Customer Solution Case Study
/ Medical-Supply Distributor Avoids Costly ERP Replacement with Migration to Windows Server and SQL Server
“I’m most proud of the fact that we found a way to modernize our ERP system that funds itself. We didn’t need to go around to the business units and ask them for more sales and profits to offset IT cost increases.”
Rick Mears, Chief Information Officer, Owens & Minor
Major medical and surgical supply distributor Owens & Minor ran its business on an aging IBM mainframe that was running out of capacity, inflexible, and costly to run. So, it chose an innovative strategy by migrating, rather than replacing or rewriting, its custom code to the Windows Server 2008 envi-ronment. It expects to invest all operating savings into further IT improvements, beginning with new end-user and customer interfaces. The result will enhance customer service and flexibility for continued growth without incremental IT expenses.
This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.Document published February 2010
Business Needs
In its day, a state-of-the-art IBM 390 mainframe helped Owens & Minor jump ahead of the competition to become a U.S.$8 billion-a-year business.
However, the day of the mainframe came and went, but the mainframe was still there. Owens & Minor saw it as a growing expense, and as a potential limitation on continued growth. With the mainframe, every 10 percent increase in the company’s revenues cost Owens & Minor another $1 million in licensing fees as it increased processing capacity.
“Each year we celebrated growth by having to spend more and more on mainframe upgrades,” says Rick Mears, Chief Information Officer at Owens & Minor.
Beyond the expense, the company was running out of capacity on the 700 MIPS mainframe. Custom reports could take weeks to write and run. Software updates took months to implement, limiting the ability to respond to fast-changing business needs. Call center representatives vied with each other for the largest flat-panel monitors, which better displayed the multitude of screens that they often needed to respond to customers. Data was contained in IMS DB, VSAM files, and “virtually every data and storage technology invented by IBM in the past 25 years,” says Mears. Consequently, enterprise data was trapped inside the mainframe, and nearly every user request required a COBOL program to be written to deliver information to users.
Yet Owens & Minor had been reluctant to replace or rewrite this system, and with good reason. The company ran its business on 10 million lines of custom COBOL/CICS code. The business logic in that custom code had become a competitive differentiator and a key source of the company’s superior customer service. “It was our secret sauce,” says Mears. “We weren’t going to throw it away.”
Solution
Mears wanted to move the business applications to a more modern, cost-effective platform. By moving the mainframe applications to the Windows Server 2008 operating system, Microsoft SQL Server 2008 data management software, and server-based hardware, Owens & Minor would gain a much more cost-effective computing platform. In turn, the company could reinvest the savings in enhancements and new user interfaces that would help fuel continued growth for years without all the additional cost associated with ongoing mainframe upgrades.
The challenge was how to get to the Microsoft environment. Because Owens & Minor valued its business logic, buying a commercial enterprise resource planning (ERP) package and then spending heavily to customize it to suit the company’s needs was unattractive. So was spending years to rewrite the company’s existing software to a new platform. And neither option would be cheap. Owens & Minor estimated that it would spend $100 million to $200 million to replace or rewrite. Fortunately, there was a third option, one that required only a fraction of the cost—and a fraction of the time—of the others: preserving the investment in the existing business logic by migrating the business systems directly to the Windows Server environment without a rewrite.
To accomplish the migration, Owens & Minor turned to its longtime solution provider, Dell Perot Systems, which used migration tools including Micro Focus Studio Enterprise Edition and Micro Focus Server Enterprise Edition. The Micro Focus tools were especially well suited to the variety of languages that had to be managed as part of the migration.
“The Micro Focus tools are phenomenal,” says Mears. “They shift our application development activities onto the desktop, giving our developers a view into the system that they didn’t have before. That boosts their productivity and provides for higher quality code.”
The mainframe was shut off and shipped out in October 2009. The new production version of the Owens & Minor ERP system operates on a clustered pair of Hewlett-Packard quad-core, 8-processor computers, for a total of 64 processors. The test-and-development and disaster-recovery environments each operate on a similar platform.
Benefits
The Owens & Minor migration was so cost-effective that, even factoring in its cost, the five-year price tag for operating on Windows Server is significantly less than that of the mainframe, allowing the company to invest the savings in other IT improvements.
The company is applying these savings to what Mears calls “dramatic improvements” in the system’s user interfaces and report-ing capabilities. Already, Owens & Minor has rolled out a new customer service system, called OM Connect, that reduces the number of screens with which a customer service representative has to work, from dozens down to just a few. The result is higher productivity for represent-atives and better, faster service for customers. When Owens & Minor takes advantage of the new system’s flexibility to add customer self-service through Web-enabled services, those benefits will only grow. And the company plans to replace its system of nightly batch jobs and canned reports with real-time business intelligence delivered over the Web to authorized users wherever they are, enabling more profitable decision-making.
Because Windows Server and SQL Server are so much more cost effective than the mainframe, Owens & Minor now has redundant production servers, plus right-sized development and disaster-recovery servers. “We have a redundant, high-availability, failover environment. That was difficult and expensive to do before,” says Mears. “I’m most proud of the fact that we found a way to modernize our ERP system that funds itself. We didn’t need to go around to the business units and ask them for more sales and profits to offset IT cost increases.”
Perhaps the biggest benefits will come in enhanced customer service. “We want our customers to see that we’re leading the industry in using technology to serve them better,” says Mears.
This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.Document published February 2010