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Movado accelerates business processes with SAP software on IBM i
IBM SAP International Competence Center
“ By running our SAP applications on IBM i, we are able to manage a complex solution landscape with a minimum of effort and a lean IT team.”
Steve Cappitelli
Director of Global IT Operations
Movado Group
“ Being able to use the IBM Power 770 for real-time replication, disaster recovery and to eliminate the need to recover from tape in the event of failure fulfills our key business philosophies of efficiency, reliability and reusability.”
Frank Morelli
Senior Vice President of Global Business Processes and CIO
Movado Group
3
Movado accelerates business processes with SAP software on IBM i
Customer Objectives
• Cut stock and working capital requirements
• Reduce administrative and procurement costs
• Improve month-end financial closing performance
• Increase SAP ERP application performance for end
users
• Reduce business risk with improved disaster recovery
capabilities.
IBM Solution
• Worldwide upgrade from legacy ERP system to a
harmonized SAP ERP solution, consolidated three
legacy ERP application instances into one
• Two IBM Power 770 servers with IBM POWER7
processors
• IBM i operating system with integrated IBM DB2
database
• Comprehensive SAP ERP solution
• SAP ERP Human Capital Management
• SAP Apparel and Footwear
• SAP NetWeaver Business Warehouse
• SAP ERP Strategic Enterprise Management Business
Consolidation
• SAP solutions for governance, risk, and compliance.
Customer Benefits
• Reduced stock requirements and thus working capital
requirements by tens of millions of dollars by introducing
enhanced inventory management and automatic stock
allocation.
• Shrunk administrative headcount by 10 percent while
maintaining a consistently high level of service thanks to
automation of the procurement process in SAP ERP.
• Gives Movado’s financial department the visibility it
needs to close the books faster at the end of each
accounting period.
• Cut business risk by achieving recovery time objective of
24 hours using the IBM co-location disaster recovery
solution.
• Successfully implemented one global instance of SAP
software, improving ease of system administration and
reducing total costs of operation.
About this paper
This paper describes the implementation of a comprehensive SAP application landscape including SAP ERP, SAP ERP Human
Capital Management, SAP Apparel and Footwear, SAP NetWeaver Business Warehouse, SAP solutions for governance, risk, and
compliance on the IBM Power Systems platform with IBM i. The paper details the initial decision criteria, implementation approach,
current hardware and software landscape, and the ongoing migration of the company’s secondary data center to an IBM co-location
site.
4
Movado embarked on a project to consolidate its three legacy
ERP application instances into one central system to improve
inventory visibility, enhance reporting precision, and increase
the speed at which the books could be closed at the end of each
accounting period.
The ultimate goal was the creation of a central ERP platform with
sufficient performance to meet Movado’s long-term business
requirements. To achieve this goal, Movado needed a full IT
refresh – upgrading hardware and consolidating its legacy ERP
applications to an integrated solution.
The company based its selection process on four key criteria:
• consistent IT architecture that was easy to manage and scale
• integrated, validated and shared information
• always-on, 24/7 availability of data and services
• added business value through enhanced reporting
Movado chose to implement a comprehensive suite of SAP
applications running on the IBM Power Systems™ platform. IBM
and SAP were selected as having the best combination of
focused skill sets that would enable the two vendors to deliver an
integrated solution and minimize business risk during the
implementation process.
Background, starting point and objectives
About Movado Group, Inc.
Movado Group Inc. is positioned in the luxury, accessible luxury,
and fashion segments of the global watch market. The group
manufactures, distributes and markets products for Movado,
Ebel, Concord, ESQ by Movado, Coach, Tommy Hilfiger, HUGO
BOSS, Juicy Couture and LACOSTE. Movado owns 33 retail
stores in North America, maintains a presence in Hong Kong
and Switzerland, and ships its products to retailers around the
world. Headquartered in Paramus, NJ, USA, the group has
annual sales of approximately $500 million and employs 1,500
people worldwide.
