SAP NetWeaver Roadmap

Karch, Heilig, Bernhardt, Hardt, Heidfeld, Pfennig

SAP NetWeaver™ Roadmap

5Contents

Contents

1 Introduction 11

2 SAP NetWeaver in 20 Minutes 15

2.1 Requirements of an IT Landscape ................................................................. 172.1.1 Flexibility As a Key to Success ......................................................... 182.1.2 Cost Consciousness ........................................................................... 212.1.3 Innovation .......................................................................................... 23

2.2 SAP NetWeaver ................................................................................................ 242.2.1 Levels of Integration .......................................................................... 262.2.2 Components of SAP NetWeaver ..................................................... 272.2.3 Architecture ........................................................................................ 302.2.4 Supporting Standards ........................................................................ 322.2.5 Costs .................................................................................................... 332.2.6 Innovations with SAP NetWeaver ................................................... 342.2.7 Strategic Significance ......................................................................... 36

2.3 Paths to SAP NetWeaver ................................................................................ 382.3.1 Project Procedures ............................................................................ 382.3.2 Roadmaps ........................................................................................... 39

3 Value Analysis 41

3.1 Market Requirements and Technology ........................................................ 41

3.2 Description of the Value Analysis ................................................................. 433.2.1 Flexibility ............................................................................................ 453.2.2 Innovation .......................................................................................... 473.2.3 Cost Reduction .................................................................................. 483.2.4 Reference Value ................................................................................. 50

3.3 The Value Analysis Process ............................................................................. 51

4 Roadmap to SAP NetWeaver at Automotive Inc. 55

4.1 Scenario Description ....................................................................................... 55

4.2 The Challenge ................................................................................................... 584.2.1 Building an Analytical CRM System ................................................ 584.2.2 Supplier Integration .......................................................................... 60

Contents6

4.3 The Points of Focus .......................................................................................... 614.3.1 Integrating All Customer Relations in One Platform ..................... 624.3.2 Integrating All Supplier Relations in One Platform ....................... 70

4.4 Fast Project Successes ..................................................................................... 74

4.5 Integrated Project Procedure ......................................................................... 774.5.1 Setting Up the BW and BPS Solution .............................................. 774.5.2 Master Data Management for Dealers ............................................ 804.5.3 Development Portal with Suppliers ................................................ 834.5.4 Issue Management ............................................................................. 864.5.5 Overview of the SAP NetWeaver Components Used ................... 88

4.6 Automotive Inc.—Value Consideration ........................................................ 884.6.1 Management of Customer Relations ............................................... 894.6.2 Integrating the Suppliers ................................................................... 904.6.3 Evaluation and Recommendation .................................................... 92

5 Roadmap to SAP NetWeaver in an Automotive Supplier Company 95

5.1 Scenario Description ........................................................................................ 955.1.1 Developments in the Automotive Supplier Industry .................... 955.1.2 Growth and Situation of Car Doors Inc. ......................................... 99

5.2 Challenges ......................................................................................................... 1025.2.1 Integrating Heterogeneous Systems ................................................ 1025.2.2 Optimizing the Supply Chain ........................................................... 1045.2.3 Optimizing Intercompany Process Flows ....................................... 106

5.3 The Supply Chain As a Future Success Factor ............................................. 1075.3.1 The Car Doors Inc. Supply Chain ..................................................... 1075.3.2 Objectives of Car Doors Inc. ............................................................ 109

5.4 Integrated Project Planning Procedure ....................................................... 1105.4.1 Integrating a Standardized DP Integration Platform ..................... 1105.4.2 Integrating a Supply Chain Controlling Solution ........................... 1145.4.3 Integration and Harmonization of Business Objects ..................... 1185.4.4 Integrating Business Partners from the

Automotive Supplier Market ............................................................ 1195.4.5 Conclusion .......................................................................................... 122

5.5 Car Doors Inc.—Value Consideration ........................................................... 1235.5.1 Standardized Integration Platform ................................................... 1245.5.2 Data Integration for Supply Chain Controlling .............................. 1255.5.3 Supplier Integration ........................................................................... 1275.5.4 Evaluation and Recommendation .................................................... 128

7Contents

6 Roadmap to SAP NetWeaver for United Gas 131


6.2 Challenges ......................................................................................................... 1346.2.1 Self-Developed Solutions versus Standard Software .................... 1356.2.2 IT Infrastructure ................................................................................. 1356.2.3 Collaborative Business and the Intranet ......................................... 1376.2.4 Key Figures and Reporting ............................................................... 139

6.3 Approaches ........................................................................................................ 1416.3.1 Introducing a Cost-Effective Infrastructure .................................... 1426.3.2 Collaborative Business ...................................................................... 1436.3.3 Decisions Based on Key Company Figures ..................................... 1456.3.4 Changeover to Standard Software .................................................. 146

6.4 Rapid Project Success ...................................................................................... 148

6.5 Integrated Project Planning Procedure ........................................................ 1496.5.1 Developing a Modern Infrastructure .............................................. 1496.5.2 Key Figure Models ............................................................................ 1516.5.3 Optimizing Customer Relationships ................................................ 1536.5.4 Intercompany Processes with Customers ....................................... 154

6.6 United Gas—Value Consideration ................................................................ 1556.6.1 Developing the IT Infrastructure ..................................................... 1566.6.2 Developing Key Figure Models ....................................................... 1576.6.3 Integrated Process Interfaces ........................................................... 1586.6.4 Process Integration with Business Partners .................................... 1606.6.5 Evaluation and Recommendation ................................................... 161

7 Roadmap to SAP NetWeaver at ABC Bank 163


7.2 Challenges ......................................................................................................... 1687.2.1 Optimizing the Customer and Product Portfolio .......................... 1697.2.2 Simplification of the Value Chain and IT Landscape ..................... 171

7.3 Starting Points .................................................................................................. 1757.3.1 Gradual Change to Standard Software ........................................... 1757.3.2 Quantity and Quality of Available Information ............................. 1777.3.3 Cross-Company Integration of Processes ....................................... 183

7.4 Integrated Project Planning Procedure ........................................................ 1857.4.1 Quick Win: Introducing SAP Enterprise Portal (EP) ...................... 1857.4.2 Implementing an Analytics Platform ............................................... 1877.4.3 Implementing an Integration Hub ................................................... 189

7.5 ABC Bank—Value Consideration ................................................................... 1907.5.1 Standard User Interface .................................................................... 1917.5.2 Data Integration ................................................................................. 192

Contents8

7.5.3 Process Integration ............................................................................ 1937.5.4 Evaluation and Recommendation .................................................... 194

8 ESA—Enterprise Services Architecture 197

8.1 The Gentle Revolution ..................................................................................... 1978.1.1 IT Developments of Recent Years ................................................... 1978.1.2 Another Paradigm Shift ..................................................................... 199

8.2 Reasons for Service-Oriented Architectures ................................................ 2008.2.1 The Burden on Businesses ................................................................ 2018.2.2 Squaring the Circle ............................................................................ 2018.2.3 Developed IT Landscapes ................................................................. 202

8.3 Web Services ..................................................................................................... 2028.3.1 Increasing Standardization in IT ....................................................... 2038.3.2 Communication Between Web Services ......................................... 2048.3.3 The Benefits of Web Services ........................................................... 206

8.4 ESA—SAP's Blueprint for SOA ....................................................................... 2078.4.1 From ERP to the Cross-Application Business Process ................... 2088.4.2 The ESA Structure .............................................................................. 2098.4.3 Sample Scenario ................................................................................. 2138.4.4 SAP's Road to ESA ............................................................................. 2178.4.5 The Road to ESA As a Process .......................................................... 218

8.5 Conclusion ......................................................................................................... 218

9 Technology 221

9.1 SAP NetWeaver Integration Platform ........................................................... 221

9.2 The Integration Layers of SAP NetWeaver ................................................... 2229.2.1 People Integration ............................................................................. 2239.2.2 Information Integration .................................................................... 2239.2.3 Process Integration ............................................................................ 2249.2.4 Application Integration ..................................................................... 2259.2.5 Summary and Outlook ...................................................................... 225

9.3 People Integration ............................................................................................ 2269.3.1 Market and Solution Requirements ................................................ 2269.3.2 SAP Enterprise Portal ........................................................................ 2279.3.3 SAP NetWeaver Collaboration Services .......................................... 2349.3.4 SAP NetWeaver Multi-Channel Access ........................................... 236

9.4 Information Integration ................................................................................... 2409.4.1 Market and Solution Requirements ................................................ 2409.4.2 The SAP Solution ............................................................................... 2449.4.3 SAP Business Intelligence ................................................................. 2449.4.4 SAP Master Data Management ........................................................ 2519.4.5 SAP Knowledge Management .......................................................... 2549.4.6 Outlook ............................................................................................... 256

9Contents

9.5 Process Integration .......................................................................................... 2579.5.1 Market and Solution Requirements of an

Exchange Infrastructure .................................................................... 2579.5.2 SAP Exchange Infrastructure in Detail ............................................ 2609.5.3 Summary and Outlook ...................................................................... 268

9.6 Application Platform ........................................................................................ 2699.6.1 General Market Requirements and Solutions ................................ 2699.6.2 SAP Web Application Server ............................................................ 270

9.7 Composite Application Framework .............................................................. 2789.7.1 Market and Solution Requirements of the

Composite Application Framework ................................................ 2789.7.2 The SAP Solution in Detail ............................................................... 279

9.8 SAP Solution Manager .................................................................................... 2839.8.1 Support in the Process Life Cycle .................................................... 2859.8.2 Process Modeling and Management ............................................... 2869.8.3 Outlook ............................................................................................... 287

10 Final Considerations 291

10.1 Familiar Applications As a Basis .................................................................... 29110.1.1 SAP Business Information Warehouse ............................................ 29210.1.2 SAP Enterprise Portal ........................................................................ 29210.1.3 Predecessors to XI in the Form of Pure EDI Solutions ................. 29210.1.4 SAP Web Application Server ............................................................ 293

10.2 New Components in SAP NetWeaver .......................................................... 29310.2.1 SAP Exchange Infrastructure ............................................................ 29410.2.2 SAP Master Data Management ........................................................ 29410.2.3 SAP Composite Application Framework (CAF) .............................. 294

10.3 Advantages for “Early Birds” .......................................................................... 295

A Sources and Further Reading 297

B About the Authors 301

Index 305

163Roadmap to SAP NetWeaver at ABC Bank

7 Roadmap to SAP NetWeaver at ABC Bank

Like many of its competitors, the German ABC Bank has sig-nificant structural problems and needs to make lasting improvements to its processes. Its aim is to concentrate on core competencies. SAP NetWeaver offers a range of capabili-ties for supporting and expediting this modification.

