7-Eleven finds SAP applications and IBM i provide the greatest convenience

Published on 12-Dec-2008

Validated on 01 Aug 2013

Customer:
7-Eleven Stores Pty Ltd

Industry:
Retail

Deployment country:
Australia

Solution:
Enterprise Resource Planning, Information Infrastructure, Optimizing IT, Supply Chain Management

IBM Business Partner:
SAP

Overview

This paper describes an implementation of the SAP Business Suite on IBM i logical partitions running on IBM Power Systems servers at 7-Eleven Stores Pty Ltd, Australia. It describes the historical background, the current hardware and software landscape, and future project plans.

Business need:
Convert 7-Eleven supply chain from a direct to store model to centralised replenishment and distribution. Improve the timeliness and transparency of financial reporting. Implement an efficient, integrated, enterprise-wide reporting system. Leverage years of expertise and efficient operation with IBM i. Run the proposed reporting system and existing SAP retail applications on a scalable, easily managed platform. Continue the close integration between IBM i and Microsoft Windows servers.

Solution:
Two IBM Power Systems servers running IBM i V5R4 with the integrated DB2® database. Virtualized Windows disk management provided by IBM i. SAP ERP 6.0, SAP NetWeaver® Portal, SAP NetWeaver Process Integration, SAP NetWeaver Business Warehouse, SAP POS Data Management and SAP NetWeaver Business Warehouse Accelerator

Benefits:
Achieved quick ROI on the investment in both hardware and software. Upgraded from SAP R/3® 4.6C to SAP ERP 6.0 and NetWeaver 7.0. Upgraded to IBM i and IBM Power Systems technology. Increased revenue and profits through better stock management. Reduced deliveries into stores from 110 per week to just 30 per week. Improved financial reporting for 7-Eleven and its franchisees. Increased franchisee satisfaction by reducing administrative workload.

Case Study

Background and company history

Worldwide
7-Eleven is the largest operator and franchisor of convenience stores in the world, with annual sales of about US $36billion. 7-Eleven operates more than 34,800 stores in Japan, Australia, Mexico, Taiwan, Singapore, Canada, the Philippines, Sweden, Denmark, South Korea, Thailand, Norway, Malaysia and China, Macau, Hong Kong and the United States.

In Australia
7-Eleven Stores Pty Ltd is a family-owned business in Australia – owned by the Withers and Barlow families. 7-Eleven was the first franchised convenience store in Australia and revolutionized grocery convenience in the country. It celebrated its 30th birthday in 2007. There are about 380 7-Eleven stores in Victoria, New South Wales and Queensland. About half the stores also sell fuel. With annual sales of AUS $1.3bn, 7-Eleven is the market leader in convenience retailing in Australia.

7-Eleven’s application software background and current plans
In 1998, 7-Eleven Stores selected ERP software from SAP as its core application system and went live with release 4.0 running on an IBM AS/400 in 1999. Over the years since, the SAP footprint has been extended and new functionality introduced. In the early days the stores transmitted their sales data over dial-up connections to the AS/400, which then processed this data overnight. Now the stores are online, providing the stores’ franchisees the opportunity to query or modify stock orders and access financial data. In the past, 7-Eleven has run its store petrol sales separately on another system running OS/400. In 2009, the company plans for the petrol sales to be managed through SAP too.

7-Eleven has been looking at new functionalities to address the company’s current strategic objectives, and chose SAP as the most suitable solution. A number of workshops were held in 2007 to determine business requirements. These requirements were grouped and analyzed with regards to their business impact and potential business benefits, and then prioritized. In a second step, the process and IT implications were derived and a high-level SAP fit/gap analysis was performed to determine if the requirements could be met and the benefits achieved. Based on the priorities, the IT implications were grouped together to determine a logical sequence of IT and SAP application changes.

Investment plans
Four phases of SAP investment have been planned to take place over three financial years, starting in 2008:
1 The highest priority requirement was the need for an efficient, integrated and enterprise-wide reporting system, which would be addressed by implementing SAP’s business intelligence solutions (SAP NetWeaver BW 7.0, SAP POS DM and the SAP NetWeaver BW Accelerator). The BW component could be implemented with 7-Eleven’s existing version of SAP (R/3 4.6C), but the company decided to upgrade to the most current version (ERP 6.0) before implementing BW.

