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News in focus

Major changes to SAP services provider market: Forrester Acquisition, consolidation and new delivery models have heralded a significant, rapid change in the SAP services market over the past two years, according to a new Forrester report. Nathan Luck reports. In its latest Forrester Wave report, SAP Services Providers, Q2 2011, authored by Liz Herbert, the researcher summarises significant changes in the SAP services market over the last two years, with acquisition and consolidation running “rampant” and new delivery models changing the game for buyers and providers. Recent major developments, some even materialising during the course of the Forrester analysis, suggest an imminent changing of the guard, with established players falling by the wayside and hungry up-and-comers jostling for supremacy. During the several months of research for the Forester Wave analysis, a number of significant acquisitions took place, including the NTT Data Group acquiring Keane, Accenture securing Ariba’s Business Process Outsourcing (BPO) operations and Atos Origin announcing plans to take over Siemens’ IT business. Forrester’s analysis points to continued acquisitions by larger multinationals – including Accenture’s acquisition of CAS, IBM’s purchase of Cast Iron Systems, the acquisition of Diamond by PricewaterhouseCoopers (PwC), and Deloitte buying up ClearCarbon, steady investment by the India-based giants and an increase in Japanese service providers buying up companies as strong evidence the systems integrator (SI) landscape around SAP is experiencing drastic change. A ‘New Economics’ philosophy in the services market, driven by the economic downturn in 2008, is also evident through the proliferation of cloud solutions, outcome-based pricing and nonlinear delivery models. “Clients are still trying to do more with less… facing reduced budgets and staff,” said the report. “[They] are even more demanding around results – not just on-time and on-budget but thorough business cases and business results such as lower costs, increased visibility or better reporting.” Forrester examined past research, user need assessments and vendor and expert interviews to develop comprehensive criteria for the evaluation of strengths and weaknesses of the top SAP services vendors. The set of 65 criteria was grouped into three high-level categories: • Current offering – the ability to provide end-to-end implementation services, from advisory and process consulting through to implementation to support services and

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hosting; • Strategy – pricing innovation, relationship and codevelopment with SAP, and investment in the SAP practice; and • Market presence – client base across key geographies, overall staff dedicated to the SAP practice, overall financials for the SAP practice and growth within SAP services. The report’s 65-criteria evaluation of SAP service providers reveals that Accenture and IBM maintain market leadership with geographical reach and the greatest span of services across the SAP lifecycle of strategy consulting, implementation, support and hosting services. Also included in the market leader category were Capgemini, HP, CSC, HCL Axon, TCS, T-Systems, NTT Data Group and Wipro. In terms of advisory and strategy consulting and industry expertise, Deloitte and PwC lead this sector, as advisory firms with strong SAP implementation practices. According to the report, “they are well-positioned for business process transformation work as well as to work with firms around key industry or process changes. They both excel at change management and organisational design”. It also highlights the up-and-coming nature of Indian providers, such as TCS, Wipro, Infosys and HCL Axon, which, as they globalise, are beginning to compete with the established multinational corporations. While SAP support has been the mainstay of their services, they are broadening their offer into higher value consulting and stack hosting at the other end of the spectrum. Relatively small player CIBER also received an honourable mention as a ‘contender’, making it into the analysis for the first time. “Key organisation changes in recent months mean that it is increasingly winning large deals and is a notable player in the market,” the report said, adding that it is best suited to clients in the public sector, utilities, retail and manufacturing sectors seeking a full outsourcing solution. A total of 19 vendors and 186 user companies were interviewed by Forrester for the 2010 SAP services analysis. The independent magazine for SAP professionals

Inside SAP Winter 2011  

All the latest on SAP in Australia and New Zealand.