Systems configuration biz case

A Business Case for the Advanced Mode IPC

By Doug Beverage, Siemens Logistics & Assembly Systems, Inc.

Once one begins to ponder the potential applications for systems configuration, you quickly realize that the possibilities are endless …


While walking along the "Philosophen Weg," on the other side of the Neckar River from Heidelberg, Henk Meeter and I discussed some recent news from SAP concerning the Advanced Mode of the Internet Pricing and Configurator, or IPC.

My impression was that SAP was stepping away from support of the Advanced Mode, and focusing their development efforts on the Compliant Mode and the Variant Configurator in R/3.

Being one of the few Advanced Mode IPC customers, I was naturally dissatisfied with this information. However, from a business perspective, I understood why SAP might be moving its focus off of the Advanced Mode. There are very few existing Advanced Mode customers, and during a survey at the previous CWG, most customers queried felt that VC/Compliant Mode met their configuration needs quite adequately, and that they did not require the Advanced Mode.

While I understood their reasoning, I certainly did not agree with their conclusion. My personal feeling was, and still is, that most customers do not understand the difference between Compliant and Advanced modes, nor do they understand the real reasons for choosing the Advanced Mode.

Moreover, I believe there is a large number of companies that could benefit from the additional features of the Advanced Mode that have simply not identified the potential benefits of the type of automated configuration tool that the Advanced Mode makes possible during the sales and engineering phase of a customer project.

My personal belief, consistent with this, is that there is a very large potential market for what I call systems configuration.

A few weeks ago, therefore, when Henk contacted me about writing this article for the CWG Review as a forum to make my case for the continued support of Advanced Mode, I felt it was time to put rubber to the road.

No longer could I simply rant and rave about my cause. It was time now to actually build a business case for Advanced Mode, based on the concept of systems configuration.

Thank you Henk for challenging me to write this article, I only hope that I have done the subject justice.


The following article presents a very high-level business case for the use of Advanced Mode configuration with the SAP IPC (Internet Pricing and Configurator). The basis of the argument is the business requirement for systems configuration. Systems configuration adds another layer of abstraction to the product configuration paradigm, in order to better assist users, whether they be sales persons, engineers, or customers, in creating viable solutions using configurable products.

There are relatively many vendors offering automated product configuration solutions, whereby product and application knowledge is captured in an electronic format, and then executed to assist users in creating a valid configuration of the product.

However, very few vendors offer automated systems configuration tools, whereby inter-product and application knowledge about how products work together may be captured and executed, and fewer, if any, offer complete automated systems configuration solutions. SAP is one of the former. It is not yet one of the latter.

The goals of this article, therefore, are threefold:

  • First, to clearly differentiate between product configuration and systems configuration;
  • Secondly, to outline the strategic business advantages inherent in systems configuration, and to justify, thereby, systems configuration as an issue for really effective business execution;
  • And third, to demonstrate that, if there are any doubts about the fact that systems configuration is a real business requirement, and that SAP software addresses that requirement in the most effective and fundamental of ways, then those doubts should be firmly put to bed.

What is the Advanced Mode IPC?

Many readers may be familiar with product configuration from the perspective of the R/3 VC (Variant Configurator) and not the IPC. Therefore, I have included a short introduction to the IPC, and more specifically, to its Advanced Mode. If you are already familiar with IPC and the Advanced Mode, you may wish to skip this section.

The Internet Pricing and Configurator (IPC) is a standalone Java application that executes outside of R/3 for the configuration and pricing of configurable products. The IPC may be used in several different business scenarios. In general, however, it is used for sales configurations by customers or sales representatives in B2B/B2C scenarios. Essentially, the IPC provides all of the power and benefits of the VC, only in a portable format, separate from R/3 so that it can easily be integrated into other applications, such as web portals for internet selling.

Additionally, the IPC enables two types of operation: Compliant Mode and Advanced Mode. The Compliant Mode allows the configuration of products using the classical object dependencies familiar from VC modeling, including preconditions, selection conditions, procedures, and constraints.

