1 / 26

Effective ERP Disaster Recovery Management: Business Risks and ROI

Understand the importance of disaster recovery in today's real-time ERP systems and how it impacts business risks and ROI. Learn about critical elements and cost-effective solutions to ensure mission-critical service levels and mitigate risks effectively.

watsona
Download Presentation

Effective ERP Disaster Recovery Management: Business Risks and ROI

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Business Case Analysis SLA’s for Today’s ERP Systems “Understanding the Business Requirements” Lou Harvey Senior Chief Architect ERP Program Integrated Business Solutions Lockheed Martin

  2. Applicable System Components PDM (e.g., Metaphase, Product Manager) Program Manager’s Tool Kit w/Data Warehouse Document, Authoring, View & Markup Tools Gate way CALS, STEP Stds. SGML Authoring Tools SGML Data Managers Web Access Fire wall & Web I/F DeFacto Ind. Stds. Systems Engineering Tools ) EDI Stds. Legacy Data Systems CITIS Access SW CM Tool SW Analysis & Dev. Tools (e.g., Teamwork, Softbench) Automated Assembly Systems HR (Lawson, People Soft) Automated Assembly Data Managers Automated Assembly Program Develop. Tools ERP (e.g., Oracle, SAP) Structural Analysis Tools CAD Tools Mfg. Planning Devel. Tools, LSA Data Bases, RMS Tools, Provisioning Tools CAD Data Managers Component / Supplier Manager (e.g., Aspect)

  3. Management Process Elements - Plan & Estimate - Risk Management - Quality Assurance - Monitor & Track - Subcontract Management - Reviews (Prog &Technical) (program metrics) - Configuration & Data Management - Interdiscipline Coordination - Information & Data Management Technical Process Elements System Definition Analysis Design Development, Implementation, Test Sustainment Organization Support Process Elements - Process Assessment - Tools & Methods - Asset Repository (Metrics, Reuse, - Process Metrics - Training Lessons Learned Lessons Learned) - Continuous Process Improvement Product Life Cycle Process Elements Hardware Requirements Analysis and Concept Definition Hardware Preliminary and Final Design Hardware Fabrication, Integration and Test Operations Stakeholder Requirements Analysis and Problem Description System Architecture and Requirements Allocation System Integration and Test Support Software Design Software Development, Integration and Test Software Requirements Analysis Disposition

  4. Let’s Set the Stage…. • ERP is Driving a Paradigm Shift….. • A Back-Up Window No Longer Exist…. • It’s Now a Recovery Window • Recovery Managementfor Today’s ERP System... • The Question is No Longer “What If”…. • But When & How Fast to Recovery ????? • Data Fileson Disks are No Longer the Problem…. • The Transaction is the Data …. • Without Full Transaction LOGS, Data Files Are Often Useless.. • Disaster Recovery Is No Longer An Option… • Disaster Mitigation a Daily Process, DRP a Last Resort…. • DMP/DRP Budget??? We Need Budget ??? • Coming to the Table with Business Risks & ROI • Good Recovery Management Plans Show ROI Cost Recovery

  5. Current “State of Business” - Business Restructuring has become more competitive, driving ERP Systems to become Real-Time. (80’s-Wkly; 90’s Daily; 2000 JIT@1hr) - Mission Critical Process Risks have increased with the emergence of the Real-Time ERP Systems. (Recovery in 80 & 90’s 6-12 hrs, Today < 4 hrs)

  6. Key Business Drivers... Today’s Real-Time ERP Business Systems Require a Mission Critical Service Level Agreement (SLA) • JIT manufacturing changes under 4 hours (formally 24-48 hrs) • JIT Integrated Customer and Supplier processes • High Down Time Costs • Customer and Government Penalties • Increased Product Liability

  7. Key Elements… • Management Driven MCES Requirements • ERP Application Developmentmust address Real-Time Risk Mitigation • Production Support Planningstarts early • Production ERP support services need to be in place at Start-Up, Day 1 • Mission Critical Vendor Support Agreements must off-set identified Business Risks & SLA

