Leading North American electronics manufacturer optimizes operations with IBM and SAP

This technology giant employs some 2,000 people throughout North America, producing yearly global sales of more than $10 billion. The electronics manufacturer is looking to cut costs through consolidating different systems and standardizing operations throughout the combined company. The objective is to gain deeper insight into business operations, right down to each of its 800 profit centers.

The company’s Director of Operations, Technology and Applications, explains, “We aim to become the world-leading green innovation technology company by 2018, known for our complete solutions and services alongside our outstanding products. To do this, we must think and act as a single company. For example, it is a huge task to integrate new acquisitions, and, at the same time, grow the business with new opportunities in emerging economies such as Brazil, India, China, Turkey and Vietnam to name just a few.”

Streamlining a complex network
The North American company runs a comprehensive suite of SAP applications to manage its core business operations. Over a fifteen-year period, SAP software has grown from a single instance to multiple independent landscapes for the business units. For example, Canadian operations run on a single SAP instance, while the US runs three SAP instances, one each for its factory, consumer and business-to-business activities.

“SAP has a proven track record of supporting large organizations, and bringing the benefits of consistent reporting and analytics across a business,” says the Director of Operations, Technology and Applications. “Our roadmap is to reduce the number of SAP software instances in different data center environments and optimize our IT infrastructure. We want to gain the benefits of synergy between business operations by improving information flow with enhanced reporting and analytics.”

The electronics manufacturer had been running its IT support organizations on a country-by-country basis. With the strategic aim of operating as a single business, the IT team set about re-organizing its IT teams to match operational needs, regardless of country.

Partnership with IBM Global Business Services
The combination of acquisition workload and systems administration imposed a high workload on the company’s relatively lean team. The IT team looked to outsource both application management and data center hosting to allow greater focus on developing business services and meeting commercial objectives rather than technology. The company selected IBM Global Business Services as the best partner to take on SAP application management services and manage its business-critical infrastructure.

The company’s Director of SAP applications comments, “IBM Global Business Services provides SAP application management services for our European division, and we could see the benefits. Now that our North America operations use IBM application management services, we are looking to take advantage of global consolidation of the applications to help cut costs and improve information efficiency.”

“Cost efficiency is a very high consideration for us. If we can reduce the number of SAP environments, then the datacenter costs come down and we have fewer, larger applications to manage, which fits with our global objectives.”

Optimizing operations with server consolidation
The company’s first step was to understand and optimize its organizational structures. This led to the establishment of regional computing centers. In turn, the team agreed a strategy to introduce and take advantage of virtualization and cloud technologies to help drive down costs. Working in partnership with IBM Global Business Services, the team set about introducing a server landscape that could deliver on the objectives.

Initially, the company ran its core SAP ERP applications on a total of 25 systems, including 14 IBM Power Systems servers and 11 IBM System x servers. The SAP applications are being migrated to three IBM Power 770 servers featuring IBM POWER7® processors, and the Intel environments will run in virtualized IBM System x3850 servers hosted by IBM. The consolidation of 14 to three servers has cut complexity, data center space and energy requirements, based on the advanced virtualization capabilities of the Power Systems platform.

For example, the company uses IBM PowerVM® to provide multiple virtual servers in logical partitions (LPARs) on each Power 770 server, hosting development, test and production environments for its SAP software. The use of multiple LPARs on a smaller number of very powerful Power 770 servers, each with 48 POWER7 processor cores, is the key technology that has enabled the dramatic reduction in physical server footprint. It also runs SAP ERP, SAP Customer Relationship Management, SAP Supply Chain Management, SAP NetWeaver Business Warehouse, SAP NetWeaver Process Exchange and many related applications in separate LPARs on the three Power 770 servers.

Improving storage management
Data for the SAP applications is managed by IBM DB2, which provides very close integration with the SAP software environment. The latest versions of DB2 offer both row and index compression functionality, which can reduce data volumes by more than 40 percent. The company relies on IBM System Storage® DS8300, an enterprise-class storage solution that is capable of supporting up to 128 TB, and up to 1024 TB with four expansion models attached.

Workload automation
To help ensure consistent performance and meet the agreed service levels in the business, the electronics manufacturer deploys Tivoli Workload Scheduler, which sets business policies to control the submission, queueing and execution of jobs. Tivoli Workload Scheduler automates workload scheduling and improves total workload throughput. Jobs with higher business value can be assigned higher priority, while the software intelligently manages the mix of workload types to optimize processor utilization and achieve service level agreements.

Benefits of outsourcing
The team estimates that some 80 percent of systems management is outsourced to IBM, from application management services, software, infrastructure and data center hosting for the IBM Power 770 and IBM System x3850 servers.

The Director of SAP applications comments, “Traditionally, we have run our SAP software in-house. Working with IBM, we are transitioning to software as a service, which provides a much more cost-effective way of meeting the business needs.”

Consolidating to IBM Power 770 servers has helped the company to cut its software licensing costs by 25 percent and reduce its total costs of operation by 34 percent. Data center energy consumption has been cut by an estimated 80 percent, and floor space by 44 percent. By outsourcing its application management and data center hosting to IBM Global Business Services, the company has cut its system administration costs by more than 50 percent.

The Director of Operations, Technology and Applications concludes, “We run the business based on detailed service level agreements with the operational units and according to the commercial objectives set by the business executives. Working with IBM, we are able to meet those service levels without buying additional servers, licensing new software or purchasing new floor space.”

“By outsourcing tasks to IBM, our team is able to handle a high volume of reporting and support requests, and the consolidation to the Power 770 server solution will simultaneously enable us to continue on our cost-reduction journey.”