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Client case: Apoteket Solution replacement using Oracle applications to reduce costs
Riga, 2011-11-03
Sida 2
Understanding & reducing complexity
Accenture Application Portfolio Optimization Solution
IT Portfolio Management Challenges
Complex infrastructure and application architectures
Long lead times for system changes due to legacy application inflexibility
Lack of integration due to disparate, disconnected systems
Redundant applications and functionality create a complicated business and IT environment
Poor alignment with business goals
Inflated costs of hardware purchasing and maintenance
Increased non-discretionary spend allocated to maintenance and support
Limited budget and personnel available for strategic investments
End-to-end rationalization and optimization capabilities focused on business alignment
Evaluating existing applications to identify functionality which is overlapping or missing, or where application sustainment costs exceed the value provided to the business
Results:
Delivers a pragmatic plan for applications and technology that is aligned to the future business direction
Provides you with an actionable Cost Reduction roadmap that specifies whether to decommission, remediate, re-platform, consolidate or enhance applications
Implement a rigorous governance and portfolio management process to sustain the results of the Application Portfolio Optimization
Accenture Application Portfolio Optimization: a two-phased approach
Phase 1
Speed: Iterative approach to quickly establish an initial application roadmap and associated value case
Focus: Organize work to focus on high value opportunities
Flexibility: Structure a flexible approach that can be adjusted as objectives and scope are refined
Phase 2
Implement Recommended Disposition from Phase 1
Sustain
Decommission
Remediate
Re-platform
Replace
Consolidate
Enhance/Expand Sida 3
Distinct Application Dispositions
Disposition Description Characteristic
Sustain To leave as is and maintain Ultimate low cost solution
Decommission To retire (sunset) application Short-term cost
Long-term benefit
Remediate To improve code quality, developer productivity and overall reliability of application
Perfect-fit solution
Low training requirements
Re-Platform To port an application from one technical platform to another by reusing (partially or fully) the code asset in the target platform
Quick solution
Low training requirements
Supports platform rationalization
Replace Removing the existing application by decommissioning it and replacing it with something else
Increased business benefit
Longer deployment timeframe
Consolidate Replace an application with another existing application capable of scaling
Low cost
Low training requirements
Fastest deployment timeframe
Enhance/
Expand
Hybrid (Reuse and Extend via Development or Additional Software Components/Modules)
Low cost
Low training requirements
Sida 4
Sida 5
IT Governance Results
5
Applications with overlapping functional coverage leads to redundant costs and delayed value
Years of modifications lead to tangled application code increasing costs and risk due to complexity
Point-to-point integration (leads to higher cost of change and increased risk of failure)
Obsolete technologies that are complex and costly to maintain
Moving from Moving to
Revitalized and renewed application architecture
Rationalized application and data landscape
Streamlined business processes and improved support of the strategic goals
Newer technologies with more available skills
Sida 6
Replacement Case - Apoteket AB
It is Apotekets goal to inspire and help people achieve a life of health. The Group works with both consumers and operators on the nursing and health-care market.
Sida 7
Deregulation of the Swedish pharmacy industry during 2009 to 2010
930 pharmacy stores Monopoly on the consumer market 43 billion SEK revenue 11 000 employees
330 pharmacy stores 35 % of the consumer market Half the revenue Half the number of employees
From to
Implications to Apoteket AB:
Competitive situation
Sida 8
New prerequisites put demand on new IT solutions
IT systems supported 900 stores, revenue of 40 billion SEK and monopoly
Customized and expensive IT-systems
Modern IT solutions suitable for competitive market adapted to Apotekets new size
Cost efficient IT support (standard)
Flexible IT support
Before deregulation After deregulation
Sida 9
Oracle Application Integration Architecture
Apotekets new IT solution
Oracle EBS and Financial Analytics Financials
REX Prescription management
Oracle Retail SIM Store inventory management
Oracle Retail RMS Merchandising, procurement, orders
Extenda Point of sale
Oracle Demantra Forecasting
Store processes
HQ core processes
Finance processes
External systems
Apotekens Service
Suppliers Banks Payex Loyalty club Gift cards Apoteket legacy
Sida 10
Oracle Retail
Sida 11
Oracle Retail
Oracle SIM Store inventory Good receipt Stock taking Shelf space allocation Shelf labels
Oracle RMS Assortment Price Suppliers and deals Purchase order Replenishment Inventory management
Oracle ReSA (parts of RMS) Consolidation of sales transactions Sales audit
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Phasing Approach
Apoteket chose Option D, since it was regulated that no stores could open on the old solution after 1st January 2011:
Could only open new stores on the new platform. Must have full functionality for this
Could not impact operations of existing stores
Cost
Ris
k
Low
High
High
Option B
Option A
Option D
Functionality
#Sto
res
Low
High
High
Option B Rarely Selected
Option A Large Retailers
Option D Small/ Medium Retailers
Option C Rarely Selected
Option C
Sida 13
Use Retail standard
processes
Keep cost low, capacity
high
Aggressive go live
timing
Oracle Retail - Project Approach 1 2 3
Go
al
Stra
tegy
O
utc
om
e
Project delivered with over 50% of team offshore.
Significant amount of application scope delivered in a short time.
Development, System test completely done offshore; integration test onshore.
Delivery project start to finish from July, 2010 through February, 2011.
Quickly build team size
Minimize required customizations.
Minimize scope changes during delivery project.
Build a team with the right mix of onshore and offshore team members.
Keep defined components owned within a given shore (i.e. development completely done offshore).
Maintain ability to quickly staff up team in key skill areas.
Begin with approach that standard Oracle Retail processes will be leveraged as much as possible.
Use pre-created assets for Oracle Retail standard processes.
Keep any customizations outside of the standard processes.
Shortened scoping period by using predefined processes.
Customizations limited and performed outside of core processes.
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Integration
Sida 15
New Integration Approach
Oracle eBS
Customer
Item Oracle Retail
POS
REX
Common Integration Datamodel Application
Specific Datamodels
Oracle AIA 11gR1
25 Different Business Objects (18 std AIA, 7 custom) 75 Integrations Implemented 50 AIA Web Service Integrations
ARTS
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Reuse Of Services Example: Sales Transaction Data
Oracle eBS
Oracle Retail
POS
Dose Package
Management
Oracle AIA 11gR1
Sales Transaction ARTS
REX
Loyalty Club
Business Intelligence
Apotekens Service
Sida 17
Summary Apoteket objectives
Modern IT solutions suitable for competitive market adopted to Apotekets new size
Cost efficient IT support (standard)
Flexible IT support
Project Results
Standard solutions makes it possible to decrease maintenance costs
Shared development with others
Use of off-shore
New solution provides capabilities to be a competitive retailer
Flexible integration solution
Sida 18
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