German banks, in general, are experiencing significant structural prob-lems. During the past decade, they have hardly changed, and they havepersisted in using their old structures. Practically every bank still assumesresponsibility for each process in the value chain itself, leaving great opti-mization potential unrealized. Changes have constantly taken place inother sectors of the industry over the last decade, and now these bankshave only a short time period to adapt themselves to new market require-ments. Ulrich Cartellieri, former executive and member of the board ofdirectors at Deutsche Bank, described the circumstances of the financialservices industry by saying, “The banks will be the steel industry of the1990s.”

Pressure to Change

ABC Bank, which plays a significant role in the German banking market,faces problems that are typical in the industry. It's under intense pressureto make changes, and this directly affects the demands made on its ITdepartment. Although banks generally have high IT budgets at their dis-posal, in no way do they have the best possible IT systems. With theirlong-standing and versatile use of computer systems, they have facedhigh costs, originating from the heterogeneity of their IT landscapes. Atthe same time, their complex IT structures impede fast compliance withmarket requirements. ABC Bank is faced with the challenge of makinglasting improvements to the cost/revenue ratio and at the same timeoptimizing its processes, particularly where outsourcing segments of thevalue chain comes into play.

7.1 Scenario Description

Reunification in the beginning of the 1990s and the phenomenal marketboom at the end of the 1990s enabled German banks to achieve excel-lent results. However, the market boom's continuously rising returnshave led to a dangerous development. The banks' structural problems

Roadmap to SAP NetWeaver at ABC Bank164

were concealed for a long time and were then clearly manifested at theend of the market boom. In the last 5 to 7 years, banks in Europe weren'tinterested in the classic banking business with private customers becauseIPOs (Initial Public Offerings) and investment banking were far moreprofitable. However, the economic decline of the last 2 to 3 years (inwhich many IPOs were floated and investment banking had to enforcemassive cuts) has prompted a change in the behavior of financial institu-tions. Banks are suddenly in the red because their core business has beenneglected for years, and therefore has hardly grown.

Greater Compe-titive Pressure

The crisis has been intensified by other problems in the industry, which, forexample, suffers from bad loans and has to compete for customers.Although there is already a very high density of banks in Germany, new ven-dors are pushing into the market alongside existing competitors. The banksof automobile companies (subsidiary companies of OEMs) have achieved arespectable share of the market, for example, in the area of car financing.

The boom not only covered up the fact that business with both privateand business customers had been neglected, but also that costs had risensharply. It was necessary to lower expenditures, which resulted in layoffsthroughout the entire industry. In addition, many branch offices wereforced to close, because they were only profitable if they looked afterseveral thousand customers. Although a considerable number of branchoffices have closed during the past few years, there are still too few cus-tomers per branch.

Decade-Long Useof IT

Banks recognized the great potential of IT early on, and have been usingcomputer systems on a broad basis for decades. In the 1970s and 1980s,it became customary for banks to develop and install their own softwarein-house, and the use of standard industry software was uncommon. Thisuse of homegrown solutions based on legacy technologies such asCOBOL and mainframes has led to higher maintenance and repair costs.

When considering the typical banking IT scenario, we distinguish betweenthe following three areas: administration (which includes purchasing andHR), sales, and core banking (which includes processing transactions andbookings). Standard software is used only in the area of administration.SAP has developed a core banking solution in cooperation with Ger-many's largest retail bank (Deutsche Postbank AG) called SAP for Banking.It has aroused much interest, but has not yet been distributed.

Even in small organizations, there may be more than a hundred differentsystems in use in the three different areas, leading to an extremely heter-

165Scenario Description

ogeneous system landscape (with many legacy and mainframe systems).Some larger banks may even have more than a thousand different sys-tems in use. The high-security standards in the banking industry, whichdemand certification for every type of software, have made banks wary ofchanging their IT systems. The relatively high number of banks with SAPR/2 installations is proof of this steadfast reluctance.

Infrastructure Software

In the banking industry, infrastructure software is typically developed in-house. Although the banking industry recognized the need for infrastruc-ture software earlier than other industries, due to the inherent use ofmany different systems, further developments in this area are necessary.The integration of many systems, with their numerous interfaces, leads tohigh absolute costs, and therefore, the costs per transaction are also veryhigh.

Cost ReductionIn response, banks have started a fervent attempt to reduce costs, withthe primary goal of consolidating the IT landscape. Also, investments ininnovation go primarily toward the migration of existing systems, or intohardware and software updates. Completely new implementations ofsoftware are planned only to a small extent. A further decline is also fore-cast for the area of expenditures for IT services. In spite of these savings,the banks have failed to significantly reduce their IT costs overall, as enor-mous costs for maintenance and care of the existing systems are stillaccruing due to the high system complexity.

Organization of the IT Department

In banks, the organization of the IT department naturally reflects theorganization of the IT systems. Almost every product in operation has itsown sub-department, which is made up of people who are familiar withthe highly specialized software in use. Although this structure enables thecreation and development of the required know-how, at the same time italso means that the respective departments are apt to adhere to “their”system, as their jobs are connected with it. Thus, there is a strong self-interest on a personal level not to remove legacy systems.

Banks have a fundamental structural problem that they must solve asquickly as possible: In contrast to the manufacturing industry or to high-tech enterprises, for example, a bank is in charge of its entire value chain,from the design and purchasing phases to production, and culminating insales and services. Employing a data-processing center to manage theposting of transactions is economically sensible only for banks of a certainsize. As a result, the majority of banks cover the entire process chainthemselves, and high costs accrue, because of the comparatively smallnumber of customers.


Therefore, banks have to change, just as OEMs have changed. They willonly look after part of the process chain themselves, operate unprofitableareas jointly with other banks, or simply outsource. While the change byOEMs was gradual, dragging on for more than 30 years, the change in thebanking sector must happen faster. International institutes identified theneed for change early on and reacted accordingly, so they are now evalu-ated higher on the capital market than are German banks. Therefore, it iseasy for them to take over German banks.

Analysis of theBanking

Landscape inGermany

When comparing the banking market in Germany with the rest ofEurope, the heterogeneity of the German market particularly stands out.The five largest Spanish banks share about 50% of the local credit volumeamong themselves. In Germany, the five largest banks collectively dealwith only about 20% of credits directly. The quota for the five largestbanks in Belgium and the Netherlands rests at over 75% and over 80%,1

respectively. A comparison of the market shares of the five largest Euro-pean banks is shown in Figure 7.1. The German market's problems willlead to a structural change in the medium term. Through partnerships,outsourcing, or merging, larger bank units will emerge and have a size inwhich, for example, transactional banking will become profitable. This“National Champions” strategy has been pursued in France, for example,where several banking enterprises have merged to form one large bank,which can assert itself well in the global market.

Figure 7.1 Market Share Comparison for the Five Largest Banks in Europe (Data in Per-centages)

SpecializationAs a Result of

Structural Change

Along with the trend of consolidating several small banks into fewerlarger banks, there are, of course, other possibilities that meet pendingstructural changes. Small to medium-sized institutions can consider spe-

1 European Central Bank: Structural Analysis of the EU Banking Sector, 2002.

0

20

40

60

80

100

FRNLBEESDE

167Scenario Description

cializing in certain areas. For example, some financial service providersspecialize in certain products (for example, the Norisbank specializes inconsumer loans) or processes (for example, MPL specializes in sales).Other enterprises, such as Allianz, which took over Dresdner Bank, seektheir fortune through offering insurance services.

Industrialization of the Banking Sector

The industrialization of the financial services sector is imminent. Banksmust undergo fundamental change, because their operation has becometoo expensive. They have to concentrate on their core business areas assoon as possible, and enter into close partnerships, where they do partsof their business together (within as well as outside the industry). Germanbanks have to explicitly cut back on their vertical integration, as control-ling everything themselves is no longer expedient. In the IT area, the par-ticular challenge exists in supporting this rapid modification.

ABC Bank's situation is typical for a German bank. Among the existingsystems, there are many solutions that have been developed in-house,which, for the most part, are based on comparatively old technologies.Many programs were developed in COBOL and were poorly docu-mented. A whole range of applications are not implemented in the cli-ent/server architecture, but they run in a mainframe environment.

Heterogeneous IT Landscape

Over the years, the number of systems in use at ABC Bank has increasedto more than a thousand. Due to the acquisition of a smaller institute afew years ago, heterogeneity has increased further, as only small progressin the unification of both IT landscapes has been achieved. Overall, a sig-nificantly heterogeneous system landscape has developed, in which theIT trends of the past 30 years have left their mark.

The diversity in the IT landscape is also reflected in the way the IT depart-ment is organized. Almost every large system has its own correspondingspecialized department. The members of these sub-units have greatexpertise in the use of specific applications, but they resist against systemunification, afraid that the system they work on may be affected. The ITorganization has been outsourced in the form of three subsidiaries.

Proprietary Interfaces

For the most part, the integration of many different systems takes placethrough manually developed interfaces, which are very difficult to main-tain, as proprietary technology has been applied. There are efforts to installa modern integration system based on J2EE, but this must be put on holdas the manufacturer of this software has gone out of business. Therefore,many interfaces still exist, which are predicated on the simple exchange ofinformation on a data level, which only takes place every 24 hours.