2 The main reason to upgrade SAP first was driven by 7-Eleven’s aggressive growth strategy and the fact that maintenance for version 4.6C ends in 2009. The scope for a functional upgrade was limited to a few very high priority requirements, such as integrated space management and a conversion from the EBCDIC to the ASCII code page format – a decision taken to keep the upgrade on a low risk path to avoid any additional delays in implementing SAP BW.

These two initiatives formed the first phases of the IT roadmap. The upgrades from EBCDIC to ASCII and to SAP ERP 6.0 were carried out in early 2008 on time and without problems.

3 Given the high strategic importance of improving the communication to franchisees and hence increasing the franchisees’ satisfaction, an upgrade of the store portal was defined as the third phase of the roadmap. There may be up to about 400 users accessing SAP from the stores.

4 The remaining high priority requirements were grouped in a fourth phase.

Resources and timelines for these four phases were then estimated to derive a cost/benefit model for the roadmap activities.

SAP solution landscape
SAP ERP 6.0 and SAP NetWeaver
Until 2008, 7-Eleven used SAP R/3 4.6C as its core business application. In order to leverage the greatly enhanced functionality of the newer releases of SAP ERP, the company upgraded to the most current version, with SAP NetWeaver 7.0 as its base technology platform. SAP ERP and SAP NetWeaver will provide a stable business application platform for several years to come.

Over the last three years, 7-Eleven has introduced a new electronic centralized purchasing and distribution model which has had significant results. It has:

  • Reduced deliveries into stores from 110 per week to just 30 per week
  • Eliminated a very time-consuming administrative burden from the franchisees
  • Resulted in better purchasing power for the business
  • Increased profit margins, which are shared between the company and the franchisee

Today franchisees no longer have to manage orders and deliveries from myriad different suppliers or pay an employee to manage these processes. Instead, stock orders are now automatically created by the 7-Eleven system based on sales and inventory data. The orders are then made available to the franchisees for adjustment via the SAP NetWeaver Portal. At an agreed cut-off time, the orders are sent electronically to a central distributor and bulk deliveries are made as required into stores. This new system has proved hugely popular with the franchisees, freeing them up to spend more time with customers and improving their bottom line.


SAP NetWeaver BW and BW Accelerator
7-Eleven is currently implementing SAP NetWeaver BW to provide the highest-quality business reporting systems throughout all operational and category management functions across the corporation. This will enable 7-Eleven to make smart decisions in relation to purchasing, forecasting, promotions measurement, individual purchasing patterns, and store layout.

One illustration of this will be market basket analysis, which identifies which products individual customers purchase, when and where.

The new SAP software will make it much easier for 7-Eleven to manage store cluster pricing across different states and, in the future, to produce KPI reports for individual stores. This means franchisees will be able to measure their performance against stores with similar demographics and identify new opportunities to service their customers better and generate greater profitability for their stores.

Significant data volumes
Due to the significant retail data volumes produced by about 380 stores, it is important for 7-Eleven to ensure that the BW queries perform well. To this end they have chosen to implement the IBM Systems solution for SAP NetWeaver BW Accelerator.

The SAP BW Accelerator presents itself as a turn-key solution, because it combines both software and hardware in one package. To create the BW Accelerator solution, SAP has partnered with Intel and IBM. In essence, the BW Accelerator is a highly scalable analytic server with an embedded SAP TREX search engine that processes queries initiated by users of SAP NetWeaver BW. Running the BW Accelerator in conjunction with the IBM blade server architecture offers a uniquely scalable solution.

SAP BW Accelerator includes indexes that are vertically inverted reproductions of all the data included in InfoCubes (that is, fact and dimension tables as well as master data). Note there are no relational or other database management systems in a BW Accelerator. There is only a file system, and indexes are essentially held as flat files.

The second principal component of SAP BW Accelerator is the engine that processes the queries in memory. The software runs on a scalable IBM BladeCenter. The operating system used for BW Accelerator is 64-bit Linux, so in addition to having no database license cost, there is also no OS license cost. The IBM Systems solution for BW Accelerator from SAP can help businesses analyze large amounts of critical information up to 200 times faster than alternative tools.

The hardware components that 7-Eleven chose for this role on both production and development systems include two BladeCenter H chassis, four blades for production and three for development, and two DS4700 storage servers.

