This slide presentation features Liz Herbert, Principal Analyst with Forrester Research Inc, on how to take control of your ERP system to enable growth and revenue generation by learning to: -Find the balance between cost control and business innovation -Manage the TCO of ERP systems by reducing complexity -Identify performance and stability vulnerabilities by focusing on the quality of customizations To watch the complete webinar, visit http://www.castsoftware.com/news-events/event/erp-customization-kills-innovation?gad=ss

1. © 2009 Forrester Research, Inc. Reproduction Prohibited
ERP Optimization
How to Save Cost And Gear Up For
Business Innovation Simultaneously
Liz Herbert, Principal Analyst
June 2013

2. CAST Confidential 2
Speakers
Liz Herbert
Principal Analyst
Forrester Research
Chris Manuel
Director of Partner Solutions
CAST

3. Innovation and growth top technology
spending priorities
Source: Forrsights Services Survey, Q2 2012
28%
30%
24%
38%
38%
34%
34%
41%
37%
35%
10%
17%
26%
21%
28%
34%
37%
31%
42%
50%
We are bringing in new, smaller, more innovative vendors to help
us implement new technologies
The increased reliance on predictive analytics to help inform
better and timelier business decisions
The need to grow/expand the business in new geographies and
developing countries
Business executives taking a more active role in the provisioning
and decision-making for technology and IT services
The increased use of software, infrastructure or business
process as-a-service offerings
Consolidation of business units or streamlining operations
The increasing use of smartphones and tablets, as well as the
apps on them
Senior business management's conservative approach to
spending on large projects
The need to lower our IT operational costs
The need to innovate and grow our business
“How much of an impact do you believe the following changes and
initiatives will have on your firm's IT services spending over the next 12
months?”
Moderate impact Significant impact
Base: 1,058 IT services decision-makers

4. Firms balance “run” with “innovate”

5. ERP is among the leading software investment
categories
Source: Forrsights Software Survey, Q4 2012

6. CAST Confidential
POLL:
How much do you spend on operations versus new development?
6

7. Balancing ERP Needs With Wants

8. © 2012 Forrester Research, Inc. Reproduction Prohibited
Future areas driving innovation
investments
1. Cloud 2. Mobile 3. Social
4. Business
Flexibility
5. Big Data
Source: Forrester

9. © 2013 Forrester Research, Inc. Reproduction Prohibited 9
Too much customization increases cost
and hurts innovation

10. CAST Confidential
POLL:
How do you measure the extent of customizations?
10
* Respondents could select more than one answer

11. © 2013 Forrester Research, Inc. Reproduction Prohibited 11
Quantifying the customization problem
› Customization costs can equal or surpass ERP software
costs
• Services can run 10x or more of the ERP software costs, of
which customization is a big part.
› Organizations strive for vanilla implementations, no more
than 20% customization
• But valid reasons exist for some customization
• And managing business demands is tricky
› Outsourcing relationships could be structured to drive
out extensive custom code and to optimize
• But many are “your mess for less” model

12. © 2013 Forrester Research, Inc. Reproduction Prohibited 12
Why optimize / modernize?
Cost:
• Protect investment.
• Maintainability –
long-term support
and TCO.
• Deliver agility.
Innovation:
• Capitalize on new
technologies.
• Exploit new
markets and
business models.
• Empower
employees.

13. Optimize ERP ROI by:
› Move away from extensive custom code – revaluate
need for this and usefulness of customizations
› Technical upgrade to reduce maintenance and support
costs
› Functional upgrade to improve business value
› Consolidate instances where it makes sense
› Upgrade / modernize to be able to leverage new
features and add-ons

14. © 2013 Forrester Research, Inc. Reproduction Prohibited 14
Source: Forrester Research, The Business Applications Playbook
Forrester’s business applications
strategy approach
• Define phasing
priorities.
• Assess buy versus
build alternatives.
• Determine candidate
software suppliers.
• Analyze project
dependencies and
time frames.
• Define the business
applications road
map.
• Calculate the (TEITM)
business case based
on costs, benefits,
risks, and flexibility.
• Define functional
architecture.
• Identify technology
characteristics and
deployment methods.
• Determine how
current apps fit into
future plans.
• Map integration and
data management
strategies.
• Define BI strategies
and performance
measures.
• Define the IT/BT
organizational model.
3. Define the
target
architecture.
• Articulate the vision
for business
processes.
• Define the
technology
innovation strategy
to support the
process vision.
• Define scope and
objectives of the
strategy.
• Develop a
preliminary
business case for
the transformation.
• Review business
and IT
strategies.
• Assess current
apps and
technology
environment.
• Assess process
capabilities.
• Determine gaps.
1. Assess apps
portfolio and
processes.
• Select apps
software and
delivery vendors.
• Implement specific
phases of the road
map.
• Manage ongoing
ownership costs.
• Measure results
achieved.
• Optimize staffing
resources and
vendor
relationships.
• Start the whole
process over.
4. Build
business
apps road
map.
5. Execute,
measure,
and
optimize.
2. Set the
strategy
and
vision.

