BusinessDigitalMiscellaneous CapGemini: Capping IT Off

Time to get back to the future …


Anders Nilsson

June 10, 2016

Many of today’s applications are a legacy from more than 25 years ago. They were designed and built given the opportunities and constraints of the technology at that time. I frequently meet customers with systems developed in the 1970s and 1980s where the competence in maintaining the applications has been retired for many years, but the applications seem to have an endless life. It’s not unusual that these applications still support core business processes necessary for the company to run their business.

Unfortunately it’s not much better with many of COTS (Commercial of the shelf) products on the market either. Most of the ERP systems that are in use today, sold and still deployed are also a legacy from a time when the restrictions in performance/speed, storage volume and communication possibilities set the agenda for how they were designed and built.

This has produced systems with a lot of limitations, delays, complexity, a non user friendly experience and an unnecessary higher total cost of ownership. The reason is that the systems have been designed to primarily support and fulfill the constraints from a technical perspective. Paying attention to the needs of the end-users was not high on the agenda, leaving us with systems that unfortunately in many cases require a lot of extra effort and plenty of frustration.

In the table below there are a few examples of the cost development of a few basic components like processors, RAM and HDD since 1990 (or around);






42 000 USD (1997)

42 000 000 USD (1984)

0,06 USD

One GFLOP costed 42 KUSD 1997 and 42 MUSD 1984 and 0,06 USD 2015. A cost reduction of 700 million times 1)

Cost / RAM (GB)

103 880 USD (1990)

4,37 USD

The cost reduction from 1990 is 24’ times  2)

Cost / HDD (GB)

11 200 USD

0,03 USD

The average HDD price per GB has gone down 370 000 times  3)

If you also add the development of speed in storage and memory access, capacity in network and broadband, the components building up the IT landscape (where the speed is more than 10 000 times higher for memory access), the game plan for designing and building IT-systems have been completely changed.

Fortunately there is hope. The new S/4HANA is the first and (at the moment) the only fully redesigned and reengineered ERP-system fully taking into consideration the opportunities that the technology innovation over last years has brought. S/4HANA uses new technology innovations and improvements in hardware, communication and databases and it’s created to take advantage of the power of the in-memory computing technology. This leads to a system that is built to meet the challenges in the new digitized era – a digital core. Even if S/4HANA is rebuilt to use the power of technology innovations, the reasons for moving to S/4HANA are mainly business related.

One example where the benefit of S/4HANA is obvious is within the operational analytics. Most ERP-systems in use today need a separate business warehouse (BW) to analyze the operational information collected from the transactions. The reason for this is primarily to be able to handle the performance limitations in a traditional transaction database. The consequences of this are unfortunately costly;

  • Duplicate data
  • Delays
  • Need for reconciliation
  • New tools to handle the import/export (very often with extra licenses)
  • Need for specialists for developing reports in BW or other tools

In S/4HANA, the analysis can be done from the transaction database without a need for a separate BW. The benefits are easy to understand and can be summarized in one word – simplification.

According to a newly released report from Capgemini Consulting where more than 600 executives from the US, Europe and China participated finds that analytics in operations is increasingly seen as a strategic priority for organizations. Over 80% of respondents agreed that analytics in operations plays a pivotal role in driving profits or creating competitive advantage and that one of the today’s challenges is that too much time is spent in reconciliations and to collect data instead of analyzing and take decisions.  

There are of course other benefits with a system completely reengineered and built without the limitations that for long time are removed. To mention a few:

  • Run a system without batch jobs
  • A user experience built for humans and not for data operators in white coats
  • A system natively built to run on any platform and is designed for a mobile usage already from the beginning
  • Built for not only explaining historical events, but to predict the future
  • Built for cloud and the internet of things already from the start

Digitization is the word on everyone’s lips, but putting lipstick on a pig, doesn’t change the fact that it’s a pig. So, there is a need for everyone in charge of the IT portfolio in whatever organization you are in to start gear up and invest in a foundation for the new digital era. The alternative, sticking with the status quo, is to continue with high TCO, bad user experience, long time to market and more time spent explaining differences than predicting the future. So, if you are a CIO or represent the business it’s time to act. Most certainly you have a number of burning platforms and to replace them is not only a question of IT. It’s a matter of using IT as the differentiator to create a competitive edge.



This article was written by Anders Nilsson from CapGemini: Capping IT Off and was legally licensed through the NewsCred publisher network.

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