Using J2EE New systems comply with the J2EE standard, although relatively few soft-ware applications have been purchased. In other words, most J2EE soft-ware is homegrown. Also, first steps have been taken in the area of cus-tomer relationship management, with the use of self-developed J2EEsoftware.

7.2 Challenges

The basic structural changes banks are currently facing are inevitable, andthere are several resulting challenges that must be met. Because the maingoal is to reduce cost, all projects have to focus on fast ROI and measur-able results. Excessive operating costs act like a catalyst for the modifica-tion process, and intensify the effort to achieve fast and effective results.

In addition to pressure from competition and structural problems,another external factor affects the banks, emphasizing the need forchange: Legislature has responded to past stock exchange scandals andhas increased standards, especially with regard to transparency in lending.New regulatory standards such as Basel II,2 tighter tax laws, and the Sar-banes-Oxley Act3 reinforce the pressure on banks to change their pro-cesses and also the IT systems on which the processes are mapped.

ProcessManagement As a

Core Task

To prevent a common misunderstanding (i.e., introducing new softwarewill solve problems based on poor process design) from being perpetu-ated, internal processes must be managed. Practically every bank has bigproblems in managing its processes, and finding a permanent solution tothese problems is necessary. This task can be supported by suitable soft-ware, but will never be solved by IT alone. Therefore banks must reengi-neer their IT organizations and processes, and then map these changes tothe company's software.

ImpendingChanges

In an effort toward improvement, banks will need to do the following:

� Consolidate the IT system, with the objective of minimizing complexityand reducing costs

� Disintegrate the value chain, with the objective of concentrating onreal core competencies in-house and outsourcing other areas

2 Regulations regarding the capital and surplus of banks.3 A law that stipulates strict accounting standards for companies listed on US stock

exchanges.

169Challenges

� Increase focus on the customer, with the objective of selling moreproducts to individual customers and achieving greater sales revenueper customer

� Analyze the value added (profit) by individual products, processes, andcustomers by value management with the objective of deducing andplanning measures

� Based on this analysis, ABC Bank will be able to formulate strategies togenerate more profit out of the products, customers, and so forth. Thisapproach is contrary to what happens today—banks don't knowwhether or not they're earning money with a customer or product.

Deduced Measures

Under these conditions, some considerable changes in the IT area can beexpected. In particular, implementing a standard platform, on which theycan reorganize and optimize using standardized building blocks of soft-ware introduces a real challenge for ABC Bank, with its large variety ofsystems. This reorganization should simplify the system landscape consid-erably. The process of disintegrating the value chain will result in the needfor ABC Bank to let several systems become obsolete, as the sub-pro-cesses mapped therein should be taken over by partner companies in thefuture. Parallel to this effort, the bank must work on successfully collect-ing more specific information about customers and products, and makingthis information available to its staff. Both of these main objectives areexplained in more detail below.

7.2.1 Optimizing the Customer and Product Portfolio

Although ABC Bank uses more than a thousand different IT systems andhas spent large amounts of money for its operation, it still doesn't knowenough about its customers. Data is available in single systems, but noton a condensed level. Due to the huge diversity of systems, the impor-tance of a customer is often overlooked, that is, it is not possible to get areliable overview of a single customer. ABC Bank has systems for virtuallyany product so it is forced to look in each and every system to determinewhether the customer is affiliated with that system (meaning that he hasthat product). Only some systems have reporting capabilities, whichapply to individual data sources, delivering an inexact, even a partiallycontradictory picture.

Costs and Returns per Customer

However, it is not only the information about customers itself that is inad-equate. Similarly, no comparison of the incurred costs with the sales rev-enue or the returns per customer is available. In fact, the bank doesn'tknow whether or not it makes money on a customer. Because this type of


information doesn't exist even on a customer level, it is of course also notavailable on the product level (for instance, for determining what a cus-tomer has purchased or would like to buy).

It is not possible for ABC Bank to get precise information at the touch ofa button, for example, about a customer's profitability. Therefore, sup-port is by no means tailored to meet the needs of a particular customer.Rather, ABC Bank distinguishes between the market segments (retail, pri-vate banking, etc.), but within these segments the individual employeecannot discern the importance of a customer. The staff must attempt todo an initial evaluation using a customer's account balance. However, thisis only an improvised procedure, which does not solve the problem.

Integration ofExternal Infor-

mation

The bank must collect precise information in order to be able to servecustomers better and sell more products. Less profitable customers couldbe handed over to special subsidiary companies or to bank units that cangenerate profits with this type of customer segment due to strong stan-dardization or automation of services. Deutsche Bank, for example, pur-sued this idea with the creation of an Internet subsidiary bank calledBank24.4

Product Costs andRevenues

It is not just on the customer side that ABC Bank has insufficient informa-tion at its disposal, but also on the product side. The correlation betweenreturns and costs of a product is based more on the use of estimatesrather than on exact and comprehensible data. Because there are manysystems with no direct linkage to a product or customer, the cost that itincurs cannot be deduced. The existing costs (particularly by the requiredIT) can be determined only for very standardized financial products, like acurrent account.

Even if all the information regarding individual customers and the respec-tive products were available, it would still be difficult for users to accessit. Information is largely disseminated across the company via the heter-ogeneity and diversity of the systems used. In actuality, this means thatthe staff can see only a section of the real situation, and therefore cannotalways respond properly. Consequently, one of ABC Bank's importanttasks is to increase the quality of existing information, and to simplifyaccess to this information.

4 Meanwhile, Bank24 has been re-integrated into the parent company again due to achange of strategy.

171Challenges

7.2.2 Simplification of the Value Chain and IT Landscape

“Lean Production” in Banks

The second largest challenge facing ABC Bank is the transition to leanproduction. Just as car manufacturers are now handling only a small por-tion of the production chain themselves, the bank must manage toexplicitly reduce their vertical integration. This entails examining practi-cally all processes with regard to whether or not they could be imple-mented better or more cheaply by an outsourcing partner. If, for exam-ple, a specialized company can handle consumer loans more cheaply andsuccessfully offers this service to other banks, then there is no reason forABC Bank to keep offering this service. If there are no strategic argumentsagainst or other opposition toward outsourcing, the bank can save thecosts associated with handling loans, and thereby simplify its processesand the required systems.

The complexity of the IT landscape, with many in-house systems andpoint-to-point connections that need to be maintained, and without amanufacturer's support, along with the costs resulting from all this, prac-tically begs for simplification. This leads to a make-or-buy decision:Should the bank continue developing its own software, or is it willing toplace its bet on standardized software (that is, buy a solution and custom-ize it)?

Advantages of Standard Software

In most industries, including the banking industry, standard software hasasserted itself. The support of a software manufacturer through updatesand new releases should not be underestimated, even if regulatorychanges such as Basel II require a wide range of IT customizations. As thefinancial industry is subject to very strict regulations, a manufacturer'ssupport is particularly helpful here.

Furthermore, standard software offers a better time-to-market; becausethe software manufacturer has more resources, it can bring new softwareinto the market in a shorter amount of time. In addition, a bank's risks,which are already attached to every solution that is developed in-house,are dramatically reduced.

Support of Standards

Depending on market power and the setting of market standards, thesoftware manufacturers determine which standards will be applied andsupported in their products (for example, currently J2EE versus .NET) sothat their software offers advantages here too. While software that isdeveloped in-house must comply with market standards, and thereforecan react to only new standards, standard products already support anopen IT architecture from the day of their initial release.


Gradual Change Banks must realize that they need to make enormous changes. Thesechanges will have a huge impact on the cost and resources side, so only agradual approach to them is realistic. On this issue, Henning Kagermann,SAP's board spokesman, gives the following assessment:

“The CIOs know they have to live with the heterogeneity for the next fiveyears. You cannot just rip everything out and replace it, because thatwould be too expensive. Therefore you need a new blueprint for the nextfive years and a new architecture which you can develop over time. It'stoo expensive to do in one go. It is not a revolution, but an evolution.”5

Interfaces As aCost Driver

The high number of systems that are required for the various individualneeds brings an enormous interface problem with it. The combination ofthe many in-house software developments and mainframe applicationsusually relies on manually administered interfaces, for which there is ofcourse no manufacturer's service or updates. Whenever an application isupdated or modified, all interfaces involved are to be checked, tested,and, if necessary, customized. Obviously this process involves every sys-tem that is linked to the application to be customized.

As the funds for maintenance, which constitute 70% to 80% of the totalIT budget, are allocated to the individual processes during a process costinspection, the high number of interfaces inevitably means very high pro-cess costs.

SystemIntegration

Software

Because the integration of existing systems in a company by manuallycreated interfaces is very complex, maintenance-intensive, and thereforeexpensive, special software for integration has been used for a few yearsinstead. The automation of electronic communication is linked with theobjective of connecting all applications throughout the company. At thesame time, this will avoid a disruption in media (i.e., changing the mediafrom using an IT system to using paper for example). System integrationhelps to minimize the possible sources of error, and the quality of dataincreases incrementally with the pace of the business process. Ultimately,an integrated application will be created, geared toward the company'sbusiness processes. This type of software is referred to as Enterprise Appli-cation Integration (EAI) software.

Integration Types Aside from the pure integration of applications—the so-called applica-tion-to-application integration (A2A)—the integration of different organi-

5 Banking Technology Magazine: In Profile. March 2004. www.bankingtech.com.

173Challenges

zational units is especially of interest. Such an integration across companylimits is known as business-to-business integration (B2B).

Intercompany Cooperation

To be able to divide the value chain and outsource unprofitable areas,banks urgently need software for intercompany process integration. Theoutsourcing of processes, or “business process outsourcing,” means thetransfer of company responsibilities to other companies. For this youneed software that can integrate processes across company boundariesand firewalls smoothly.