Business challenges and project objectives
Movado wanted to gain the agility to respond to increasing
customer demand by optimizing its manufacturing, distribution
and financial processes. Simultaneously, the company wanted
to streamline its internal workflows, to cut stock and working
capital requirements, and to reduce administrative and
procurement costs. A key measure was Movado’s ability to close
each financial month end, which would ensure that executives
based their decisions on accurate, timely data.
Existing systems and infrastructure were proving a hindrance to
these objectives. The company’s server infrastructure was not
optimized to handle the increased processing load, and its
legacy ERP solutions restricted its ability to globalize processes,
analyze sales and inventory information from worldwide offices.
The result was that it was difficult to adjust marketing programs
and production plans, which directly affected the ability to
manage margins.
Underpinning the operational objectives, Movado also wanted to
reduce business risk. With many different SAP ERP and
standalone software solutions, the company was not
comfortable with its ability to recover from disaster in a timely
manner.
5
Technical solution
Making the move to SAP software
Movado first implemented SAP ERP applications and SAP
NetWeaver Business Warehouse (SAP NetWeaver BW) on two
IBM Power® 570 servers running IBM i and using the integrated
IBM DB2® for i database system. Using a high-speed virtual
private network, all of the company’s geographic locations
accessed the same SAP ERP instance, supporting core
business processes, such as financials, sales and distribution,
supply chain management, procurement and logistics. Movado
today operates its SAP applications on two IBM Power 770
servers, running the latest release of the IBM i operating system,
7.1, in a high availability configuration.
Worldwide transaction data captured in SAP ERP applications is
transferred to SAP NetWeaver Business Warehouse for further
analysis, meeting the company’s requirements of integration and
enterprise-wide consistency.
Using a single global instance of SAP ERP, the company is able
to generate reports by brand, geography, customer, and stock-
keeping unit dimensions. Procurement – previously managed
with separate applications and transacted through low visibility
processes such as telephone calls and faxes – is now managed
in SAP ERP, and can be analyzed along several dimensions,
including supplier, product, schedule, geography or purchaser.
Movado’s SAP applications user base comprises the entire
organization – some 1,500 individuals. All Movado employees
can access their personnel data through a self-servie
application, using SAP ERP Human Capital Management and
SAP NetWeaver Enterprise Portal. This solution is also being
used to access reports through business intelligence
applications, initiate maintenance or feature request tickets, and
access the SAP Productivity Pak application by U-Perform – a
knowledge base containing training materials. Employee feature
requests are reviewed by administrators twice per week in the
SAP Solution Manager. Movado implemented the SAP Change
Control Management workflow, enabling the company to fully
track all change requests.
The next stage of the project was to develop an aftersales
support solution based on SAP technology and developed in-
house. In addition, Movado implemented SAP solutions for
governance, risk, and compliance to increase security.
SAP Apparel and Footwear
Movado evaluated different applications and concluded that the
SAP Apparel and Footwear application was optimally suited to
meet its business needs. SAP Apparel and Footwear includes
the key elements of the retail chain, and with minor customization
became a perfect fit for watch sales.
The sophisticated Allocation Run (ARun) functionality was
configured to automatically order new stock when levels fall
below a predefined threshold, helping Movado to improve its
customer service and inventory prioritization, and increase its fill
rate by 15 percent.
Implementing the ‘fair share’ logic to optimize supply
management between different plants, ARun was configured to
automatically prioritize allocation to regions with the highest
demand – significantly reducing inventory and working capital.
Aftersales support application
To deliver improved repair services to its customers, Movado
developed an aftersales support application to replace its
legacy solution, and integrated it end-to-end with SAP ERP
software. A third-party application was used for the front-end
after sales web application. The back end was developed using
SAP ABAP programming tools, fully integrated into SAP ERP and
which communicates with the main SAP ERP instance via the
IDoc interface. Customers may visit the portal to open repair
tickets for their watches, entering full details, and they can then
view the progress of the repair through Movado.
6
Integration with standard SAP ERP transactions – for example,
using SAP ERP data to source components and manage
invoicing – allows Movado to build a full estimate for each watch
repair. Call center staff using the aftersales application have full
visibility of every watch and customer in the system, and can drill
down to see exactly where a watch is in the repair workflow in
even greater detail, enabling them to provide personalized
feedback to customers.