  8. Cost Effective Vs Cost to Business • Mission Critical SLA’ are part of a ERP deployment • High ROI Return (less that 30 days) • ERP Production Cost Ranges (40% of Development/Yr*) • Finance ($25k to $50k per day) • Manufacturing ($1,000 to $15,000 per minute) • Distribution ($1,500 to $5,000 per hour) Example: Equipment Manufacture • Single Server (Equipment Upgrade & Hot Patch Bug crash) • Cost $1,200 per minute in Overhead, 3 shifts down • Costs associated with non-shipment of product, $10,000/hr • Total estimated loss for 5 days down time exceeded $8 M • Total loss due to Non-Ship/Billing added $12 M *META Group ERP Survey Report, “Ongoing Support Cost Unveiled”,1999

  9. ERP Mission Critical Investment.. • Includes: • Business Re-engineering of Critical Processes • Risk Mitigation Modelling of Critical Processes • Production Support Modelling of Critical System and Services • Real-Time ERP Service Level Agreements (SLA) • Support for Critical ERP Environments • Critical Vendor Partnerships • Integrated Production Support Teams

  10. Production Support Production Support System and Services • Off-Sets to Business Risk include: • EMS Rapid Recovery Capabilities (under 4 Hours) • Redundant & Clustered Systems • Hot-Application Recovery Resources • Critical Vendor Response Teaming • Applications, Production & Vendor Resources • Integrated Disaster Mitigation (Risk) Planning

  11. Today,s Real-Time ERP SLA’s Must Reflect Real-Time ERP Risks • Must support 4 hour to Recovery Objectives • Define Critical Vendor Partnerships & SLA’s • Hardware(Hardware & O/S Firmware) • Software (COTS, Custom & 3rd Party Bolt-On) • Special Integration • Establish Integrated Production Support Teams • Application Stability and Upgrade Controls • Systems Engineering and Environment Stability • Operations and Change Management Standards

  12. Finance TAX Laws, Cash Flow, Shareholder Interest Planning Customer and Supplier JIT requirements Manufacturing JIT MRP and Inventory Limits, Gov. Reg. Distribution & Logistics JIT to Point-of-Sales Replenishment Centers Transportation Resources Domestic/Export Rules Things have changed…. 1st…Finance, Manufacturing and Distribution Transactions are audible source records under the March 1997, IRS Policy Change 2nd…Product and Shareholder Liability interest have changed and are defined as Business Critical Records under both Federal and State Laws

  13. Today’s ERP Business Requires… Real-Time ERP Transaction Records (Not Just Data Files Anymore) • Availability • Integrity • Accessibility • Shareholder Value • Dependability • Maintainability (RTO/RPO) • Security (RTO/RPO) • Recoverability (RTO) • Audit Traceability (RPO) RTO= Recovery Time Objective RPO = Recovery Point Objective

  14. ERP Example: New Central Finance REAL-TIME PROCESSES & INTERFACES Manufacturing - MRP - O/E - COST - Contract Services - Inventory Control • Finance Real-Time Records • Contract Compliance • CASH Management • A/R via E-commerce/EDI • A/P via E-banking/EDI • Tax via E-Banking/EDI • Transaction Level Tax Audits Customer - Billing - Shipping - Pricing - Inter-Company Government - Tax - Reg. Agencies Distribution - Domestic - International Supplier - Orders - Payments

  15. Defining SLA’s for Real-Time ERP • Identify and Define Mission Critical Processes • Business Risks & Impacts • Implement Change Management Control Processes • Establish Service Level Agreement for each user level of ERP System Services • Establish and Document the Risk Management Plan • Gain Sign-Off’s from both Management & Users

  16. Elements of a SLA • Based on the OSI Model • Business Requirements driven by Identified Critical Business Processes • Requirements Based on End-User Access & Production • Revise Data Center & Vendor SLA’s

  17. Risk Mitigation Plan (RMP) Process • Start with the Business Process Requirements • Categorize the Critical Business Processes • Fit into one or more Mission Critical Processes • MC1 (0 to 4 hours) • MC2 (4 to 24 hours) • MC3 (24 to 72 Hours) • EstablishBusiness Risk and Costs Profiles • RMP Cost Recovery Model • RecommendOff-Sets to Business Risk using SLA’s • SetupEnterprise Management Services to meet SLA

