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Microsoft runs AS/400's in house - Article?

Bernd Schaefers Oct 21, 2001 8:34 AM
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If you search Microsoft's TechNet you'll find:

AS/400s Extinct at Microsoft Since May, 1999

In late 1995, Microsoft began a project to centralize and modernize its
legacy computer systems. The project was vital to saving the company money
by streamlining Financial, Human Resources, Order Management, Distribution
and other vital line-of-business applications at the very heart of
Microsoft's internal computing information environment. These applications
ran on a number of divergent and geographically distributed computer systems
requiring complex and custom interfacing to form an aggregate system that
was anything but integrated. Included were 12 AS/400s, 3 VAX clusters, and
at least 50 Microsoft® Windows®-based client/server systems. In 1999, the
project was completed and the legacy systems were replaced with one
centrally managed SAP R/3 solution, consisting of just 15 Windows 2000-based
application servers that share a SQL ServerT2000-based database. Today, with
the new system, instead of taking several weeks to close the worldwide
consolidated books, Microsoft can now close every month in five days or
In the mid 1990s Microsoft and its worldwide subsidiaries used legacy
business systems running on the IBM AS/400 with expensive custom interfaces
and no common taxonomy.
Over the next few years, the legacy system was replaced with a centralized
ERP system (SAP R/3) running on Windows 2000 and SQL Server 2000.
Products & Technologies
Windows 2000 Advanced Server
SQL Server 2000
Saved US$5 million per year in hardware maintenance fees, and $15 million
per year in reduced procurement costs.
Executives have a single global view of business information much faster.
Significant redeployment of systems development & support staff through
In the mid 1990s, before Microsoft began implementing the SAP R/3 solution,
the company's tremendous growth rate was straining its business support
systems. More than 30 separate systems supported the company's financial,
operations, and human resource groups alone. Based on legacy IBM AS/400 and
Digital Equipment Corporation VAX platforms, the systems communicated
through a complex series of costly custom interfaces including MAC-PAC.
MAC-PAC is an application developed by Accenture for order management,
inventory control, purchasing, A/R, A/P, and general ledger accounting.
These systems had been implemented in a piecemeal fashion over time in many
Microsoft geographic subsidiaries, and systems decisions were based on
applications available at that time. Batch processes moved information among
systems, but as the company grew, so did the time required to run the
batch-to more than 12 hours.
The AS/400-based MAC-PAC solution was deployed to a number of regional
locations and subsidiaries, allowing regions to customize their
configurations to support regional-specific business rules and other
processing differences. Over time, these custom coded applications resulted
in divergent taxonomies that became costly to resolve, maintain and
integrate, due to changing business requirements including regional business
models, improvements to manufacturing practices, and Y2K challenges. As a
result it became difficult to consolidate information up to the corporate
level so that decision makers could quickly determine how well the company
was doing.
"The critical factors that made this project a success were the extremely
strong support from our executive sponsors, and the fact that the business
groups really owned the implementation. It was not an information
technology-driven implementation but rather a business-driven
Mike Adams, General Manager, Enterprise Applications, Microsoft Information
Technology Group (ITG)
In 1995 Microsoft began deployment of SAP R/3, initially running on Windows
NT® Server with SQL Server, to centralize and replace its worldwide business
systems. By early 1999, Microsoft had replaced 100% of its legacy AS/400,
VAX, and disparate client/server production business systems with a single,
global instance of SAP R/3 on 15 application servers running Windows 2000
Advanced Server operating systems, and a single SQL Server 2000 database.
As of this writing (November 2000), Microsoft continues to successfully run
this central system in production at corporate headquarters and in more than
60 subsidiaries with customized local language, currency and statutory
requirements. New functionality, such as payroll and APO (supply chain
optimization) continues to be added to the existing SAP R/3 feature set
which significantly exceeds what was available in the old solution. The new
system's database is over 500 GB in size, grows at 5 GB per week, and
delivers sub-second performance for over 2,000 intranet and 40,000 Internet
users (600 concurrent). Despite the fact that the system is centralized,
performance has significantly improved over the previous distributed
systems, and the cost of running the system is dramatically less.
With Windows and SQL Server, Microsoft reduced its dependence on a team of
highly specialized and costly database administrators that were needed to
support the legacy system around the clock. AS/400 systems at Microsoft now
serve purely support purposes - software product interoperability testing
and Microsoft product support for AS/400 customers. "We no longer need to
maintain a staff of AS/400 and VAX experts whose sole function is to watch
over our business systems" says Bryan Krieger, Director of Microsoft's SAP
R/3 technical team.
Administrative and management costs have dropped because Microsoft's IT
group can run its systems just as effectively with a smaller administrative
and operational staff on Windows 2000 Advanced Server. Microsoft has had
99.9 percent continuous high availability with its SAP R/3 system, excluding
one hour of scheduled maintenance per week, since Microsoft went live on the
The Microsoft SAP R/3 production environment relies on two Compaq ProLiant
8500 database servers (8x550-MHz Intel Pentium III Xeon processors), with
one acting as a hot standby for fail over purposes. Each server is
configured with 4-6GB of RAM and 1.4-5 TB of hard disk storage. Fifteen
additional Compaq ProLiant 4500, 5500, 6400 and 8500 systems are used as
application servers.
"Microsoft needed to change the way it ran its business, but at the same
time, it needed a solution that would complement its business. We did not
have 30 different legacy systems because we were indecisive; we had them
because we had a diversity of needs. SAP R/3 provided us with a way to meet
those needs with one very powerful platform. It gave us a way to transform
our business in a way that was consistent with the business we wanted to
Bob Herbold, Chief Operating Officer, Microsoft Corporation
Retiring the AS/400
The migration from AS/400s to Windows 2000 progressed from the smallest
traffic region to the busiest traffic region. This method was followed to
troubleshoot any issues at the smaller sites before the migration began at
the larger sites, with North America, Europe and Asia migrating last.