The Advanced Mode relies only on constraints and a new dependency type, monitoring rules, to replicate the entire power of the Compliant Mode, as well as to provide some very powerful new features.

These new features include Multiple BOM (Bill of Material) Position Instantiation, Abstract Data Types, and Aggregation Rules. Do not get overwhelmed by the names of these features, the concepts behind them are actually quite simple, which is amazing given the power they provide for configuration.

Multiple BOM Position Instantiation refers to the ability to create multiple configurable instances from a single bill of material position. Imagine a configurable product that contains some other configurable part in varying configurations in its bill of material. In the VC and the Compliant Mode of the IPC, a bill of material must contain a separate position for each possible configuration required in the result.

For instance, if I require five different configurations of the same configurable part within the result, that configurable part must be listed in the bill of material five times. In the case of five different configurations this restriction may be acceptable.

However, in the case of a very large number of different configurations, it is simply not feasible to create a separate position for each possible different configuration of the very same part within the bill of material. Multiple BOM Position Instantiation means that the Advanced Mode is able to create multiple different configurations for the same configurable part from a single bill of material position. You can probably imagine the incredibly positive effect this has on bill of material maintenance.

Abstract Data Types are a special type of characteristic available only in the Advanced Mode, which enable the creation of sibling relationships. Using the VC and the Compliant Mode IPC, only bill of material or parent-child relationships can be expressed in the configuration. However, by using abstract data types it is possible to express any type of relationship between any configurable products.

Aggregation Rules are supported by the new dependency type introduced in Advanced Mode configuration, monitoring rules, and they enable the summation of numeric values across configurable products in the configuration. For example, an aggregation rule could be used to sum the power consumption of all components attached to a power distribution panel; this value, in turn, could be used to verify that the connected components do not draw more electrical current than is available from the panel.

While these new features may not seem awe inspiring to the casual observer, the impact that they have on product configuration is nothing less than profound. Multiple BOM Position Instantiation has a very large impact on the configurator, not least because it makes bill of material maintenance so much easier.

But in combination with Abstract Data Types, it adds an entirely new dimension to the capabilities of the IPC.

The VC and the Compliant Mode IPC are both based on de-compositional configurations. That is, the configuration is based on a maximum or super BOM which contains all possible components. During configuration, inapplicable components are removed based on the selected product options, and remaining components define the BOM for a specific configuration of the product.

However, the Advanced Mode IPC supports both de-compositional and compositional configurations. That is, Advanced Mode supports de-compositional configurations, just like the VC or Compliant Mode; but it also supports compositional configurations, whereby the configuration is created by first adding components to what might be a very abstract BOM, nothing more than a "container" for a large number of products or parts, and then composing them into completely new structures, based on the relationships between them expressed by Abstract Data Types.

This is obviously quite a bit different than decomposition, and as we will see later in this article, the ability to do this, to create compositional configurations, is what uniquely positions the IPC to solve systems configuration challenges.

What is Systems Configuration?

Simply stated, systems configuration is the configuration of varying products into some logical structure based on the specific business and product requirements for sales and/or engineering purposes.

For example, at Siemens Dematic we produce material handling products, and these material handling products are almost all individually configurable.

In order to meet all of our requirements, we categorize these products into different logical hierarchies: for product-specific requirements such as power or network controls, we place them in one hierarchy, and for business-specific requirements such as logical function within the system or for shippable segments for order entry, we place them in another.

At issue here is the fact that these hierarchies are not just static categorizations for master data organizing purposes. They are dynamic. That is, they play against each other during the product or systems configuration process.

Given this, while some businesses face configuration of products with several hundred characteristics and hundreds of thousands of individual combinations or more possible, systems configuration is quite a different challenge altogether.

Taken individually, the products contained in systems configurations are not necessarily complex, although there is nothing that says that they cannot be. Nevertheless, and taken together, the situation quickly becomes quite a bit different.

For instance, the configuration of the individual product required to fully manufacture a single six meter conveyor may require only ten or fifteen key characteristics input by the user. However, the configuration of a material handling system containing ten kilometers of conveyor, along with and including the power distribution and controls networks required to run it, may contain thousands of instances of individual configurable entities, used for everything from the validation of power requirements to the generation of controls, plus the ultimate configuration of software product for export to a code generation tool.