SAP solutions for governance, risk, and compliance
To control application security and ensure that users had
appropriate access rights across all systems, Movado chose to
implement the SAP solutions for governance, risk, and
compliance.
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IBM Power 770
BW
BW
In the past, generating reports on user access rights was a
manual process. Using the SAP GRC Superuser Privilege
Management component – also known as ‘Firefighter’ – the
company is able to monitor, audit and update access rights
precisely. Using the tools provided by SAP GRC Superuser
Privilege Management, reports can be generated automatically,
freeing IT staff from iterative tasks.
If system access is enabled for an individual user, SAP GRC
Superuser Privilege Management gives administrators full
visibility and recovery from user changes.
Figure 1: SAP system environment at Movado
7
Server architecture
Movado implemented two IBM Power 770 servers with twelve
IBM POWER7® processor cores and 288 GB main memory
each. As a fully integrated deployment to IBM Power servers
running the IBM i operating system, Movado relies on internal
data storage. Each IBM Power 770 server is configured with
22 TB disk space on internal hard disks, reducing the number of
physical devices and interfaces, and contributing to the small
server-room footprint of this configuration.
The IBM POWER7 processor was designed for virtualized
consolidation of business-critical workloads. Combined with the
IBM i operating system and the integrated IBM DB2 for i
database, the IBM Power 770 platform offered both high
performance and native support for workload consolidation – the
optimal combination to achieve high SAP application
performance and streamlined administration.
To maximize the available system processing capacity, Movado
uses the advanced virtualization features provided by IBM
PowerVM®. Using the micro partitioning features of PowerVM,
each server is divided into multiple logical partitions (LPARs)
based on a shared processor pool. The company activated
seven IBM POWER7 processor cores in each IBM Power 770
server, and divided the total capacity in shared pools between
four uncapped LPARs, arranged identically on both servers.
Production SAP ERP and SAP ERP Human Capital Management
solutions are hosted in one LPAR, and a second LPAR hosts the
production SAP NetWeaver Business Warehouse. Movado runs
its SAP quality management solutions in a further LPAR, and up
to 15 different SAP systems run in a final LPAR for development
and testing purposes.
IBM i also offers a unique onboard virtualization feature – IBM i
subsystems. Subsystems are virtual runtime environments for
individual applications, allowing them to share available
hardware resources within a single LPAR. Subsystems allow
prioritization and demand-capping for individual applications,
and can be started and stopped independently. Running SAP
ERP applications on an IBM i platform enables users to set up
simplified IT landscapes to run their SAP solutions.
To ensure optimal performance of its mission-critical production
systems, Movado allocated three virtual processor cores to the
logical partition running the SAP ERP production system. This
logical partition is prioritized and weighted to ensure that the
production systems can use all the available resources required
to improve reliability and performance.
SAP application architecture usually comprises three tiers:
database, application and user interface. The three tiers are
often run on different machines, and sometimes on different
hardware platforms and operating systems.
Taking advantage of the integrated IBM DB2 for i database,
Movado is able to combine the database and application tiers.
Movado runs the IBM DB2 for i database as part of the IBM i
operating system, with the SAP application’s central instance
and application server in a single LPAR. Running both the
database and the application in one LPAR reduces complexity
and cuts the number of partitions that need to be monitored and
maintained. Running two tiers rather than three tiers is beneficial,
as it removes the need to manage an additional LPAR. The
reduction in complexity that Movado has achieved by running 15
development and testing systems in one LPAR is another
advantage of using the IBM i operating system over alternative
platforms, which often require more LPARs to operate a similar
SAP environment.
Steve Cappitelli, Director of Global IT Operations, concludes:
“By running our SAP applications on IBM i, we are able to
manage a complex solution landscape with a minimum of effort
and a lean IT team.”
8
Using IBM Co-Location
At the beginning of the upgrade project, Movado relied on a
traditional disaster recovery approach, with daily incremental
backups to tape and twice-yearly equipment testing. As the
company’s data had grown, it became clear that it was no longer
feasible to recover all of its business-critical systems within a 24-
hour window. To improve business continuity and reduce
business risk, Movado decided that co-location would be the
best way to achieve its goals.