InterfacesUsing software for process integration has advantages that should not beunderestimated in the complex system landscape. The interfaces are con-figured in a central location; information on the existence of an interfaceis stored there, documented in a certain way, and thus made transparent.Knowledge about a manually created interface, on the other hand, caneasily get irretrievably lost when an employee moves to another com-pany.

Figure 7.2 Comparison of Point-to-Point and EAI Hub Connections

EAI

Point-to-Point Connections

Connections using EAI


While the manually generated integration of systems creates point-to-point connections via interfaces, EAI software typically creates a hubarchitecture. As illustrated in Figure 7.2, the number of interfaces isthereby significantly reduced, as every system has to be connected to theintegration platform only once. When there's a specific number of appli-cations to be integrated, EAI software offers large cost advantages. In Fig-ure 7.3, the costs of the two integration types are contrasted.

Integration on theApplication Level

The first form of integration software, called middleware, was primarilyintended for the exchange of data. In contrast, EAI focuses on integration,particularly on a business process level, but also on an application anddata level. ABC Bank invested a lot in middleware from a vendor that spe-cialized in banking, a company that unfortunately didn't survive the com-motion of the Internet market boom. The subsequent removal of thissoftware, for which maintenance no longer exists, therefore, should bedealt with first.

Figure 7.3 Comparison of Integration Costs (Point-to-Point and EAI Hub)

Consolidation onthe Integration

Market

There is a clear trend toward consolidation in the integration softwaremarket at the moment. The specialist vendors who did position them-selves in the heyday of the best-of-breed architectures are in an increas-ingly difficult situation. Because best-of-breed causes a lot of integrationcost, today's companies are looking for more cost-effective integratedsolutions. That's why specialist vendors are facing a lot of competition inwhich they can hardly win because no one wants best-of-breed. Theyseem to be more exposed to competition from generalists, such as SAPand IBM, that offer comparable solutions and automatic integration witha company's applications out of the box. This is strengthened by the fact

Point-to-Point

EAI

Co

sts

Number of interfaces

175Starting Points

that the application server and the integration server are frequentlybecoming one in the same, and therefore the application vendors (withunderlying application servers) find themselves in a very comfortable sit-uation.

As a result of these developments, ABC Bank must take the followingmeasures:

1. Use standard software instead of homegrown solutions

2. Develop an integration infrastructure to enable the outsourcing of busi-ness processes

An IT landscape that is set up with standard software—and has modernintegration possibilities for the integration of external processes—has theadvantages of being cost-effective and having a superior quality, becauseit controls the IT value chain via an effective supplier and service manage-ment.

7.3 Starting Points

In light of the developments that were discussed in the previous section,ABC Bank must do the following if it is to become a viable competitor intoday's market:

1. Use standard software to reduce costs and implement process advan-tages

2. Increase the availability and quality of information to be able to makedecisions in consideration of all relevant factors

3. Promote integration on the business process level to improve the valuechain and therefore reduce interface costs

We will examine these three areas more closely in the following threesections.

7.3.1 Gradual Change to Standard Software

Software Development As a Core Competency

With its growing IT landscape that is mainly based on homegrown soft-ware, ABC Bank faces the problem that it will need to invest large sums ofmoney into further software development. The field of software develop-ment is certainly not part of a bank's core competencies, and manage-ment must decide whether or not tying up capital in this area is a viableoption. Software manufacturers invest 10% to 15% of their turnover intothe development of new products, but this investment is worth it for


them, because they can sell new products to many customers, so thedevelopment costs are ultimately borne by many companies. A bank's in-house software development is self-financed only by the bank; mainte-nance and additional development have to be self-financed and self-managed also.

As banks are subject to strict regulatory requirements, external influencesoften necessitate software customization. In response to Basel II, banksmust carry out far-reaching changes, and this demands further consider-ation as to whether a move toward standard software would be appropri-ate.

Integration ofStandard Software

At the same time, from a financial standpoint, the advantages of usingstandard software instead of developing software in-house are not imme-diately clear; at first glance, in-house development tends to look better,because it has most likely already been amortized. However, if we con-sider the maintenance, customization, and integration costs associatedwith developing software in-house, standard software comes out on top.Therefore, the choice of integration software should be considered as towhich extent the integration between the technical platform and thefavored application is preconfigured, as well as what costs and expensesare accrued. A big advantage of SAP is that all SAP applications that spanover many different process areas are very well integrated with each other(for example, mySAP CRM and SAP R/3, for checking product availabil-ity), and the NetWeaver integration platform is very well integrated withthe applications.

SAP NetWeaver's application server, SAP Web AS, enables good integra-tion in the Java world, because not only can it work with ABAP, but withJava as well. Thus, it can be easily connected with IBM's WebSphere Javaplatform, for instance, which is widely distributed.

Standardization ofProcesses

The decision in favor of standard software for mapping business processesalso enables a stronger unification of the processes themselves, which canincrease efficiency and consequently reduce costs. A template design isfrequently chosen for it, that is, create a basic customizing and roll it outto all organizational units. Further customization can take place in theseparate organizational units, but the processes are substantially the samethroughout the group. Similarly, the correct balance between unificationand necessary individual features is found on a client's design. (A systemcan be divided into technical clients with each having different customiz-ing settings.)

177Starting Points

Due to the unification of processes, systems can often be eliminated,reducing costs. At the same time, by standardizing its processes, the com-pany creates the basis to enable further optimization in which certainprocesses in special departments, shared service centers, or other compa-nies (in terms of BPO) are relocated. A first success can now be seen inthe creation of service departments: easy telephone queries aboutaccount balances or wire transfers were outsourced to an external callcenter service provider. The comparatively expensive bank employee willonly be required for more complex queries. Therefore, efforts toward thestandardization of business processes and the systems and formats usedwill be intensified.

Along with the standardization of processes and the systems used tomanage those processes, the standardization of desktops should also beendorsed in order to promote potential cost savings in this area as well.

Software:Make or Buy?

All in all, the use of standard software provides a great opportunity toshift the IT landscape's build/run ratio in favor of innovation. If the bankuses ready-made software, it can concentrate more on its core businessbecause fewer investments will be going toward maintenance of complexhomegrown solutions. The make-or-buy decision has to be examinedagainst the background of a banks' high vertical integration.

The German bank HypoVereinsbank has come up with an interestinganswer as to whether or not to use standard software. The company rec-ognized the advantages of standard software, and it tried to install it inareas where it is generally not used yet. Under the motto of “Make andSell,” the bank created a banking software in cooperation with SAP for itsown use, but also to be sold to other companies.

NetWeaver As Standard Software

The discussion of the advantages and disadvantages of converting to stan-dard software will not be explored further, as SAP NetWeaver is the focusof this book. In this context, it should be mentioned that NetWeaver isdelivered with the new applications (i.e., almost all applications deliveredin 2004 and later from SAP). The respective license is contained in therespective software package.

7.3.2 Quantity and Quality of Available Information

The poor availability and quality of relevant information is ABC Bank'smajor problem. It is laborious for staff to access relevant content, as infor-mation on customers and products is distributed over several systems. Aportal can help the bank eliminate this problem.


Problem Area:Reporting

Problems do not only exist in the direct retrieval of data on individual cus-tomers. Compiling and condensing information for use in evaluations andreports is also difficult. Reporting delivers imprecise and partially contra-dictory information, which on top of all this is not available in therequired granularity. A modern business intelligence system offers thepossibility of receiving fast reliable information in this area. Only withconsolidated and structured files can we evaluate the contribution ofindividual customers or products to the overall financial performance ofthe company.

Portal and Knowledge Management

ABC Bank's staff uses two words to describe the company's informationsituation: intransparency and redundancy. The system landscape is sub-stantially shaped by the following:

� The large number of interfaces, which distribute information in aninsufficient manner

� The use of different sources of information, which make use of individ-ual user interfaces and require different types of operation

� Highly individualized programming in the individual systems

� Distribution of applied logic across the entire IT landscape so thatemployees are forced to access all systems to find the information theyneed

ReducingComplexityfor the User

The solution would be a portal that acts as a central access point for allinformation. It is possible to integrate the bank's heterogeneous systemlandscape in the front end using the portal. This means a system layer willbe implemented that conceals the complexity from the user. The avail-ability of relevant information will be improved significantly, as the userwill no longer see the confusing complexity of the system. As a bonus,training expenses will be reduced, as training will no longer have to becarried out for every individual system. The administration expenses asso-ciated with login problems and forgotten passwords will also fall dramat-ically.

KnowledgeManagement

The introduction of a portal offers the chance to implement a KnowledgeManagement system (KM) at the same time. All unstructured documentsthat are required for work can be stored there. Its primary purpose is tomake current product information available. Background information onproducts and the bank's sales strategies are also stored here. Regulatorychanges and their effects on the business process can be documented in

179Starting Points

electronic form in the KM system so that expensive paper circular mailscan be dropped. Training can even be eliminated in some areas.

Easy routine queries (for example, account balance queries or wire trans-fers) can also be processed by lower-level personnel, who have access toall required information at the click of a mouse.

Figure 7.4 illustrates the possible front-end integration of ABC Bank's sys-tems.

Figure 7.4 Portal and KM at ABC Bank

The simplification achieved by improved access to information and thestructural arrangement of information eventually serves one large objec-tive: to make the bank's entire knowledge about customers and suitableproducts available to the employees by collecting all relevant informa-tion.

Procedure:Step by step

You can introduce the portal step by step. While one user group is alreadyusing it and therefore gets integrated information, the other user groupscan still access the systems individually (for example, a KM system) with-out the portal. While some user groups will immediately start using theportal, others will be not impacted right away by its implementation. Lit-tle by little, use of the portal can be expanded to more user groups, andthe integrated contents can be refined. For example, the area of privatebanking could serve very well as a pilot for implementation. As a relativelysmall group of staff is affected, the volume of the project size for improv-ing their work environment is limited. Because very wealthy customersare looked after in this area, a realized success can have a positive impacton the overall result. If you manage to improve the customer satisfactionin this rather small segment, it can have a remarkable impact on youroverall financial result because there is a lot of money involved.

