Movado accelerates business processes with SAP software on IBM i

Movado Group Inc. is positioned in the luxury, accessible luxury, and fashion segments of the global watch market. The group manufactures, distributes and markets products for Movado, Ebel, Concord, ESQ by Movado, Coach, Tommy Hilfiger, HUGO BOSS, Juicy Couture and LACOSTE. Movado owns 33 retail stores in North America, maintains a presence in Hong Kong and Switzerland, and ships its products to retailers around the world. Headquartered in Paramus, NJ, USA, the group has annual sales of approximately $500 million and employs 1,500 people worldwide.

Business challenges and project objectives
Movado wanted to gain the agility to respond to increasing customer demand by optimizing its manufacturing, distribution and financial processes. Simultaneously, the company wanted to streamline its internal workflows, to cut stock and working capital requirements, and to reduce administrative and procurement costs. A key measure was Movado’s ability to close each financial month end, which would ensure that executives based their decisions on accurate, timely data.

Existing systems and infrastructure were proving a hindrance to these objectives. The company’s server infrastructure was not optimized to handle the increased processing load, and its legacy ERP solutions restricted its ability to globalize processes, analyze sales and inventory information from worldwide offices. The result was that it was difficult to adjust marketing programs and production plans, which directly affected the ability to manage margins.

Underpinning the operational objectives, Movado also wanted to reduce business risk. With many different SAP ERP and standalone software solutions, the company was not comfortable with its ability to recover from disaster in a timely manner.

Movado embarked on a project to consolidate its three legacy ERP application instances into one central system to improve inventory visibility, enhance reporting precision, and increase the speed at which the books could be closed at the end of each accounting period.

The ultimate goal was the creation of a central ERP platform with sufficient performance to meet Movado’s long-term business requirements. To achieve this goal, Movado needed a full IT refresh – upgrading hardware and consolidating its legacy ERP applications to an integrated solution.

The company based its selection process on four key criteria:

• consistent IT architecture that was easy to manage and scale
• integrated, validated and shared information
• always-on, 24/7 availability of data and services
• added business value through enhanced reporting

Movado chose to implement a comprehensive suite of SAP applications running on the IBM Power Systems™ platform. IBM and SAP were selected as having the best combination of focused skill sets that would enable the two vendors to deliver an integrated solution and minimize business risk during the implementation process.

Technical solution
Making the move to SAP software
Movado first implemented SAP ERP applications and SAP NetWeaver Business Warehouse (SAP NetWeaver BW) on two IBM Power® 570 servers running IBM i and using the integrated IBM DB2® for i database system. Using a high-speed virtual private network, all of the company’s geographic locations accessed the same SAP ERP instance, supporting core business processes, such as financials, sales and distribution, supply chain management, procurement and logistics. Movado today operates its SAP applications on two IBM Power 770 servers, running the latest release of the IBM i operating system, 7.1, in a high availability configuration.

Worldwide transaction data captured in SAP ERP applications is transferred to SAP NetWeaver Business Warehouse for further analysis, meeting the company’s requirements of integration and enterprise-wide consistency.

Using a single global instance of SAP ERP, the company is able to generate reports by brand, geography, customer, and stock-keeping unit dimensions. Procurement – previously managed with separate applications and transacted through low visibility processes such as telephone calls and faxes – is now managed in SAP ERP, and can be analyzed along several dimensions, including supplier, product, schedule, geography or purchaser.

Movado’s SAP applications user base comprises the entire organization – some 1,500 individuals. All Movado employees can access their personnel data through a self-servie application, using SAP ERP Human Capital Management and SAP NetWeaver Enterprise Portal. This solution is also being used to access reports through business intelligence applications, initiate maintenance or feature request tickets, and access the SAP Productivity Pak application by U-Perform – a knowledge base containing training materials. Employee feature requests are reviewed by administrators twice per week in the SAP Solution Manager. Movado implemented the SAP Change Control Management workflow, enabling the company to fully track all change requests.