  18. Elements of a RMP • Everything is based on Business Processes….. • Use a OSI System Layer Model • Create aRisk Mitigation Response Model • Define Escalation Levels and Responsibility Model • Define all Mission Critical Business Processes • Create a BP Cost Avoidance and Mitigation Plan • Tangible (Plant OH, Recovery Efforts, Downtime) • Non-Tangible (Lost Billing impacts to Cash Flow, Customer Impacts) • Use a Cost Impact Example as Justifier • “ABC” Manufacturing or Business Process Case

  19. SLA for ERP is Mission Critical • SLA Models Off-Set ERP Application Risks • Business & Production Requirementsdrive SLA’s Risk Response Requirements Special Note: In a Real-Time ERP System use of Disaster Recovery Planning (DRP) should be a Last Option of Choice 36 to72 hours to Recover Off-Site Is Very Costly to any Business Unit

  20. The Corner Stone of the SLA is.. In a Real-Time ERP System use of Disaster Recovery Planning (DRP) should be a Last Option of Choice ESM Critical Management Services provides • Hot Backup Services • ERP has Limited Maintenance and Backup Windows • Mirrored Data & Transaction Integrity • Hot Archival Access & Support (12 to 36 mth Hist.) • High Speed Recovery (Application, Transactions and System) • Data & Transaction Integrity @ 2hrs, Operational @ 4hrs • Data Retention & Purge Management • Define Requirements for What, When, How and Who?

  21. ESM Services are Critical! Today’s ERP Deployments require ESM Services: • Real-Time ERP SupportRequires Hot Back-Up • You Need ERP Transaction Recovery Tools • Transaction Recovery under 2 Hours (recommended) • Most ERP Application Vendors Do Not Provide Tools • INTEGRADED TOOLS WILL ONLY EXIST AFTER 2005* • Plan to Support Partial Data or System Recovery • Application Examples include: • E-Order Entry, EDI, MRP, E-Invoice, Price/Cost, Shipping *Gardner, “ERP Tools”, 1999

  22. The Technical Approach • Check Point in Reality • Finance and Manufacturing are now Integrated • Risk Mitigation and Service Level Agreements • Recovery Objectives(What, When & How?) • Master Data Issues (Point In Time?) • Interfaces are a Major Problem Area • Technical Approach To Risk Mitigation • Transaction Recovery • Typical Recovery Window <= 2 Hours • Environment Recovery • A typical ERP Database has 50 - 100 GB (data only)

  23. Backup Window File Level Backup Daily, Weekly, Monthly Local Backup Limited Retention The MISconception We already have an Enterprise Backup System... ENTERPRISE BACKUP ERP RECOVERY SYSTEM • Recovery Window (RTO/RPO) • Transaction (block) Level • Full Every 12 Hours • Remote Recovery • 7+ Year Data Retention

  24. EBS - Enterprise Backup System Enterprise capable hardware / software / processes RPO - Recovery Time Objective RTO - Recovery Point Objective Business Process Objectives drive & define RPO and RTO Reverse engineer EBS from RPO and RTO requirements. $$ - Investment Capital Budget (medium to large industry) Recommended investment: 3% to 6% of gross sales. EBS ERP Recovery Design Process RPO + RTO = ERP Capable EBS

  25. Facts to Remember • ERP SLA Planning is a Real-Time Risk Management Issue • ERP SLA plans are the best approach • Manage Cost by using a Mission Critical Business Impact Based Cost Recovery Model • ERP System Downtime Does Not Exist!! • This is often the Business User’s “Point of View” • Fast Hot Backup and Real-Time Recovery “a must” • Off-Site DR recovery is your last option in today’s Real-Time ERP Business Environments • A 72 hours Recovery is unacceptable • Identify & Mitigate all Business Impacts and Shareholder Risks

  26. One Last Item to Ponder... “The Business You Save … ... May Be Your Own” Thank you for attending my session, I would be happy to help address any question you may have... You may contact me at ERP Programs, Lockheed Martin e-mail :louis.j.harvey@lmco.com,

More Related