Improve Customer Care

Another objective that should be achieved by the optimization of avail-able information is the improvement of customer care. In the past, ABC

Portal

CRM

KM

Legacy ...Stock

system


Bank has undertaken its first steps in this direction by developing CRMsoftware. This software allows you to retrieve detailed customer data anduses data from other source systems for that reason. Certain additionalinformation about customers can be stored, so that, for example, infor-mation is available about a customer's interest in certain products. Themanagement team will now try to align this information with categorizedproduct information, so that products can be suggested automatically.The system is based on the J2EE architecture; however, it is notenhanced, because the consolidation of files from different sourcesrequires a great deal of effort, and the expected degree of success has notmaterialized.

Necessity of CRM The first steps toward CRM were made in an attempt to increase thebank's low cross-selling rate with IT support, and this idea was taken upagain using SAP NetWeaver. Accessing the distributed customer informa-tion will become significantly easier with the implementation of the por-tal, and with the possibility of accessing the different data sources via theunifier technology. Fortunately, the legacy CRM system is based on J2EE,so a large part of it can be used again. The algorithms in particular, whichalign customer and product information, don't need to be changed.Additionally, the capabilities of the KM system can help here as well.Based on recommendations, detailed product information is supplied atthe touch of a button, which informs the bank staff of current conditionsor of legal changes, for example.

StrongerCustomer Focus

ABC Bank is also counting on this solution to help it provide more cus-tomer-focused products. In terms of mass customization, financial servicesshould be offered that are relatively easy to develop, and at the sametime correspond to the customers' specific requirements. The difficultyhere is in finding the right balance between standardization and custom-ization.

In the medium term, a stronger focus is applied to one-to-one marketing,which is supported by sales activities in the area of e-business. In a similartime period, financial services in the form of mobile business is expectedto serve customers better, and at the same time gather more informationabout them.

Profitability and Risk Evaluation of the Customer Business

Access to necessary information is drastically improved by the portal, andworking with this information becomes more efficient, however the qual-ity of the underlying data remains unchanged. Therefore the next logical

181Starting Points

step for ABC Bank is to implement a data warehouse that can extract andprocess all necessary information from the many source systems. Notonly should the current data be available, but it should also include targetfigures and estimates.

Methods to Ensure Success

The objective is to make progress, particularly in the area of cost andprofit accounting. This accounting method is used to analyze the cost-effectiveness of individual products or customers, and can be used tocompare different time periods or organizational units with each other.Measures for controlling the company are devised from this analysis, forexample, it might identify the need to improve certain areas. By compar-ing two profit centers, for instance, it is soon clear where the strengthsand weaknesses of a bank can be found.

Furthermore, the data warehouse can process important informationfrom the administrative systems. Knowledge on the number of employ-ees on sick leave in a department, for example, or the quality of the staff'stime recording facilitates conclusions about efficiency in these areas.

Avoiding Redundancies

With the introduction of a central reporting and analysis platform, one ofthe bank's basic problems is being addressed. As a result of the highlyheterogeneous system landscape, the information situation is character-ized by a high degree of redundancy. Information is available in variouslocations in a different context, whereby it is not often clear how the sys-tem processes the displayed data due to a great deal of individual logicbeing used. In the worst cases, the information is even contradictory.

Because of the large number of interfaces between systems, informationmust not be consolidated or gathered over many systems, but insteadextracted from individual sources. This way, errors that could ensue as aresult of individual programming can be avoided.

One Central System

The data warehouse should serve as a central source of information thatis used as a basis for decision-making processes. Due to the multitude ofdifferent systems, master data isn't always reliable (it's changed in onesystem but not in the next system and so on). The data warehouse will beused as the foundation for the unification of master data to increase thequality and consistency of data in the heterogeneous environment. Withthe approach of implementing a central system instead of procuringinformation from a multiplicity of sources as before, a cost-effective cen-tral administration of the system will also become possible.

The main objective of the implementation of the data warehouse systemis to make exact value and risk analyses available. On the basis of this


information, it is possible to determine a customer's profitability and pro-vide that customer with service accordingly. To do this, the accumulatedeconomic result, which is deduced by totalling all products sold to thecustomer, is taken into consideration.

Contacting theCustomer

Knowledge of the profitability of a customer (or under marketing factors,possible profitability) is used as a foundation for better customer care.The financial institution has accumulated a huge amount of data duringits support relationship, which is not used in the optimization of the busi-ness. For example, thanks to account movement, it has informationabout which leasing contracts a company handles. Due to the pattern inthe expense behavior (for example, if, in the past, the leasing amountchanged every three years because a new machine was acquired), cus-tomers could be individually addressed, and a suitable offer could proac-tively be submitted to them.

The specific customer sales approach should be viewed with the under-standing that the capital market conditions for an individual institutionare predetermined. That means the margin between what the bank maycharge for a loan and what it has to spend for the loan cannot bechanged. The financial market sets this margin. Therefore, the primaryway the company can distinguish itself is by providing offers that are tai-lored to the customer's individual situation.

Consideration ofActual and

Planned Data

ABC Bank's objective is to better serve the customer. From a financialcontrolling standpoint, it is therefore now important to focus on the cus-tomer's possible revenue potential, and not—as in the past—on the costfactors generated by a customer. Thus it is essential to maintain plannedvalues along with the actual values, and to always align both with eachother. The considered data should incorporate the following points:

� Customers

� Products

� Market

� Competing vendors and their products

Integration ofExternal Data

Sources

If a sufficient amount of this type of data is not available, of if the datalacks quality or detail, it can be bought from an external company. Thispractice already plays a large role in the context of benchmarking. Theintegration of (purchased) data from market research must therefore beconsidered in the conceptual design of the data warehouse.

183Starting Points

In addition to the revenue side, we also have to consider the risk side indetail. As a result of the increased standards imposed by Sarbanes-Oxleyand Basel II, it is very important to have an information system that isbased on key figures to enable a suitable risk. (They use the key figures tocreate a risk classification from which, for instance, refinancing costs canbe derived.) In this context, planned figures and simulations are also veryimportant, as stress tests analyze how solidly a bank has safeguarded itsrisks in the portfolio.

Product Portfolio Optimization

The bank's lack of information about its products can be viewed in thesame terms as its lack of information about its customers. The initial cir-cumstances are the same; information is decentralized and not transpar-ent. As the accrued costs are directly allocated in only a few areas, it ishard to estimate the degree to which individual offers are profitable. ABCBank does not know exactly what added value it attains with its individualproducts. For the same reason, a comparison of various organizationalunits is only possible to a certain extent, as the resulting conclusionsdon't really have a solid foundation.

Analysis of the Value Added

With the implementation of the data warehouse, you can analyze a prod-uct's added value and, if necessary, optimize it. Depending on whether aproduct is self-financed by fees and provision or by an interest margin,information about current accounts, loans, and services can be processedand interpreted. By comparing actual data with planned data, you canexpect more reliable information about the contribution of individualproducts to the company's overall success.

Using this exact information, the bank can decide which business optionis best for each product. Successful core products can be further devel-oped and promoted in terms of both sales and processes. The positioningof products that are successful only within a certain target group can beadjusted (for example, they can be handed over from one of the com-pany's organizational units to a shared service center), and less successfulproducts can be outsourced to specialized companies.

7.3.3 Cross-Company Integration of Processes

Many bank services, such as a current account, (a bank giro account) areso highly standardized that they are basically interchangeable. Neverthe-less, most banks handle such transactions and business processes them-selves, without making cost-conscious decisions in this area. By no means


do the accrued costs reflect the benefits. The operation of different sys-tems is necessary for a comparatively small number of customers, and thebank has to absorb relatively high costs per customer.

Economies ofScale

To achieve economies of scale and to clearly reduce the costs per cus-tomer, it is critical that larger units process the back-office operations.This can be done either by using data processing centers (in the case ofsavings banks and mutual savings banks), or by entering into partnershipswith various financial institutions (as with Deutsche Bank and DresdnerBank in the area of payment processing). In the medium term, we canexpect to see the development of bank factories. These are banks thatspecialize in individual transaction procedures and offer these services toother banks. The German Norisbank, for example, specializes in con-sumer credits. Thanks to a good scoring model to classify potential andexisting customers, (i.e., they assess the risk of a credit loss), the companyhas been very successful. Furthermore, Norisbank offers the service oftransacting credits to other banks.

Outsourcing ofBusiness

Processes

Needless to say, in practice the outsourcing of business processesinvolves more than just simply handing over a loan application form.Because the intermediary bank must have access to all information rele-vant to the loan, combining the systems of both companies is necessary.As a matter of fact, all processes related to the allocation and processingof loans are outsourced. For some time, outsourcing in the area of secu-rities trading has also become standard. But in general we can say that inthe area of outsourcing, German banks have a long way to go, especiallycompared to their European competitors.

Apart from those business processes that deal directly with banking,another area that has the potential to be outsourced is administration.Deutsche Bank, for example, made headlines with its decision to out-source its whole purchasing department.

Need for anIntegration

Platform

However, to enable such a cross-company collaboration, there must bean integration platform in place that facilitates electronic links betweenthe participating companies on a business process level. Such a processintegration solution allows the systems to connect and operate eventhrough the firewall boundaries. Of course, besides the simple and cost-effective operation of the platform, security must also be considered.Lastly, the transparency that exists for interfaces—as well as the ability tomonitor them during operation (for possible troubleshooting)—must beensured.