The next stage of the project was to develop an aftersales support solution based on SAP technology and developed in-house. In addition, Movado implemented SAP solutions for governance, risk, and compliance to increase security.

SAP Apparel and Footwear
Movado evaluated different applications and concluded that the SAP Apparel and Footwear application was optimally suited to meet its business needs. SAP Apparel and Footwear includes the key elements of the retail chain, and with minor customization became a perfect fit for watch sales.

The sophisticated Allocation Run (ARun) functionality was configured to automatically order new stock when levels fall below a predefined threshold, helping Movado to improve its customer service and inventory prioritization, and increase its fill rate by 15 percent.

Implementing the ‘fair share’ logic to optimize supply management between different plants, ARun was configured to automatically prioritize allocation to regions with the highest demand – significantly reducing inventory and working capital.

Aftersales support application
To deliver improved repair services to its customers, Movado developed an aftersales support application to replace its legacy solution, and integrated it end-to-end with SAP ERP software. A third-party application was used for the front-end after sales web application. The back end was developed using SAP ABAP programming tools, fully integrated into SAP ERP and which communicates with the main SAP ERP instance via the IDoc interface. Customers may visit the portal to open repair tickets for their watches, entering full details, and they can then view the progress of the repair through Movado.

Integration with standard SAP ERP transactions – for example, using SAP ERP data to source components and manage invoicing – allows Movado to build a full estimate for each watch repair. Call center staff using the aftersales application have full visibility of every watch and customer in the system, and can drill down to see exactly where a watch is in the repair workflow in even greater detail, enabling them to provide personalized feedback to customers.

SAP solutions for governance, risk, and compliance
To control application security and ensure that users had appropriate access rights across all systems, Movado chose to implement the SAP solutions for governance, risk, and compliance.

In the past, generating reports on user access rights was a manual process. Using the SAP GRC Superuser Privilege Management component – also known as ‘Firefighter’ – the company is able to monitor, audit and update access rights precisely. Using the tools provided by SAP GRC Superuser Privilege Management, reports can be generated automatically, freeing IT staff from iterative tasks.

If system access is enabled for an individual user, SAP GRC Superuser Privilege Management gives administrators full visibility and recovery from user changes.

Server architecture
Movado implemented two IBM Power 770 servers with twelve IBM POWER7® processor cores and 288 GB main memory each. As a fully integrated deployment to IBM Power servers running the IBM i operating system, Movado relies on internal data storage. Each IBM Power 770 server is configured with 22 TB disk space on internal hard disks, reducing the number of physical devices and interfaces, and contributing to the small server-room footprint of this configuration.

The IBM POWER7 processor was designed for virtualized consolidation of business-critical workloads. Combined with the IBM i operating system and the integrated IBM DB2 for i database, the IBM Power 770 platform offered both high performance and native support for workload consolidation – the optimal combination to achieve high SAP application performance and streamlined administration.

To maximize the available system processing capacity, Movado uses the advanced virtualization features provided by IBM PowerVM®. Using the micro partitioning features of PowerVM, each server is divided into multiple logical partitions (LPARs) based on a shared processor pool. The company activated seven IBM POWER7 processor cores in each IBM Power 770 server, and divided the total capacity in shared pools between four uncapped LPARs, arranged identically on both servers. Production SAP ERP and SAP ERP Human Capital Management solutions are hosted in one LPAR, and a second LPAR hosts the production SAP NetWeaver Business Warehouse. Movado runs its SAP quality management solutions in a further LPAR, and up to 15 different SAP systems run in a final LPAR for development and testing purposes.

IBM i also offers a unique onboard virtualization feature – IBM i subsystems. Subsystems are virtual runtime environments for individual applications, allowing them to share available hardware resources within a single LPAR. Subsystems allow prioritization and demand-capping for individual applications, and can be started and stopped independently. Running SAP ERP applications on an IBM i platform enables users to set up simplified IT landscapes to run their SAP solutions.