15. Recommendations
1. Assess your packaged applications: how customized are
they, how much is this costing you, is the customization driving the
right business benefits, are people still using it
2. Optimize your packaged applications: understand where
you can reduce customization, modernize applications, reduce the
TCO, and increase the supportability and performance
3. Extend applications to drive business innovation: put
cost savings back into business value, extend applications into
new areas – mobile, cloud, analytics,

16. CAST Confidential
POLL:
How many lines of ERP custom code do you have in your organization?
16

17. CAST Confidential 17
Industry Reflections – ERP Customization Size
• Total of 254 applications
• Total of 205,614,000 LOC
• Average 809,000 LOC
#ofERPapplicationsanalyzed
Lines of Code (in thousands)

18. CAST Confidential
CAST Solutions – Powered by Products & Services
18
Highlight
Benchmarking
Application Intelligence Platform
Appmarq
• Software Analysis & Measurement As-A-Service
• Rapid profiling of large, complex portfolios
• Predict maintainability and technical debt
• Enterprise-grade software analysis & measurement
• Multi-tier, multi-technology, architectural analysis
• OMG-standardized automated function point counting
• CISQ Risk Drivers: Robustness, Efficiency & Security
• CISQ Cost Drivers: Maintainability & Technical Debt
• 1,500 applications, over 500 million lines of code
• Group by industry, domain, technology, geography
Application Portfolio Analysis
Productivity Measurement &
Improvement
IT Portfolio Prioritization &
Rationalization
IT Risk Identification
& Mitigation
Code Quality Management
Vendor Measurement Program
Consulting & Professional Services
• Industry expertise in software measurement, code quality
management, SAM services deployment

19. CAST Confidential 19
CAST Results in Actionable Visibility
The CAST Application Intelligence Center
Reports on application health,
team performance, benchmarking
CFOs, CIOs and VPs
Software characteristics, cost and
risk drivers, ARB, architectural
governance, root cause analysis…
PMs, QA, Architects
… and feedback & advice
on software quality
and engineering
Development Teams
Actionable visibility
across the IT organization
Application Source Code
• CICS, IMS, COBOL, DB2 z/OS
• J2EE, .NET and all Major RDBMS
• Web Apps, BI, EAI, C/C++, VB, PB
• Siebel, SAP, PSFT, OBS, Amdocs
Quality Measurement
& Functional Sizing
Compliance checks
Code, Architecture
and Data Structure
Analysis
AIP Analytical Engine
Engineering
Platform
Measurement
Platform
CAST Data

20. CAST Confidential
Driving Software Measurement in the ADM Industry
20
Key Influencers Recognize CAST
250 Global Leaders Rely on CAST
Institutions Engage CASTSIs Resell CASTSIs Use/Resell CAST
Elite technology
First in business IT
Largest benchmarking DB

21. CAST Confidential
Situation
 Market leading energy provider
 Multiple instances, multiple versions of SAP
 Concerns around control over cost & quality
 Development & maintenance provided by 3rd Party
Challenge
 Consolidate instances based on global template
 Upgrade older versions
 Implement ongoing quality control program
Case Study: Realizing Better Quality at Lower Costs

22. CAST Confidential 22
Case Study: Realizing Better Quality at Lower Costs
Solution
 Leverage CAST AIP output to establish quality baselines & measure ongoing deliverables
 Measure vendor productivity against effort estimates
 Provide coaching mechanism for vendors with regular feedback cycles
Benefits
 Optimized upgrade by suppressing 50% of custom code
 Reduced production support tickets related to customizations
 Achieved cost savings in both upgrade activity and refactoring maintenance work to new ABAP development
HISPANO P70(ECC5.0)
Average Market Range
Rank Values Rank Values Rank Values Rank Values Rank Values Rank Values
TURBOMECA PSI (ECC6.0) 1 3,02 1 2,87 1 2,67 10 3,11 1 3 11 3,18
SAFRAN IS P56(ECC5.0) 2 2,97 2 2,86 8 2,04 2 3,25 2 2,97 2 3,36
SNECMA P83(ECC6.0) 7 2,91 6 2,78 2 2,4 1 3,26 7 2,85 6 3,26
SNECMA P74(ECC5.0) 8 2,9 7 2,77 3 2,37 8 3,19 3 2,87 5 3,27
HISPANO P70(ECC5.0) 9 2,88 8 2,74 5 2,36 5 3,22 10 2,84 7 3,23
SAGEM P13(ECC6.0) 3 2,96 8 2,74 3 2,37 9 3,13 3 2,87 10 3,2
MORPHO P07(4.6c) 4 2,91 3 2,81 9 1,94 3 3,24 7 2,85 1 3,37
SAGEM INDUSTRIES P09(4.6c) 5 2,93 3 2,81 10 1,89 4 3,23 5 2,86 2 3,36
SAGEM P03(ECC6.0) 6 2,92 5 2,8 11 1,86 7 3,21 5 2,86 4 3,33
SNECMA P80(ECC5.0) 10 2,86 8 2,74 5 2,36 5 3,22 10 2,84 7 3,23
AIRCELLE PRD(4.7) 11 2,82 11 2,65 7 2,08 11 3,02 7 2,85 9 3,21
3,33
TQI Robustness Performance Security Transferability Changeability
3,12 3,06 3,16 3,07 3,1
TINE P56 (ECC 6.0)
BRISBANO P13 (ECC
6.0)TINE P41 (ECC 5.0)
BOREAL PT2 (ECC
5.0)SCOOP P07 (ECC
6.0)DAISY P80 (ECC 6.0)
TINE P06 (4.6)
INERGY P65 (ECC 6.0)
TYHG-Z (ECC 5.0)
INERGY PRD (4.6)
SULO (4.6)

23. CAST Confidential
Contact details
Pete Pizzutillo
p.pizzutillo@castsoftware.com
www.castsoftware.com
blog.castsoftware.com
linkedin.com/company/cast
@OnQuality
slideshare.net/castsoftware