After investigating a number of vendors, Movado decided that
only IBM Global Technology Services had the equipment and
expertise to support the transition to a co-location solution.
Frank Morelli, Senior Vice President of Global Business
Processes and CIO of Movado Group, comments: “The vendors
we looked at really gave us a binary choice – either a traditional,
tape-based approach or co-location. Ultimately, we decided to
go with IBM because of their proven experience with both types
of disaster recovery solutions. IBM offered us the flexibility to
gradually evolve our disaster recovery solution in a way that
made sense for our business.”
The company’s two IBM Power 770 servers were installed at
separate geographical locations and configured as independent
mirrors with a real-time data replication solution. One IBM Power
770 server is installed at a Movado data center, the other IBM
Power 770 server is to be re-located to an IBM site.
By mirroring its production environment to the IBM co-location
data center, Movado gains the ability to failover to its secondary
site in the event of a disaster recovery scenario – bringing its SAP
systems back online almost instantly. Using this disaster
recovery method, core business activities such as inventory
management would be minimally impacted by an outage at the
primary site, and the company’s IT team would be free to
prioritize the order in which secondary systems were brought
back online.
“Being able to use the IBM Power 770 for real-time replication,
disaster recovery and to eliminate the need to recover from tape
in the event of failure fulfills our key business philosophies of
efficiency, reliability and reusability,” says Frank Morelli. “We are
secure in the knowledge that our core business data – including
shipping and inventory information – will be protected if the
primary data center suffered a power outage.”
Performance improvements
Strong collaboration
With a solution that involved components from both IBM and
SAP, Movado has first-hand experience of the collaboration
between the two vendors. Mike Torrente, Vice President Global
Information Technology, says of the relationship: “From my
perspective, it’s seamless. For example, we had a situation
where our system was performing poorly and we opened a
support ticket at 11:00, and by 11:45 someone from the
combined IBM and SAP development team at SAP in Germany
had looked into the problem and was giving us a solution. I think
that speaks very highly about the quality of the IBM and SAP
alliance.”
Movado regularly takes part in conferences for knowledge
exchange with other IBM i users. Jorge Serrano, SAP Basis
Manager at Movado, comments: “We have a lot of confidence in
IBM’s commitment to the IBM i platform, and because of that, we
find it valuable to keep a link with the IBM i community going.
There’s always something interesting that comes out of our
conversations that we can follow up on to optimize our own
system environment.”
9
Next steps
Preparations are under way to complete Movado’s co-location
strategy. “We are planning to move the secondary IBM Power
770 to an IBM data center by the end of 2012,” says Frank
Morelli. “Our goal is to eliminate tape backup entirely and
simplify the landscape as far as possible. By outsourcing our
disaster recovery to IBM, I am confident that we’ll be able to
achieve it.
“When we moved to running a single instance of our SAP ERP
and SAP NetWeaver Business Warehouse solutions on the IBM
Power Systems servers, it was a ‘big bang’ implementation – we
went live worldwide on one day. To limit the number of variables
in the equation and minimize the risk of something going wrong,
we decided to stay with the third-party high-availability solution
for data replication. Now we have a stable environment, we are
very interested in optimizing our high availability setup and
investigating other vendors’ solutions – including IBM PowerHA.”
Internal storage on IBM i simplifies the task of system
administration, making it an ideal option for companies such as
Movado. As the business continues to grow, external storage
may provide additional benefits. Steve Cappitelli concludes:
“Internal storage works well with our landscape, but we are
always on the lookout for new opportunities. In the future, we may
make the move to external storage solutions if we need extra
performance to drive our business forward – possibly through
storage virtualization and a storage area network with traditional
disk drives and also solid state disks.”
“We had a situation where our system was performing poorly and we opened a support ticket at 11:00, and by 11:45 someone from the combined IBM and SAP development team at SAP in Germany had looked into the problem and was giving us a solution. I think that speaks very highly about the quality of the IBM and SAP alliance.”