Here, however, it is important to note that, although the configuration of a very large system like those that Siemens Dematic regularly produces may contain thousands, or even ten's of thousands of configurable instances, a systems configuration scenario need not be extremely large or complex.

The systems configuration paradigm may be applicable anytime a customer purchases various configurable products that are intended to function together in a system, however large or small that system might be.

For example, a systems configuration could just as easily be a few workstations with a small server and a router, in contrast to an entire datacenter of top-end servers and networks containing thousands of nodes.

Once one begins to ponder the potential applications for systems configuration, you quickly realize that the possibilities are endless:

  • Architecture / Home and Building Construction
    Configuration of a large number of prefabricated and standardized materials including spatial compatibilities and joints, along with validation of structural integrity, such as weight load limits.
  • City Planning and Development
    Configuration of a large number of land lots having different zoning requirements with adjacency relationships between them and optimization problems, such as maximizing the overall value through appropriate utilization.
  • Travel and Tourism
    Configuration of possible travel stops, such as airports, resorts, and landmarks, with distance relationships and optimizations for shortest travel time or least distance traveled.
  • SAP SoftwareConfiguration of many different software products with multiple compatibility relationships and optimizations for considerations like price or hardware requirements. Not to mention the large number of available 3rd party add-on products.

Above are only a few examples. Systems configuration applies anytime inter-related products are sold together for the purpose of assembly, or composition, into functional systems.

Business Need

Certainly not every business model requires systems configuration. However, there exist a very large number of potential business opportunities for the systems configuration paradigm.

Any business relying on expert staff - typically sales and application and product engineers - for the development of sale-able systems based on standard configurable products can benefit from systems configuration.

Especially in today's very difficult market, it is essential for businesses to remain competitive in their satisfaction of customer expectations. There is no other way to be profitable.

Systems configuration assists in ensuring that this happens. It does not do so through some vague, intangible, immeasurable and supposed benefits. It does so through very practical, meaningful, and measurable benefits, such as:

  • Improved quality;
  • Cost savings;
  • The capture of key expert knowledge.

Today more than ever, perhaps, these always important, measurable benefits have been transformed into strategic benefits, which are absolutely essential. We will outline below just how systems configuration helps achieve them.

For right now, however, let us state the need as briefly and as succinctly as we can. There are, as we mentioned earlier, any number of software vendors selling product configuration tools for capturing and re-using expert knowledge about configurable products.

There are very few, however, if indeed there are any at all, that are selling systems configuration tools to perform essentially the same task, but only for the next level: entire systems of inter-related products.

Historically, solutions providers and system integrators have relied on highly knowledgeable expert staff, again sales engineers, applications engineers, and even product engineers, to design functional systems based on available products.

Ensuring the quality and functionality of the designed system was a responsibility that rested entirely on the shoulders of this expert staff, and the solutions they designed often varied greatly, depending on the experts who designed them.

Systems configurators help ensure that this does not happen

Strategic Benefits

Automating the configuration of a system built on standard products can provide several strategic benefits to a business, including, but not limited to the following:

  • Capture of Expert Knowledge

    Capturing expert knowledge in a re-usable electronic format is extremely beneficial for a business for a variety of reasons. First, it forces the business to formalize structured processes for gathering the expert knowledge in a consistent fashion. Typically, knowledge experts do not follow a formal process to find answers. They either know where to look, who to contact, or take a qualified risk if the information is not available. Implementing a systems configurator requires the organization to put processes in place for gathering this information proactively and consistently.

    Secondly, it provides a single, common repository, where knowledge from various experts can be gathered together and maintained in a coherent form. Where without such a repository knowledge might have been local, the prerogative of individuals, with it the business can truly take ownership of this knowledge, and mitigate the risk of losing expert know-how, if and when key employees leave the company.

