure, many of the drivers that shaped your current deployment design don’t apply when moving into an AWS landscape, so “Lifting & Shifting” has the negative side effect of also dragging over all your technical architecture debt. Common areas include ensuring you consider rightsizing your SAP system by scheduling for peak workloads only when needed, executing a fine-grained architecture requirement review based on your SAP Early Watch data, and reviewing your storage strategies and compute to ensure you select the most cost-effective AWS compute & storage solution. These factors all have a large impact on the cost of running and operating your SAP landscape.
- Business continuity: The traditional world of HA/DR is radically changed when applied to a Cloud environment. Rather than being focused on traditional models of HA + DR in a Cloud world, you are now on AWS, a massively diverse platform. This adds High Availability to your landscape complete with diverse AWS Availability Zones that, in most cases, exceed the resiliency you can achieve within traditional hosting models. In addition, there are far fewer platform requirements which means far less cost than traditional models.
- Landscape optimization: When infrastructure is just a line of code, maintaining extensive non-production systems such as training, sandbox or multiple project tracks becomes an unnecessary overhead. Moving to an automated DevOps enabled environment enables you to build systems on demand, only when you need them. This enables dramatic cost savings compared to traditional operating models.
- Automation adoption: Any SAP on AWS business case would not be complete without factoring in the impact of Automation. If you run labor-intensive repetitive tasks, such as patching, refreshing, provisioning, and operating, automating commonly executed tasks turn multiple days of labor into near-zero labor. In addition, this results in zero human error activity that can yield significant cost benefits year after year. The Lemongrass Cloud Platform (LCP) orchestration tool was developed specifically to provide this automation, linking standard AWS platform technology with SAP APIs to provide an easy-to-use business, (non-techy) UI for automation execution.
- Cloud commercials: One area commonly overlooked is FinOps which includes ensuring that systems are purchased according to how they’re intended to be used. For example, selecting the system with the percent of uptime that will drive the best commercial model, i.e., Reserved Instances, Saving Plans, or Spot Instances. As system use always flexes and evolves, this is not a one-time static event. It’s continuous. Lemongrass offers a billing tool, governance, and easy-to-use phone apps that track spend in real-time, detect overspend as it happens and look for cost optimization recommendations month to month.
- Business Operations: Automation also plays a critical role. You can use AI to: 1.) Detect system trends that could lead to issues such as preventable downtime, 2.) Enable self-healing workflows in response to automated alert detection or 3.) Use the Near Zero Downtime technology possible in AWS to both reduce the amount of downtime needed for maintenance while enabling you to patch more frequently. AI drives significant cost benefits into organizations, increases stability by being UpToDate, and reduces unplanned downtime. For many SAP customers, unplanned downtime can cost hundreds of thousands of dollars per hour. Lemongrass’s LCP platform also combines SAP and AWS alerts into a single automated event detection solution to further streamline this process.
- Beyond SAP: Being in a leading position with disruptive technology as a competitive advantage has never been as important as it is now. If, for example, you are looking to build an application-agnostic Data Lake to extend your corporate memory by enabling AI to connect your shop floor, Point of Sale, manufacturing, or consumer behavior together with your SAP system, AWS has the tools and skills readily available to make that happen. They are known for having the broadest, fastest evolving, and most well-served marketplace for all Enterprise IT innovation. A business case looking ahead over multiple years would not be complete without factoring in your company’s ability to have access to the latest innovation in and around your SAP-centric landscape.
Fully understanding the business drivers for moving to the cloud, having early conversations, and assessing risks will all help with building a positive business case. As with many aspects of life,
“Setting a goal is not the main thing. It is deciding how you will go about achieving it and staying with that plan.” – Tom Landry, Head Coach of the Dallas Cowboys, 1960 to 1988.
For more information about how you can start preparing a cost-benefit analysis or developing a business case, visit our website or contact us for an initial discussion.
You can also join our Lemongrass Live Q&A on Friday, February 19 where Lemongrass’s Ben Lingwood and Mark Hirst, along with AWS’s Jonathan Lake, will be available to answer any of your questions on “Quantifying the business case for SAP on AWS”.
Download our eBook – SAP Cost Optimization on AWS, and find out how to modernize SAP systems and cut costs by up to 50% with Lemongrass. Download here.