Mike Torrente
Vice President Global Information Technology
Movado Group
10
Warehouse system, that’s exactly what we have achieved,”
continues Kate Moore. “By generating reports that give our
customers the insights they need to move more products out of
their inventory, we have gained an excellent reputation within
Movado Group.”
Using SAP NetWeaver Business Warehouse in combination with
the SAP Strategic Enterprise Management application’s
Business Consolidation component has enabled Movado’s
business intelligence team to perform consolidated worldwide
financial reporting, and allows the company to close the books
more quickly at the end of each accounting period.
The integrated SAP ERP applications provide validated data to
SAP NetWeaver Business Warehouse, available for detailed
analytics and reporting.
Today, every purchase order over $1,000 goes through
Movado’s SAP ERP workflow and is approved according to the
company’s organizational structure. By improving visibility of the
contents of individual purchase orders and channeling requests
to the appropriate authorizer automatically, the company has
radically increased the efficiency of its procurement process.
The solution provides more timely data, and enables financial
closes in days instead of weeks. The enhanced purchase order
workflow provides appropriate approval levels, allowing
significant vendor consolidation and, visibility of purchasing
commitment globally.
SAP software also helps Movado to place the right amount of
stock on the right shelves in response to customer demand.
Through increased ease of inventory management and
automatic stock allocation, the company has decreased its stock
and working capital by millions of dollars over a period of 3 years.
Project achievements
Since the completion of the upgrade project, Movado has seen
significant improvements in its inventory visibility, customer
service and supply chain management. Before the company
implemented SAP NetWeaver Business Warehouse, there were
three separate applications and no consolidated data repository.
W ith the implementation of SAP NetWeaver Business
Warehouse, all data for reporting is consolidated in one system,
and currency conversions are computed automatically with daily
rates from an external data provider, increasing the accuracy
and efficiency of the reporting process.
Kate Moore, Business Intelligence Director at Movado, explains:
“Before we implemented SAP ERP, we were on three different
systems, which meant lots of phone calls and sales executives
who did not know what was coming until the truck pulled up at
the warehouse.”
“When we were planning this migration and consolidation
project, the sales executives specifically requested that we build
increased inventory visibility into the solution, so that is exactly
what we’ve done. It has made a big difference for them.”
“Using the data from SAP ERP applications and the SAP
NetWeaver Business Warehouse solution, we created a Supply
Situation Report, which looks at the forecast demand, purchase
orders, requisitions and plans for the production sites over a 26-
week horizon. Sales account executives rely on this information
because it is so accurate; it shows them what’s coming in the
short and longer term, and they can plan marketing campaigns
around this.”
Improvements in inventory visibility and information integration
allow Movado’s business intelligence team to generate reports
that help Movado employees to increase sales and reduce
inventories, improving their turnover. “We set out to improve
customer service, supply chain performance, and create a
platform for growth, and, thanks to our SAP NetWeaver Business
11
“Thanks to the IBM and SAP solution, we are now able to better
understand our needs and positions globally. As a result, we
have been able to achieve continuous improvement via our
three-tier KPI reports in the business intelligence solution,
measuring supplier performance within Movado, intercompany
transfers, and Movado’s customer performance. In addition, we
are able to make better decisions about procurement and
product deployment.”
Figure 2: Kate Moore, Mike Torrente, Frank Morelli, Jorge Serrano and Steve Cappitelli
“ By generating reports that give our customers the insights they need to move more products out of their inventory, we have gained an excellent reputation within Movado Group.”
Kate Moore
Business Intelligence Director
Movado Group
For more information:
To learn more about the solutions from IBM
and SAP, visit: ibm-sap.com
For more information about SAP products and
services, contact an SAP representative or
visit: sap.com
For more information about IBM products and
services, contact an IBM representative or
visit: ibm.com
Contacts:
IBM
Walter Lang ([email protected])
For further questions please contact the IBM
SAP International Competency Center via
SPC03412-USEN-00
© Copyright IBM Corp. 2012 All Rights Reserved.
IBM Deutschland GmbH D-71137 Ehningen ibm.com
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