    Third, it makes training new employees much easier, and it allows them to become productive much more quickly. It is no longer necessary to spend weeks or months training the employee on the specific details of products and how they relate to one another. After a short overview, the new employee can begin working with the automated configuration tool itself, using it as a learning tool, while simultaneously letting it guide him to the appropriate systems solution, and preventing common mistakes.

    Finally, the capture of expert knowledge allows the experts to focus on their own particular discipline, freeing them from having to know - or trying to know - everything about every product.

  • Improved Quality

    Improved quality is almost always a driving factor for automating the configuration of systems of inter-related products.

    It is obvious that product configuration improves the quality of particular individual products, for example, by ensuring that particular sets of product options are valid together.

    Systems configuration does essentially the same thing, but again, it does so at the next higher level, by improving not just the quality of the individual products within the system, but by testing the entire system or solution, verifying that individually configured products can operate within it, and together, to produce the desired output.

    Improved quality is typically the single largest strategic benefit of automated systems configuration, and its greatest contribution to key business objectives.

  • Cost Savings

    Cost savings is another strategic benefit of automated systems configuration, and it may come in various different forms. For example, systems configuration can be used to help automate repetitive tasks, thus reducing the time required to develop an appropriate solution, an immediate cost savings.

    Alternatively, consider the benefit of improved quality which also, typically, results in cost savings. For example, suppose that an engineer is able to determine that two products will not function together without a specific hardware kit required to connect the two.

    If the engineer is able to determine this requirement before an installation expert on the customer site discovers that the products cannot be connected together, the cost savings will be significant, on everything from freight to possible re-work/re-engineering on the customer site.

Of course, these are generalized benefits that any business may gain from an automated systems configuration tool and every business will have specific benefits that cannot be imagined here.

Strategic Risks

Automating systems configuration will also entail certain strategic risks, just like any other project. And just as was the case with the strategic benefits, every business will have specific risks, based on its own particular scenario.

However, there are two risks that should be included in any systems configuration project. These are the risks inherent, first, in the fact of fundamental business change, and secondly, in the challenge of the availability of a systems configurator.

  • Fundamental Business Change

    Unless simply replacing an existing systems configuration solution with a new one that operates in essentially the very same way, every project for implementing an automated systems configurator will face fundamental business change.

    Those most commonly affected by the fundamental business change will be the application and sales engineers who develop the customer systems. The large majority of people in this role have not historically used computers to guide their creation of a system, and they are often apprehensive about the idea of an automated systems configurator.

    Many believe that the goal of a systems configuration tool is to replace them with less knowledgeable, lower wage staff who do not have the specific training or expertise that they posses. Others, meanwhile, believe that the goal is to automate every aspect of their duties, and eventually to replace them with a computer.

    Of course, neither of these should ever be the goal of a systems configuration project. The true goal is to assist the knowledge experts in doing their jobs more efficiently, and to reduce the number of errors almost inevitably made when configuring large systems without "expert system" assistance.

    While artificial intelligence may one day enable computers to "think" like humans, until that time, knowledge experts and skilled staff will always be required for the configuration of complex systems.

    The change to the tools that domain experts use, and the consequent change to the way that they work, is probably the most obvious and inevitable of all the fundamental changes inherent in a systems configuration implementation project.

    Certainly, there will be others. Many will be dependent on the specific business scenario.

  • Availability of the Systems Configuration Application

    One of the single greatest risks in undertaking a systems configuration project, however, is to be found in the availability - or the sheer unavailability - of effective automated systems configuration tools.

    As stated earlier, there is a plethora of vendors offering automated product configuration solutions. However there are very few, if any, that focus on systems configuration solutions.

    This obviously creates a substantial risk to the project, because developing and maintaining a home-grown systems configurator solution is almost certainly too costly, and too time consuming, to justify the enormous expense it entails; and standard commercial solutions are not readily available.

    But here we come to what is essentially the crux of this article.

    There is, in fact, at least one very powerful configurator on the market, addressed specifically to the systems configuration paradigm. It also just happens to be on offer from one of the very largest software development houses in the world.

    That is the Advanced Mode of the IPC, on offer, obviously, from SAP.