185Integrated Project Planning Procedure

The linking of the different systems does not take place via manually cre-ated interfaces, but through adapters that create the connection betweenthe integration hub and the applications involved. For communicationpurposes, XML has now become the standard language of integration sys-tems. While the costs for point-to-point connections with every otherconnected system tend to rise exponentially, the use of Enterprise Appli-cation Integration (EAI) software stabilizes costs per integrated system,due to its hub architecture.

Strategic Role of Integration

The decision to use EAI software should not be based on operational rea-sons alone, despite all the cost advantages and persuasive argumentsbased on practical experience. Rather, the decision for an integrationplatform should be strategical, as it plays an integral role in affecting thefoundation and the direction of the company. The decision must help toseparate the bank's value chain in an economically sensible way, and tochange the entire organization accordingly.

In our particular example, ABC Bank has decided to outsource the pro-cessing of classic bank transactions. For these purposes, in cooperationwith another bank, ABC Bank has recently founded an operating com-pany to handle these transactions for both institutions. In the mediumterm, the German market expects to see consolidation in this area, and inthe future probably only five vendors will remain. ABC Bank may verywell outsource to Postbank, which is one of the companies that insourcesthese exact processes.

7.4 Integrated Project Planning Procedure

In order to optimize the identified approaches, a project planning proce-dure is designed, consisting of the following three sub-projects:

1. Establishment of a portal with an integrated KM system

2. Implementation of an analytics platform

3. Implementation of an infrastructure for business process integration

These three sub-projects are explained in more detail in the followingsections.

7.4.1 Quick Win: Introducing SAP Enterprise Portal (EP)

As already explained, the users at ABC Bank work with many differentsystems. They need to use all of these different systems in order to get a


comprehensive picture of a customer's financial situation. By introducinga portal, ABC Bank hopes to benefit from two big advantages:

1. The (front-end) processes will be optimized and unified across all orga-nization units

2. By automating and finally removing frequently recurring routine tasks(such as system logins or searching for customer data), the users willsave a substantial amount of time

Introduction byDepartment

To master the comprehensive integration approach, a gradual process isrecommended for portal projects. Typically, one organizational unit at atime is allowed to access the portal, so that all the required content isprovided for each organizational unit. Larger organizational units can bebroken down into departments. ABC Bank has decided to create businesscases that specify previously defined and prioritized individual steps. Theadvantage is that the scope of the individual sub-projects is preciselydefined, and the particularly relevant project areas are derived from thebusiness cases.

“Think Big,Start Small”

In planning the project procedure and the definition of the sub-project,the bank will attempt to incorporate the final objective of a company-wide portal rollout, and at the same time implement the individualdepartments' special standards. According to the motto “Think big, startsmall,” the individual sub-projects enable the gradual implementation ofthe bank's various individual business areas. Due to the short timeframesof the sub-projects, fast results can be achieved relatively quickly, consti-tuting a success factor that should not be underestimated. These earlysuccesses are critical when it comes to motivating the persons involved.

Moreover, ABC Bank puts great emphasis on an elaborate security con-cept that controls the authorizations for access to different content. Thismeans that it makes sense to create an organizational plan that spells outhow different users will be grouped together at a very early stage in theproject, so that both the distribution of content and the assignment ofauthorizations can be managed relatively easily.

Information FlowBetween the

Project Team andUsers

The gradual approach to implementation ensures that there is a constantflow of information between the users and the project team, which con-tinually increases quality. Problems and optimization potential can be dis-cussed based on existing practical examples. Alternative solutions can beconsidered and discussed at length. The expertise in the individualdepartments grows because of the tight collaboration with the projectteam. Generally, the inclusion of all those concerned is extremely impor-


tant. The experts who know the (future) portal content best can be foundamong various departments. Therefore, these departments must beinvolved in the definition of the project or sub-project scope from thevery beginning.

The Importance of Content

In portal projects, contrary to conventional software projects, content iskey. A portal is worthless without content. If too little content is pro-vided, the user will not accept and use the portal. This means that theproject planning team should spend much more time on contextual top-ics than on questions that pertain to conventional IT areas, and every-body involved in planning the project should be prepared for this shift inemphasis to content. The applied technology is not that important, aslong as a certain degree of functionality is ensured. Instead, the conceptsof integration and processing of content, as well as of structuring andnavigation, have a much bigger impact on user-friendliness, and thus onresults.

A portal is an integration platform that has points of contact in practicallyevery organizational unit. Nearly all processes will be modified; at leastthe way that process steps are carried out and operated will radicallychange.

Information Structures

All companies have information structures that were not planned ordeveloped in a logical manner, but that instead grew “organically.”Although these structures are far from optimal, they are astonishinglyresistant toward change. However, with the introduction of the portal,and especially the Knowledge Management component, great changescan be expected.

The integration of existing homegrown software for CRM-type tasks inparticular is supposed to increase the quality of customer care, whichshould have an effect on the bank's revenues. Due to the unificationtechnology contained in SAP Enterprise Portal, it is relatively easy to inte-grate the various data sources required for a comprehensive view of cus-tomer data.

7.4.2 Implementing an Analytics Platform

The second big step in the transformation of ABC Bank's IT landscape is toimplement SAP Business Intelligence (BI)—SAP's data warehouse solu-tion—with SAP Business Information Warehouse (BW). The goal is to sig-nificantly improve the quality of information that serves as a basis fordecision-making. The implementation project includes providing a cen-


tral information warehouse that gathers and processes data from sourcesystems and answers the questions of all users.

Authorizations The basis for this central information warehouse is a sophisticated autho-rization concept that allows users to access all necessary information, andsimultaneously ensures that no unauthorized access to confidential infor-mation takes place. Access rights can be granted to employees with cer-tain roles, or on an individual basis.

One advantage of SAP's BW system is that data is available on the Webfront end, or alternatively in Microsoft Excel format. This way, it can beeasily provided and processed. Above all, the possibility of navigatingdeep down into the data structure from data that is currently displayedenables users to navigate through the interrelations within the reportingstructure.

Key User Concept From an organizational standpoint, the portal should allow the establish-ment of key users in each separate department in addition to predefineduser queries. Besides the predefined queries, you should try to have keyusers in every organizational unit who can implement additional specialqueries for the “normal” users. The key users in ABC Bank's differentdepartments can develop specific expert knowledge and will then be inthe position to create queries and reports themselves and customizethem according to their respective department's requirements. Asidefrom the basic data, the derived key figures are of particular interest here.

Administration The concept of using just one centralized system also facilitates adminis-tration. The administration of SAP BI can be done centrally in order to cutcosts. The actual evaluation processes and the creation of reports canthen be done by the individual departments, so that the required infor-mation will be autonomous and separate.

From a technical standpoint, the central reporting system takes a lot ofload off the operative systems, which, in turn, will then be fully availablefor handling the actual processes. They will only be used for current eval-uations (for example, to get status information such as “open orders” or“orders to be processed”). Consolidated reports will be retrieved from theBW system.

When implementing the BW system, usually data from only the mostimportant sources will be available at first. More systems will be inte-grated successively until all relevant information is available in the singlesystem. In conjunction with this gradual system growth, legacy systemswill also be removed gradually.


Integration into the Portal

A deeper integration into the portal is planned in a further expansionstage of the system. Although the information from the BW system willbe available on the Web from the time of implementation and can beretrieved from the portal, there is still room for improvement: the com-bined use of both components makes it possible to work with the con-tent on a much higher level of collaboration. In particular, the controlledinformation exchange within the team and the freely defined order inwhich the work is done (with regard to BW reports) offer great potential.

7.4.3 Implementing an Integration Hub

Finally, the third step (implementing an integration hub) will allow ABCBank flexibility in the design of processes, especially in processes thatcross the borders of the company. The basis of this is the EAI solutionfrom SAP. With the implementation of SAP Exchange Infrastructure (XI)as a central integration component, it will be possible to integrate sys-tems relatively easily and to replace them if required. Given the fact thatABC Bank's vertical integration is too high, as is the case with many otherbanks, using XI opens up many exciting possibilities. For example,unprofitable process areas can be grouped together and outsourced withthe help of XI. There is also the opportunity to use business process out-sourcing (BPO) offerings to unload processes that aren't part of the com-pany's core competencies.

Disintegration of the Interface Chaos

Not only does XI offer advantages in the modification of the process land-scape, it also enables you to reduce the complexity of the existing systemlandscape, particularly with regard to the multiplicity of existing inter-faces. Instead of having many separate connections between the systems,every system connects to XI, which, in turn, handles the distribution ofprocess information.

When you have SAP XI, it is less costly and takes less time to makechanges to the IT landscape, such as installing a new system, because youonly have to ensure that it integrates with XI, not a variety of systems.

Similarly, changes that are carried out solely in the process area can beimplemented faster and with much more ease, because only the affectedsystems have to be customized, not the interfaces. Thanks to the modularstructure of the integration landscape, the required time decreases whileflexibility increases when developing new processes or customizing exist-ing processes.


An EstablishedEAI Concept

To implement all these advantages, you must consider all the relevant fac-tors when creating the plan that precedes the technical implementationof XI. Aside from general technical considerations such as the types ofprotocols available, organizational questions must also be addressed. Ofcourse, the design of the platform is particularly important. And it wouldbe “fatal” if the system's integration were to be put on hold because theused hardware did not meet the requirements. Therefore, sufficient con-tingencies—and upgrade possibilities—have to be planned for in order toprepare for both peak loads and company growth.

The top-down approach has proven itself to be the best approach in thedesign of the EAI architecture. Based on an analysis of the system andprocesses, and considering the company's strategy, the large EAI struc-ture and architecture is first defined and validated. The sequence in whichthe individual systems will be implemented is already being planned atthis stage. Only after this step is completed will planning of the activitiesassociated with the technical implementation begin. The objective is asmooth transition from the existing to the new architecture, whichincludes the gradual removal of the legacy interfaces.

Using WebServices

The imminent modification of the IT landscape is also felt in other areas.ABC Bank has already started its first projects testing the use of Web ser-vices. Banks are typically early adopters of Web services; from a technicalstandpoint, it obviously makes sense that Web services would be used tosolve integration problems that are evident within the banking industry.