To ensure optimal performance of its mission-critical production systems, Movado allocated three virtual processor cores to the logical partition running the SAP ERP production system. This logical partition is prioritized and weighted to ensure that the production systems can use all the available resources required to improve reliability and performance.

SAP application architecture usually comprises three tiers: database, application and user interface. The three tiers are often run on different machines, and sometimes on different hardware platforms and operating systems.

Taking advantage of the integrated IBM DB2 for i database, Movado is able to combine the database and application tiers. Movado runs the IBM DB2 for i database as part of the IBM i operating system, with the SAP application’s central instance and application server in a single LPAR. Running both the database and the application in one LPAR reduces complexity and cuts the number of partitions that need to be monitored and maintained. Running two tiers rather than three tiers is beneficial, as it removes the need to manage an additional LPAR. The reduction in complexity that Movado has achieved by running 15 development and testing systems in one LPAR is another advantage of using the IBM i operating system over alternative platforms, which often require more LPARs to operate a similar SAP environment.

Steve Cappitelli, Director of Global IT Operations, concludes: “By running our SAP applications on IBM i, we are able to manage a complex solution landscape with a minimum of effort and a lean IT team.”

Using IBM Co-Location
At the beginning of the upgrade project, Movado relied on a traditional disaster recovery approach, with daily incremental backups to tape and twice-yearly equipment testing. As the company’s data had grown, it became clear that it was no longer feasible to recover all of its business-critical systems within a 24-hour window. To improve business continuity and reduce business risk, Movado decided that co-location would be the best way to achieve its goals.

After investigating a number of vendors, Movado decided that only IBM Global Technology Services had the equipment and expertise to support the transition to a co-location solution.

Frank Morelli, Senior Vice President of Global Business Processes and CIO of Movado Group, comments: “The vendors we looked at really gave us a binary choice – either a traditional, tape-based approach or co-location. Ultimately, we decided to go with IBM because of their proven experience with both types of disaster recovery solutions. IBM offered us the flexibility to gradually evolve our disaster recovery solution in a way that made sense for our business.”

The company’s two IBM Power 770 servers were installed at separate geographical locations and configured as independent mirrors with a real-time data replication solution. One IBM Power 770 server is installed at a Movado data center, the other IBM Power 770 server is to be re-located to an IBM site.

By mirroring its production environment to the IBM co-location data center, Movado gains the ability to failover to its secondary site in the event of a disaster recovery scenario – bringing its SAP systems back online almost instantly. Using this disaster recovery method, core business activities such as inventory management would be minimally impacted by an outage at the primary site, and the company’s IT team would be free to prioritize the order in which secondary systems were brought back online.

“Being able to use the IBM Power 770 for real-time replication, disaster recovery and to eliminate the need to recover from tape in the event of failure fulfills our key business philosophies of efficiency, reliability and reusability,” says Frank Morelli. “We are secure in the knowledge that our core business data – including shipping and inventory information – will be protected if the primary data center suffered a power outage.”

Performance improvements
Strong collaboration
With a solution that involved components from both IBM and SAP, Movado has first-hand experience of the collaboration between the two vendors. Mike Torrente, Vice President Global Information Technology, says of the relationship: “From my perspective, it’s seamless. For example, we had a situation where our system was performing poorly and we opened a support ticket at 11:00, and by 11:45 someone from the combined IBM and SAP development team at SAP in Germany had looked into the problem and was giving us a solution. I think that speaks very highly about the quality of the IBM and SAP alliance.”

Movado regularly takes part in conferences for knowledge exchange with other IBM i users. Jorge Serrano, SAP Basis Manager at Movado, comments: “We have a lot of confidence in IBM’s commitment to the IBM i platform, and because of that, we find it valuable to keep a link with the IBM i community going. There’s always something interesting that comes out of our conversations that we can follow up on to optimize our own system environment.”

Next steps
Preparations are under way to complete Movado’s co-location strategy. “We are planning to move the secondary IBM Power 770 to an IBM data center by the end of 2012,” says Frank Morelli. “Our goal is to eliminate tape backup entirely and simplify the landscape as far as possible. By outsourcing our disaster recovery to IBM, I am confident that we’ll be able to achieve it.