SAP NetWeaver Portal
7-Eleven also uses SAP NetWeaver Portal to deliver all content into the stores. This means there are only a few applications based in the store – Web applications are the preferred approach. Within the portal, 7-Eleven delivers a range of reports for the stores, and also runs the goods ordering and receiving processes for the stores. These functions are performed by the SAP ERP system, and the ordering and receiving application is easily the most demanding use of the system. The stores use the portal to change the quantities of products ordered for their stores, usually in the morning.

SAP POS Data Management and SAP NetWeaver Process Integration
7-Eleven is also implementing SAP POS Data Management (POS DM), a specific component of the SAP for Retail solution, in order to collect, manage and analyze the vast amount of sales data. SAP POS DM also provides a direct data interface into the SAP NetWeaver BW system, for subsequent analysis and extraction of the valuable information contained and hidden in sales data.

Internal data exchange between 7-Eleven’s various SAP systems is provided via SAP NetWeaver Process Integration (formerly called SAP NetWeaver Exchange Infrastructure). This NetWeaver component facilitates the exchange of data and information among and across a company’s internal SAP software systems as well as non-SAP applications.

The unique 7-Eleven eServices application enables franchisees to offer an entirely new range of products, including customer gift vouchers or branded gift cards from well-known Australian retailers, at any time of day or night. In the future, 7-Eleven expects to be able to offer further ticketing, leisure and recreational options through this system.

Business solution: hardware and software landscape
7-Eleven’s System i history
From 1998 through to 2006, 7-Eleven used one system (AS/400 or iSeries) with multiple OS/400 logical partitions for development, quality assurance and production. This system was upgraded a number of times to keep pace with store growth and SAP functionality growth. The model history included the S40, 740, 830 and 840 models.

When the model 830 was installed, 7-Eleven became one of the few iSeries customers in the world to use hardware disk compression, which reduced disk hardware costs while maintaining an acceptable level of performance.

At the end of 2005, 7-Eleven decided to split production and development/quality assurance into two physically separate systems so they could be installed in different locations for greater disaster recovery effectiveness. At this time they ordered a 9406-550 with two activated POWER5 processors and a 9406-570 with four POWER5 processors allocated to the OS/400 logical partitions. In 2007, these were upgraded to the current systems – IBM Power servers running IBM i.

7-Eleven has always appreciated the known IT virtues of IBM i and its predecessors, most of all its legendary reliability and ease-of administration. Nevertheless, other alternatives like Windows or UNIX were also considered multiple times during 7-Eleven’s SAP history. Comparison and business cases were made, but each time the IBM i family proved to be 7-Eleven’s best choice, based on its specific values and benefits like extreme reliability, ease of administration, integrated DB2, sophisticated integration with Microsoft Windows, powerful backup capabilities and immense scalability.

7-Eleven chooses IBM i on Power Systems
For the same reasons, 7-Eleven chose the IBM i platform and IBM Power Systems servers to implement the latest round of SAP application projects, based around an implementation of SAP NetWeaver BW.

The production system is an IBM Power 570 server with eight activated POWER6 processors, 128GB of memory and approximately 14TB of disk running three IBM i logical partitions: one for SAP production work, one for SAP NetWeaver BW, and a small one to support the integrated Windows servers. The SAP production partition runs SAP ERP 6.0 and SAP NetWeaver Portal 7.0. This system is located off-site in an IBM data center, which provides facilities management for 7-Eleven.

The development system is a Power Systems i550 with three activated POWER5+ processors, 48GB of memory and approximately 15TB of disk running three IBM i logical partitions: one for SAP development, one for development and testing of Windows applications, and one for SAP NetWeaver BW project development. As in production, the development partition is running SAP ERP 6.0 and SAP NetWeaver Portal 7.0 plus a SAP Solution Manager instance. This system will be used as the DR system should one ever be required.

IBM Power Systems dynamic Logical Partitioning (LPAR)
In the past, the production system ran with fixed allocations of CPU and memory to the two logical partitions because the second logical partition that manages the integrated Windows servers has very low requirements of both.

With the introduction of a logical partition for the BW component, 7-Eleven will be able to take advantage of uncapped processing so that the two SAP LPARs will be able to share spare processing capacity on an as-needed basis; the company can assign priorities to the LPARs to suit its business needs.