7.5 ABC Bank—Value ConsiderationThe IT Processes

at ABC BankABC Bank has seen decreasing profits during the past years, which actedas a strong impetus for change. Compared to its European competitors,ABC Bank does not have enough revenue, and it's spending too muchmoney per bank customer. Last but not least, the CIO is under increasingpressure to take action to reduce the high costs of the computer systems.It is imperative for those responsible at ABC Bank to cut the costs of theIT landscape. At the same time, the bank's new innovative products needto be supported by corresponding IT systems and processes. Therefore,the focus is not only cost reduction but also the implementation of amodern IT landscape as a basis for flexibility. Management has decided tomodernize the information systems and would like to start in this direc-tion with the following processes:

191ABC Bank—Value Consideration

� Creation of a standardized user interface for application integration

� Improvement of analysis possibilities due to data integration

� Development of a flexible architecture for IT system integration

Current Situation at ABC Bank

Take a look at the current IT situation at ABC Bank: it is characterized bya high amount of in-house software development as well as a heteroge-neous system landscape. The potential of an IT architecture based on SAPNetWeaver is shown in the following paragraphs.

As already noted, the question of whether to develop software in-house oruse standard software is particularly important to the bank. Due to thehigh costs of homegrown software, the managers of the IT departmentmust insist on the transition to standard software. In our evaluation, wewill now focus on the advantages of using SAP NetWeaver.

7.5.1 Standard User Interface

Portal for User Integration

The success of a bank is considerably influenced by whether employeeshave fast and easy access to reliable information. Because ABC Bank cur-rently has a heterogeneous system landscape, information about custom-ers and products is disseminated throughout the IT landscape. The com-pany has taken the first steps toward improved customer care byimplementing a CRM system. Figure 7.5 shows an interesting picture. Theratings in the areas of flexibility and innovation, which deal with the com-pany's added value, are hardly distinctive (the two areas got low ratings)(compare value chain, value added, and company value). Implementing acompany portal is considered the optimal solution for improving this sit-uation. SAP Enterprise Portal (EP) provides users with a unified view ofthe different IT systems and supports them in their daily work. Thus, abank employee can concentrate on providing the best possible customercare instead of on the process of searching for information.

Provision of Infor-mation with KM

Knowledge Management (KM) is another important requirement in thedevelopment of an information platform. All product information that isavailable in the form of unstructured documents, such as PowerPoint,Adobe PDF, or MS Word files, can easily be made available to every por-tal user. If we look at the evaluation of the target concept (i.e., the blue-print with SAP NetWeaver in the diagram), we can see that there is stillroom for significant improvement in the areas of communication andquality.


Figure 7.5 Evaluation of Portal Integration

At this point, we would like to mention the evaluation of outsourcing.Recently, banks have been outsourcing their non-core-competency pro-cesses to external companies. With a portal solution, this process can besupported by an integrated application interface across system bound-aries.

Potential forCost Reductions

In terms of costs, the following points stand out:

� A portal solution cuts the processing time of business processes con-siderably via the use of a role-based approach to granting access tonecessary information.

� Saving potentials in the area of knowledge management are mainlyfound in centralized information access and in the consolidation ofexisting application systems.

7.5.2 Data Integration

InsufficientData Quality

Even the best portal installation is useless if the data displayed is not ofgood quality. For this reason, it is of strategic importance for ABC Bank toconsolidate heterogeneous data sources into one single system. Figure7.6 clearly shows the present low ratings for innovation and flexibility.According to the illustration, the bank is hardly in the position to use itsoperative data for significant analyses. This is particularly emphasized bythe rating of quality.

SAP BusinessIntelligence (BI)

With SAP Business Information Warehouse (BW), SAP Business Intelli-gence (BI) provides a platform for integrating the various data sources. As

Integration of

application interfacesSystem flexibility

Process flexibility

Response rate/response capability

Outsourcing

Value chain

Value added

Company value

Innovation

process

Communi-

cation

Quality

User interfaceintegr. ACTUAL

User interfaceintegr. TARGET


a result, improved data is available regarding the risks and profitabilityassociated with the bank's customers This is indicated in the evaluationsin Figure 7.6, which show higher values for the forecasted situation in theareas of added value and flexibility and the now possible increase in thecompany value. In terms of costs, BI provides the following advantages:

Potential for Cost Reduction

Here are the potentials for cost reduction:

� Fast customization and enhancement of existing reports

� Removal of manual tasks in the context of financial controlling

� Use of predefined SAP reporting models for the implementation ofmodified reporting requirements

� Decreased analysis efforts (“reporting at the touch of a button”)

Figure 7.6 Evaluating Data Integration

7.5.3 Process Integration

Today's IT Process Integration

Two considerable tasks are the main focus during process integration atABC Bank. One is the outsourcing of business processes that are not prof-itable or are not part of the bank's core competencies, such as softwaredevelopment. The other is the simplification of the complex processinfrastructure, which is the responsibility of the managers of the ITdepartment. The actual situation is determined by little flexibility andinnovation possibilities. In the AS-IS situation (regarding process integra-tion) we have little flexibility and it is difficult to implement innovativenew solutions. As shown in Figure 7.7, the current IT architecture is notprepared for these requirements.

Integration of data sourcesSystem flexibility

Process flexibility


Outsourcing

Value chain

Value added

Company value

Innovation

process

Communi-

cation

Quality

Integration of datasources ACTUAL

Integration of datasources TARGET


ExchangeInfrastructure

SAP Exchange Infrastructure (XI) provides the tools to tackle this prob-lem. With the help of this software, ABC Bank can organize its processesmore flexibly, which is enabled by unifying the interface architecture. Inthis way, the integration of third-party systems in the context of businessprocess outsourcing (BPO) is made easier and considerably cheaper. Fig-ure 7.7 shows the potential that could be realized in all areas by imple-menting XI.

Potential forCost Reduction

Other potentials in the area of cost savings are:

� Savings in development, maintenance, and monitoring of the systeminterfaces

� Reduced effort in the operation of the XI integration software

� Shorter implementation time for cross-application business processesdue to graphical process modeling or when converting the interfacesbecause of release changes

� Decreased implementation costs when integrating outsourcing part-ners

� Generally lower project costs, as no expensive external consultantsneed to be hired for the implementation of standard connections

Figure 7.7 Evaluation of Business Process Integration

7.5.4 Evaluation and Recommendation

Portfolio Matrix It is vital that ABC Bank modernize its entire IT system architecture. Thisdoes not mean replacing individual systems with new ones, but ratherthat fundamental changes like the implementation of standard software

Integration of business processesSystem flexibility

Process flexibility


Outsourcing

Value chain

Value added

Company value

Innovation

process

Communi-

cation

Quality

Process integrationACTUAL

Process integrationTARGET


or of an integrated infrastructure solution have to be carried out. To illus-trate the considered processes, we will now draw a comparison to thereference value. (The reference value is based on the IT strategy of a com-pany. To determine what the contribution of a single project will be, theprojects can be compared with that reference value.) The reference valuerepresents a subjective evaluation of the criteria of flexibility, innovation,and cost reduction. Figure 7.8 illustrates this comparison.

It is apparent that the greatest potential lies in the area of process integra-tion. In the portfolio matrix, the evaluations for the actual process andthe target architecture are at opposite ends of the spectrum.

Figure 7.8 Portfolio Matrix

An interesting picture ensues in the area of the forecasted processesenabled by the SAP NetWeaver components. Costs can be reducedthrough data integration and process integration. The cost-saving potentialfor a standard user interface is lower in comparison. This phenomenon isexplained by the fact that a company portal can realize only indirect costadvantages (for example, through the consolidation of several legacyapplications). In a nutshell, ABC Bank should be aware of the great ITchallenges it will face in the coming years, and implement planned invest-ments promptly.

Reference value

Integrated user

interface ACTUAL

Integrated user

interface TARGET

Integration of

data sources ACTUAL

Integration of

data sources TARGET

Process integraton ACTUAL

Process integraton TARGETFlexibility

Innovation

305Index

Index

AABAP 29, 33, 156Access restrictions 235Adapter Framework 263Adaptive computing 49Administration 229Administration component 232Administrator Workbench (AWB) 246Agent 206Analyses 192Analysis and planning tools 125Analytical CRM 63Application development 156Application integration 191, 225Application server 225Application services 210, 212Application sharing 235Application strategy 51Application-to-application 172ARIS 266, 287ASAP 284ASP 15Authentication 229Authentication mechanisms 231Authenticity 231Authorization 230, 232Authorization concept 232Automation 202

BBack-end systems 227Bank factories 184Bar code scanner 239BASIC 24Basic technologies 221Benchmarking 182Best-of-Breed 16, 21, 174, 198Best-of-Breed solutions 226BEx information broadcasting 250Biometric process 232Bluetooth connection 238BPEL 204BPEL4WS 204BPO 22, 39Brain interfaces 202

Buddy list 235Business cases 186Business Connector 257Business Content (BC) 247Business Information Warehouse 224Business Intelligence 158Business packages 91, 159, 234Business partners 160Business Process Engine 266Business process management (BPM)

224, 259Business process modeling 199Business Process Outsourcing 22, 41Business processes 199, 200, 204, 208,

209, 210, 218, 219, 221Business-to-business 198

CCalculation process 85Centralized information access 192Chief Innovation Officer 201Choreography 204, 206Choreography Description Language

206CIO 201Client/Server 16, 27Cobol 21, 164Collaboration 28, 223Collaboration Folders 101, 127Collaboration Launch Pad (CLP) 235Collaboration Room 235Collaboration tools 91Collaboration with NetWeaver 227,

234Collaborative Business 159Collaborative Product Development

101, 109Communication 47Communication platform 160Communication processes 47Company data model (UDM) 59Company management 157Company objectives 50Company portal 159Company strategy 50