“When we moved to running a single instance of our SAP ERP and SAP NetWeaver Business Warehouse solutions on the IBM Power Systems servers, it was a ‘big bang’ implementation – we went live worldwide on one day. To limit the number of variables in the equation and minimize the risk of something going wrong, we decided to stay with the third-party high-availability solution for data replication. Now we have a stable environment, we are very interested in optimizing our high availability setup and investigating other vendors’ solutions – including IBM PowerHA.”

Internal storage on IBM i simplifies the task of system administration, making it an ideal option for companies such as Movado. As the business continues to grow, external storage may provide additional benefits. Steve Cappitelli concludes: “Internal storage works well with our landscape, but we are always on the lookout for new opportunities. In the future, we may make the move to external storage solutions if we need extra performance to drive our business forward – possibly through storage virtualization and a storage area network with traditional disk drives and also solid state disks.”

Project achievements
Since the completion of the upgrade project, Movado has seen significant improvements in its inventory visibility, customer service and supply chain management. Before the company implemented SAP NetWeaver Business Warehouse, there were three separate applications and no consolidated data repository.

With the implementation of SAP NetWeaver Business Warehouse, all data for reporting is consolidated in one system, and currency conversions are computed automatically with daily rates from an external data provider, increasing the accuracy and efficiency of the reporting process.

Kate Moore, Business Intelligence Director at Movado, explains: “Before we implemented SAP ERP, we were on three different systems, which meant lots of phone calls and sales executives who did not know what was coming until the truck pulled up at the warehouse.”

“When we were planning this migration and consolidation project, the sales executives specifically requested that we build increased inventory visibility into the solution, so that is exactly what we’ve done. It has made a big difference for them.”

“Using the data from SAP ERP applications and the SAP NetWeaver Business Warehouse solution, we created a Supply Situation Report, which looks at the forecast demand, purchase orders, requisitions and plans for the production sites over a 26-week horizon. Sales account executives rely on this information because it is so accurate; it shows them what’s coming in the short and longer term, and they can plan marketing campaigns around this.”

Improvements in inventory visibility and information integration allow Movado’s business intelligence team to generate reports that help Movado employees to increase sales and reduce inventories, improving their turnover. “We set out to improve customer service, supply chain performance, and create a platform for growth, and, thanks to our SAP NetWeaver Business Warehouse system, that’s exactly what we have achieved,” continues Kate Moore. “By generating reports that give our customers the insights they need to move more products out of their inventory, we have gained an excellent reputation within Movado Group.”

Using SAP NetWeaver Business Warehouse in combination with the SAP Strategic Enterprise Management application’s Business Consolidation component has enabled Movado’s business intelligence team to perform consolidated worldwide financial reporting, and allows the company to close the books more quickly at the end of each accounting period.

The integrated SAP ERP applications provide validated data to SAP NetWeaver Business Warehouse, available for detailed analytics and reporting.

Today, every purchase order over $1,000 goes through Movado’s SAP ERP workflow and is approved according to the company’s organizational structure. By improving visibility of the contents of individual purchase orders and channeling requests to the appropriate authorizer automatically, the company has radically increased the efficiency of its procurement process. The solution provides more timely data, and enables financial closes in days instead of weeks. The enhanced purchase order workflow provides appropriate approval levels, allowing significant vendor consolidation and, visibility of purchasing commitment globally.

SAP software also helps Movado to place the right amount of stock on the right shelves in response to customer demand. Through increased ease of inventory management and automatic stock allocation, the company has decreased its stock and working capital by millions of dollars over a period of 3 years.

“Thanks to the IBM and SAP solution, we are now able to better understand our needs and positions globally. As a result, we have been able to achieve continuous improvement via our three-tier KPI reports in the business intelligence solution, measuring supplier performance within Movado, intercompany transfers, and Movado’s customer performance. In addition, we are able to make better decisions about procurement and product deployment.”