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Microsoft's Finance IT group was the first to migrate and drove the original
implementation plan, starting in 1995. Within seven months, the Microsoft
team designed, configured, tested, and went live with the procurement and
payables aspects of SAP R/3 Materials Management (MM) and Financial (FI)
The Order Management group had topological and integration issues very
similar to those of the Finance group, but the managers' eagerness to
migrate to SAP R/3 was heightened by the year 2000 problem buried in some of
the legacy systems that supported the order management process. Migrating to
SAP R/3 would not only resolve the Y2K problem, but would also move order
management toward the goal of a streamlined supply chain and a flexible
systems backbone. By the first quarter of 1997, after only 12 months of
effort, Microsoft had moved its key OEM processes onto SAP R/3. Before that
phase of the order management project was completed, Microsoft began a
second phase, which orchestrated the movement of OEM hardware, packaged
product, retail licensing, and programs systems to SAP R/3.
The Human Resources group was the third major processing area to implement
SAP R/3. By April 1997, the HR system was live across Microsoft's worldwide
locations, replacing 23 separate HR legacy systems, and eliminating more
than 25 systems interfaces.
In 1998 and 1999 Microsoft replaced legacy Maxcim/MAC-PAC systems with the
SAP R/3 Sales and Distribution (SD) and Materials Management (MM) moules,
ensuring Y2K compliance for the sales and distribution systems and a more
configurable, tightly integrated system for the entire organization. Because
the modules live on a central instance, this functionality is automatically
integrated with the FI module, as well as with the SD and MM functionality
implemented for OEMs. This has extended the integration benefits to the
entire sales and distribution process, providing more accurate reporting and
a more accurate picture of the business to Microsoft executives at any
moment, worldwide.
In June 1999, Microsoft began the expanding its implementation of SAP R/3
with the Business Information Warehouse (BW), which extracts purchasing,
accounts payable, and general ledger data along with the associated master
data for key reporting to the Microsoft Corporate Procurement group.
Microsoft's Information Technology Group (ITG) integrated SQL Server
Analysis Services and Microsoft Office 2000 Web Components with BW. This
allows employees to use one of several internally developed front-end
reporting tools (called MS Insight) that uses Microsoft Office 2000 Web
Components to access predefined reports. Because it is browser-based, the
application enables employees to directly leverage the SAP R/3
implementation by viewing standard reports or developing and saving custom
ad hoc reports, as well as working with data offline and doing advanced
report formatting from within a familiar environment.
Benefits to Microsoft.
"By implementing SAP R/3, we've been able to create a unified general
ledger, streamline and standardize our business practices and reporting
worldwide, and gain better control over our assets."
Gregg Harmon, SAP Project Manager, Microsoft Finance IT
SAP R/3 running on Windows 2000 Advanced Server and SQL Server 2000 has
provided Microsoft corporate decision makers with better tools for making
decisions with a single chart of accounts. At the same time, the new system
reduced overhead costs-including hardware, software, and maintenance
costs-that were associated with the legacy AS/400 and VAX systems. For
example, the company projects savings on hardware maintenance alone of more
than $5 million per year.
With real-time access to information in the SAP R/3 database, Microsoft can
operate much faster. Instead of taking four weeks to close the books at the
end of the year, Microsoft can routinely close every month in five days or
less. Furthermore, because SAP R/3 is designed to support multiple
languages, currencies, tax and reporting requirements, the geographic
subsidiaries have rapid access to the information they need to close their
books and meet local statutory requirements. A return on investment (ROI)
study conducted by the SAP IT management team shows that Microsoft's
implementation of SAP R/3 Financials paid for itself within two years.
In addition, internally developed web-based front-end tools allow employees
to streamline procurement, HR, and other tasks by directly leveraging the
information in SAP R/3. Further technical and business information on these
tools, such as MS Market, MS Expense, MS Invoice, and others, can be found
on the World Wide Wed links listed below.
For More Information
For more technical information on Microsoft's SAP R/3 implementation, and
the many internally developed web-based line of business applications such
as MS Market, MS Expense, MS Invoice and others that make use of the SAP R/3
database via the World Wide Web, go to:
For more information about Microsoft products or services, call the
Microsoft Sales Information Center at (800) 426-9400. In Canada, call the
Microsoft Canada information Centre at (800) 563-9048. Outside the 50 United
States and Canada, please contact your local Microsoft subsidiary.
© 2000 Microsoft Corporation. All rights reserved.
This case study is for informational purposes only. MICROSOFT MAKES NO
Windows NT are either registered trademarks or trademarks of Microsoft
Corporation in the United States and/or other countries. The names of actual
companies and products mentioned herein may be the trademarks of their
respective owners.

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