Integrated Windows applications
7-Eleven has taken advantage of the excellent integration for Windows applications offered by IBM i on Power Systems servers. These applications run on either IBM System x servers attached via an IBM Integrated xSeries Adapter (IXA), or on the Integrated xSeries Server (IXS), an Intel server on a single expansion card plugged into a PCI slot in the IBM Power server itself. In these two environments, the hosting IBM i LPAR provides the disk resources and management services for the Intel servers.

Technology deployed
At the production site 7-Eleven uses either IXSs or IXA-attached servers to provide the following functions:
  • Two domain controllers
  • Email server
  • IBM WebSphere MQSeries server
  • Microsoft SQL Server database for the Radiant POS system
  • Two Web servers for the Radiant POS system
  • SAP NetWeaver Process Integration server

At the development site, IXSs or IXA-attached servers provide the following functions:
  • Two domain controllers
  • Good Mobile Messaging server, the application that provides email, calendars and other functions to 7-Eleven staff mobile phones
  • Web server for the Radiant POS system
  • EPS Progenesis Server, for property management
  • Two SAP NetWeaver Process Integration systems – development and quality assurance
  • File sharing and other applications

This environment has led to better Windows backups and simpler disk management as well as higher availability and reliability for the Windows systems. The other key advantage of this approach is for DR. After restoring the IBM i LPAR, all the Windows servers and services are immediately available. No separate rebuild of the Windows servers is required. When testing a new application or a Windows patch, this environment allows greater flexibility and provides greater confidence that unsuccessful application changes can be more easily backed out by keeping a disk image before the application or operating system change is tested. Additionally, 7-Eleven likes the ability to build a server remotely, as the data centre is located a long way from the office.

Disaster recovery and store processing approach
7-Eleven appreciates the legendary reliability of the IBM i platform (and its predecessor OS/400). As a result, while the company has a development and DR system to complement the production system, 7-Eleven has not used either a High Availability Business Partner product or a disk hardware replication solution for DR.

Daily backups to an IBM System Storage® 3576 tape library are sent off-site, and if the production system at the IBM data center is unavailable for a significant period of time, the tapes are used for complete system restore onto the DR system. This approach is possible because the stores retain their pricing data on a back office PC, and they are able to continue trading for a time without the backend SAP functions.

While price changes cannot be implemented if the SAP applications are unavailable, the stores can continue to trade successfully. For example, when it comes to ordering, 7-Eleven stores would order similar amounts of products as per the previous week, using phone support to handle any changes.

Project Achievements
7-Eleven’s project objectives were completely met. The IBM i platform and its integrated DB2 database delivered excellent performance, reliability and cost savings, that fully justified the decision for the platform:
  • Smooth upgrade from SAP R/3 4.6C to the latest SAP ERP release based on SAP NetWeaver 7.0
  • Excellent performance and capacity with the new POWER6 processor-based IBM Power servers
  • Consolidation and integration of multiple SAP applications onto two Power Systems servers
  • Excellent integration of numerous Windows-based servers and applications via IBM i centralized management functions
  • Scalable growth path: from legacy AS/400 via System i to IBM Power Systems and beyond
  • Highly reliable two-server backup infrastructure for disaster recovery
  • Total availability near 100 per cent (less than two hours downtime per year)
  • Extreme CPU utilization of almost 100 per cent through efficient hardware virtualization (LPARs)
  • Low-effort system management through autonomic computing features in IBM i and self-management features in DB2; characteristic“ease of use” of IBM i enables long-term savings in total costs of operation (TCO).


Project Summary
7-Eleven has been running SAP business applications on OS/400 (now called IBM i) for nearly 10 years.
On a number of occasions through this time, alternative hardware and software platforms for running SAP were considered, but on each occasion the characteristic benefits of the platform – extreme reliability, ease of administration, integrated DB2, sophisticated Windows integration, powerful backup capabilities and the scalability of the IBM Power Systems architecture – meant that 7-Eleven chose IBM i and Power Systems for the implementation of its upgraded ERP landscape, which is based around SAP ERP 6.0 and SAP NetWeaver BW.

Products and services used

IBM products and services that were used in this case study.

Hardware:
Power Systems, System i

Operating system:
IBM i, Win NT/2003

Service:
IBM-SAP Alliance

Legal Information

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