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

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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.

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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.

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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.

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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

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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

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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.”

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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.”

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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

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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

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“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 (walter.lang@de.ibm.com)

For further questions please contact the IBM

SAP International Competency Center via

isicc@de.ibm.com

SPC03412-USEN-00

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IBM Deutschland GmbH D-71137 Ehningen ibm.com

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