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 less. Situation 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. Solution 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 SAP R/3 Windows 2000 Advanced Server SQL Server 2000 Benefits 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 centralization. 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 implementation." 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 system. 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 become." 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.