Index306

Company value 47, 191Competitive disadvantage 201Complexity 221, 227Components 200, 203, 210, 218Composite Application Framework

35, 212, 225Composite Applications 47, 212, 225Connected infrastructure 238Connectors 229Consolidation 16, 22, 90, 192, 195Container 229Content 30Content Management System 156Controlling 125Core banking 164Core requirement 43Cost reduction 48Cost situation 50Cost transparency 158Cost-effectiveness 44CRM 34CRM system 62Cross Applications 206, 212, 280, 289Cryptography 231Customer complaints 48Customer expectations 228Customer loyalty 89Customer relations 89Customer relationship 158Customizing 285

DData aggregation 221Data currency 158Data exchange 127Data integration 191, 192Data mining 243, 248Data platform 158Data quality 126, 158Data synchronization 238, 239Data warehouse system 228DB connect 245Decision-making processes 221Detail navigation 229Development and maintenance costs

90Development environment 225Development partners 91

Development projects 127Digital certificates 232Disconnected communication 238Distributed data sources 157Drag&Relate function 231Duplication 126Dynamics of markets 41

EE-Business 15, 104, 269Economies of scale 184EDIFACT 259Electronic marketplaces 127Employee Self-Service (ESS) 234Enterprise Application Integration 42,

172, 257Enterprise portal 28, 126, 127, 227Enterprise Services Architecture -> see

ESA 42ESA 31, 42, 197, 200, 207, 208, 209, 210,

217, 218, 219, 288, 304ESS 292EVA approach 43Evaluation 191Eventing 231Exchange Infrastructure 29, 49, 89,

124, 127, 158, 160, 194, 258

FFaulty investments 92File adapter 265Flexibility 17, 44, 45Flexible system architecture 42Font size 230Freedom of redundancies 239Front end 27

GGeneral costs 50Graphic modeling 289Graphical process modeling 125, 161Graphics tools 91

HHandheld computer 238Heterogeneity 167Heterogeneous system landscape 191,

224

307Index

Hierarchy levels 228HTTP adapter 265Hub architecture 34, 174, 185Hub component 49

IIDoc 257IDoc adapter 264Implementation costs 50, 159, 161, 194Improvement process 91Inconsistency 90, 224Inflexible Internet and Intranet, disad-

vantages 139Information integration 223, 244Information logistics 199Information requirements 228Information structures 187Information technology 41Infrastructure 49Infrastructure strategy 51Infrastructure technology 48In-house developments 191Initial costs 50Innovation 16, 17, 41, 44, 47Innovation block 201Innovation criteria 91Innovation management 47Innovation possibilities 193Innovation potentials 47Innovation process 47Innovation strategy 51Integrate process interfaces 158Integrated application interface 192Integrated information display 159Integrated infrastructure solution 195Integrated overall architecture 222Integration 16, 198, 200, 202, 204, 209,

217, 221, 228Integration Builder 261Integration Directory 261Integration Engine 262Integration layer 223Integration platform 124, 187, 222, 227Integration Repository 261Integration scenarios 84Integration strategy 124Intercompany processes 155Interest group 228

Interface architecture 194Interfaces 49, 224Internet Communication Manager 272Internet Transaction Server (ITS) 269Investment protection 199, 207Investment strategy 51Investments 195ISO/OSI 32Issue management 86IT architecture 161IT infrastructure 89, 156IT potentials 52IT strategy 50, 52IT system integration 191IT system monitoring 157iViews 34, 229

JJ2EE 24, 29, 33, 156, 180, 270, 273, 276,

277J2EE application server 157Java 22, 24, 28, 33, 35JDBC (Java Database Connectivity)

246JMS adapter 265Job profiles 230Joint development platform 91

KKey figure model 155Knowledge Management 28, 156, 178,

191, 224, 254Knowledge Management System 127

LLean production 171Legacy applications 195License costs 48, 157Life cycle 225Lightweight Directory Access Protocol

(LDAP) 232Local authorizations 232Logon 232Logon ticket 232

MMainframe 197, 202Make or buy 171, 177

Index308

Management Information System 240Manager Self-Service (MSS) 234Mapping 160Mapping rules 224Market requirements 124Mass customization 180Master data 126Master Data Management 28, 224Master data management system 89Master data quality 126Mergers & acquisitions 21MI server 238Middleware 174Mobile access 236Mobile administration 236Mobile application 237Mobile business 236Mobile Infrastructure (MI) 227, 236Mobile learning platform 236Mobile sales 236Mobile services 236Module supplier 128Monitoring tools 239Monoliths 200, 202Multi-channel access 223mySAP Business Intelligence 187mySAP Business Suite 43, 225mySAP ERP 34, 156mySAP PLM 124

NNamed user 48Navigation 228Navigation bar 232.NET 33

OOEM customers 124Offshoring 15OLAP 242, 246OLTP 242Open hub 247Openness of Web Services 42Operating costs 50Operational measures 128Outsourcing 15, 46, 171, 184

PPage layout 230Paradigm shifts 199, 217Password problem 159PDA 28People Integration 223, 227, 244Personal digital assistants (PDA) 238Personalization 228, 230Personalization function 223Pocket PC 238Portal authorizations 232Portal Content Directory (PCD) 233Portal installation 192Portal navigation 229Portal pages 229Portal Server 229Portal settings 228Portfolio matrix 53Potential advantages 89Potfolio diagram 52Presentation 228Privacy principle 232Private room 235Process automation 207Process flexibility 46Process integration 193, 195, 224Process life cycle 285Process modeling 286Processing time 192Product development 91Product portfolio 155Production process 126Project costs 161, 194Proxy framework 262Public room 235

QQualitative total estimate 52Quality 15, 48Quality management 90, 91Quicker Implementation 42

RRadio-frequency devices (RF) 239Rapidness 201Reaction speed 46Realtime Enterprise 201Realtime service provider 236

309Index

Redundancy-free functions 42Reference value 50, 52, 92, 128, 195Release changes 161, 194Replacement of components 42Reporting 38, 126, 181, 188Reporting models 158Reporting possibilities 157Response rate 48, 157Retailing system 221Revolution 197RFC 286RFID 24ROI 15, 22, 33, 201ROI method 43Role 232, 233Role management 232Role-specific display 126RosettaNet 265RPM 212Runtime Workbench 266

SSAP applications 225SAP Business Connector 270SAP Business Explorer 248SAP Business Information Warehouse

224SAP Business Intelligence 126, 192SAP BW-Business Planning and Simu-

lation 244, 247SAP Composite Applications 43SAP Enterprise Portal 115, 126, 191, 229SAP Exchange Infrastructure (SAP XI)

112, 118, 246SAP GUI (Graphical User Interface)

236SAP Java Connector 270SAP Java Development Infrastructure

274SAP Knowledge Management 120,

244, 254SAP Master Data Management 118,

126, 224, 244, 251SAP Mobile Development Kit (MDK)

240SAP Mobile Infrastructure (SAP MI)

237SAP NetWeaver 162, 222

SAP NetWeaver Developer Studio 240, 274

SAP NetWeaver usage rights 48SAP Product Lifecycle Mangement 127SAP R/2 23, 165SAP R/3 23, 124, 227SAP reporting models 193Savings potentials 89, 126SCOR model 105, 116S-curve concept 96, 97, 102Search times 127Second-level navigation 229Secure Network Connection (SNC) 231Secure Socket Layer (SSL) 231Security 229Service broker 205Service End Point 206Service Interface 206Service Oriented Model 205Service provider 161, 205, 206Service requestor 206Service Semantics 206Service-based applications 42Service-oriented architecture 197, 222Services 197, 200, 202, 203, 204, 205,

206, 207, 208, 210, 212, 217, 218, 219, 233, 297, 304

Shared Service Center 19, 177Shared Services 41Shortened implementation time 89Shorter implementation period 161Simultaneous engineering 72Single sign-on (SSO) 232Single Sign-On function 159SOA 31, 37, 197, 199, 200, 203, 207, 209SOAP 31, 32, 203, 204, 205, 265SOAP adapter 265Software logistics 283Solution Life Cycle Management 225Solution Manager 283Sourcing strategy 51Standard software 155, 156, 191Standard software, advantages 142Standardization groups 42Standardized integration platform 124Structural change 166Subsystems 89Supplier data 126

Index310

Supplier integration 91, 123, 127Supplier loyalty 90Supply Chain 104, 107, 116, 119, 123, 237Supply Chain Controlling 125Supply Chain Management 105Support services 159Synchronization 238, 239System administrator 239System consolidations 157System flexibility 46, 129System heterogeneity 221System inconsistencies 124System integrators 200System Landscape Directory 261System modification 224System monitoring 48, 156System platforms 156

TTarget corridor 52Target scenario 51Task 206TCO 15, 33TCP/IP 32Technological competence 124Text language 239Tier-1 suppliers 124Top-level navigation 229Total Cost of Ownership 43Total IT costs 93Transparency 126Transport system 157Trends 15TREX 255, 256

UUDDI 31, 203, 204Unification technology 231Unit of information 229Universal data integration (UDI) 245Unstructured data 224Unstructured documents 191, 227Upgrade 42User accounts 232User analyses 230User groups 126, 228, 234User interface 27, 30, 91, 125, 195, 221,

223

User management 232User mapping 232User perspective 227User profile 229User role 159, 230

VValue added 191Value chain 46, 191Value consideration 159Value creation 47Versioning 207

WWAP 238Web Application Server 29, 34, 112,

156, 225, 237, 270Web browser 236Web Dynpro 275Web services 30, 35, 64, 122, 190, 202,

203, 206Web Services Architecture 205Work patterns 227Workset 233WSDL 203, 204, 205

XX.509 standard 232xApps 35, 36, 212, 225XI 258XML 29, 31, 32, 33, 42XML format 160XML standard 161

YYear 2000 21

Documents

SAP NetWeaver Roadmap