    It is not heavily advertised or marketed by SAP, but it fits the systems configuration paradigm very, very well.

    And because it fits the paradigm so well, a number of companies in the systems configuration business, among them global leaders in their own businesses, have implemented the Advanced Mode IPC to address their own systems configuration scenarios.

    Nevertheless, and notwithstanding the fact that a large number of SAP customers have implemented the IPC using Compliant Mode in one of the standard IPC scenarios, the number of SAP customers that have actually implemented the Advanced Mode remains a mere handful - and this against the background that a simply enormous number of SAP customers have implemented the Variant Configurator within R/3.

    And apparently, and for whatever reason, SAP appears to be moving away from its support of the Advanced Mode as the real standard configuration solution, for systems configuration problems.

    This, of course, constitutes what has to be considered the very biggest risk for the SAP customer doing business in a systems configuration scenario.

    If it is not already using the Advanced Mode IPC, this could mean that it needs to consider some other systems configurator option, as few as the available options are.

    Or worse, if it is already using the Advanced Mode IPC, then this could mean that it needs to reconsider its investments, always significant in a systems configuration project, while simultaneously investigating in other systems configurator alternatives.

    Again, as I stated earlier, the availability - or the lack of availability - of a commercially available automated systems configuration tool may be the single largest risk in implementing a systems configuration solution.

    For the SAP customer that risk is magnified, or at least given a very uncomfortable twist: SAP has an advanced systems configuration tool on offer, obviously; however, one gets the very strong "impression" of a questionable commitment to that advanced systems configuration tool, regardless of how good it might be.

    This represents a significant business challenge.


Hopefully, I have achieved the objectives I set out at the beginning of this article.

I have given you to understand, I hope, the significant difference between product configuration and systems configuration. And you will have recognized in what I have written, I hope, a strong case for how systems configuration can benefit your particular business.

Obviously systems configuration is a very daunting challenge. The risks are real. However the benefits are real too, and for most businesses, I believe, they far outweigh the risks.

Certainly, it is not possible, within this forum, to elaborate on all the possible benefits, and all the possible risks, that your business might experience in implementing a systems configuration solution.

But I hope that this article was able to plant the seeds within your thinking, so that you can begin exploring the possibilities for applications for systems configuration within in your own business - along with the multitude of benefits that it can provide.

The key for the SAP customer, again, is that, by its very nature, systems configuration requires a compositional type of configuration, where the solution is created from smaller building blocks built onto one another.

A de-compositional type of configuration simply cannot reasonably meet those needs, because the number of varying configurations of a single product within the system can almost never be estimated; and even if it could, the number is so large that it could not plausibly be implemented. The Advanced Mode IPC is uniquely positioned to solve the systems configuration problem.

As a representative of one of that handful of global companies that have implemented the Advanced Mode IPC, my interest, and the interest of my company, obviously, is that SAP continue to support it.

At the moment there does not appear to be a large demand for the software. Is that a problem due to SAP's having so little marketed or advertised it? Or is it due to the nature of systems configuration itself? Is it so unique, and the companies that require it so few, that it merits little committed attention?

Personally, I believe that the technology is still in its infancy, and that its potential for growth is truly unlimited. At the moment, however, only with the strong support and the active voice of other customers who foresee the benefits that automated systems configuration can provide, will I be able to validate my conviction.

So, perhaps you have now identified the need in your business for an automated systems configuration tool, and you are already an SAP customer. Quite possibly you are already using the Variant Configurator, or the IPC in Compliant Mode, but you are very interested, now, in the potential for the Advanced Mode.

Probably you are wondering, as a number of customers are wondering, if this impression, so strongly received at the last CWG meeting, that SAP no longer sees the business need for the Advanced Mode IPC, is actually true.

If so, then I suggest participating in the SAP Configurator Work Group (CWG), since this is the very best forum for learning about the Advanced Mode, the very best forum for meeting other customers with similar requirements, and the established forum for expressing your configuration requirements to SAP.

It is the place to make your business need known.

Doug Beverage
Siemens Logistics & Assembly Systems, Inc.