Why a calculator? Industry trends are directing IT organizations to put more emphasis on Total Cost of Ownership (TCO) and Return on Investment (ROI) impact analysis. But industry studies have shown that the majority of organizations don’t perform formal analyses – in many cases because IT executives don’t believe that they have the knowledge or tools to do so. SAP and Consensure, a consulting partner of SAP, saw a need to assist customers by producing a framework within which customers could execute these analyses. With support from SAP, Consensure developed a Microsoft Excel-based tool to provide customers with a flexible model for calculating the TCO and ROI for SAP NetWeaver projects. We’ve demonstrated this tool at some of our recent SAP events, and because of customer demand we have now made this tool available for download from the SAP Developer Network (SDN) at the above URL.
How does the calculator work?
The following is a basic description of how the calculator works. For specific guidance, I recommend working with your account team if you have questions about what to include in your calculation and what values to use to obtain the best analysis for your situation.
When you open the calculator, you’ll be in the Practices Home page. On this page, you’ll see a column that lists IT Practices and IT Scenarios with SAP NetWeaver. This is a new way of looking at SAP NetWeaver – rather than focusing on the individual technologies or components of the platform, we want to take a look at the “refrigerator” in a way that allows us to map key pain points with business processes to the SAP NetWeaver capabilities for development of a holistic IT infrastructure. Thus, rather than asking yourself a technology-centric questions such as, “Which SAP NetWeaver component should I implement next?”, you would look at questions aligned with your business needs such as, “Do I want to focus my applications on end user productivity?” (IT Practice – User Productivity) and “Do I need better transparency of my company’s information?” (IT Practice – Business Information Management). The IT Scenarios define groups of processes that comprise the IT Practices.
Each of the IT Practices with SAP NetWeaver on the Practices Home page has its own calculator – reflecting the different drivers associated with the different business processes you need to support with your IT project. (To help in understanding the IT Practices view, a mapping back to the key underlying SAP NetWeaver technologies is also provided.) Before delving into the calculators, however, let’s take a moment to review two buttons at the top of the page linking to supporting documentation. The first section, “Learn More”, provides a short presentation-style introduction into the concept of IT Practices with SAP NetWeaver and an Enterprise Services Architecture (ESA). The “User Guide (Help)” section explains the navigation within the tool and provides some basic information about how the tool works. A brief review will give you a grounding in the tool.
Back at the Practices Home page – select the “Begin Calculator” for the IT Practice that you wish to analyze. This will take you to the Start page for the selected calculator, where you’ll need to agree to the usage terms to proceed. You’ll simply select from a list of options as to where you want to go next. Your choices are:
• Overview
• Drivers
• TCO
• TBO (Total Benefit of Ownership)
• Reports
The Overview will provide you with a graphical overview of the IT Practice with SAP NetWeaver that you have selected, but normally you’ll start by selecting Drivers. The Drivers section is where you can enter key inputs such as cost drivers, benefit drivers, net present value information, and so on, which will enable the tool to perform a basic ROI calculation. The data in this section is also used by the TCO and TBO calculations. Default values for the drivers are provided to you; these values are based on Consensure’s and SAP’s years of experience in the industry. However, every customer is unique, so you would review and overlay these values where necessary. Any changes that you make here are reflected in the “Model Value” and “Impact on Model Value” columns, which are in turn used by the various analyses. You have the option of viewing the initial output by going directly to the Reports section. (More on Reports later.)
The next two sections, TCO and TBO, both allow you to determine whether and how different costs and benefit values entered into the Drivers section are used in the calculations. In the TCO section, you can select or deselect checkboxes to include or exclude entire cost categories from the calculation. You can navigate to each of the cost categories for detailed line items. There you’ll find more default values, which, again, you can adjust based on your experience in your own enterprise and industry. You can also add your own items to expand the analysis or change the existing items (e.g., change the description of a resource) to fit your needs. Finally, in this section you can also enter values for an alternative approach – so that you can make a head-to-head cost comparison between SAP NetWeaver and another solution.
The TBO section is similar to the TCO section. You can select or deselect checkboxes to include or exclude benefits (benchmarks) from the analysis. You can navigate to benefit calculation detail. As with the TCO section, you have flexibility to make changes or additions to the line items. The TBO section also contains commented cells for instructions on amending the benefit line items.
After updating these sections with your own values, select the Reports section again to review the results. The Reports section includes graphs of:
• Project Overview, including payback and breakeven information (cash basis, non-discounted)
• Total Project Costs
• Project Return on Investment (ROI)
• Cash Flow Summary
• Cost Comparison – SAP versus Alternative Approach
By using these reports for your different possible IT projects, you can demonstrate the costs and benefits of projects and make an educated decision on the appropriate path for your organization. While your time, expertise and company/industry knowledge is still an important requirement for successful analysis, the SAP NetWeaver TCO/ROI calculator can provide a framework to jumpstart your analysis of your SAP NetWeaver projects.
