TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.
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‘ONE’ SAP Services for outcomes
SAP Services Analys...
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Finally, given the major landscape shifts of cloud and mobility tied to the new SAP HANA platform migrati...
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TBR
Business Suite and the SAP Cloud portfolio, effectively setting a single experience for integrated
enviro...
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 Marianne Heer, Senior Vice President, Global Head of Services Delivery
 Ramesh Sivakaminathan, Global ...
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‘ONE’ SAP Services for outcomes

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SAP Global Services is reorganizing around a client value proposition of simplification and standardization. SAP customers face increasing complexities due to a variety of technical and business trends from cloud and big data to changing business models and markets. The challenge for SAP Global Services is to help to unlock the value of SAP’s software for its customers, enable their business evolutions and, most importantly, ease adoption through standardization. SAP is creating a single client experience that draws together the lines of support, consulting, custom development and education into a coordinated service designed to drive desired business and IT outcomes. The financial impact is powerful; support, consulting, training and services drove €11.6 billion or 69% of SAP’s 2013 revenue.

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‘ONE’ SAP Services for outcomes

  1. 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. TBR EVENT PERSPECTIVE ‘ONE’ SAP Services for outcomes SAP Services Analyst Event Orlando, Fla., June 2, 2014 Authors: Stuart Williams, (stuart.williams@tbri.com), Vice President of Research Kelsey Mason, Research Analyst SAP makes things easier for customers as complexities increase SAP Global Services is reorganizing around a client value proposition of simplification and standardization. SAP customers face increasing complexities due to a variety of technical and business trends from cloud and big data to changing business models and markets. The challenge for SAP Global Services is to help to unlock the value of SAP’s software for its customers, enable their business evolutions and, most importantly, ease adoption through standardization. SAP is creating a single client experience that draws together the lines of support, consulting, custom development and education into a coordinated service designed to drive desired business and IT outcomes. The financial impact is powerful; support, consulting, training and services drove €11.6 billion or 69% of SAP’s 2013 revenue. While the vision is compelling, the scope is daunting, and SAP’s initial focus will be on its top 1,000 customers. High-touch relationship management and service delivery integration will retain these customers and enable their journeys from consuming SAP technology to leveraging that technology to drive mutually agreed-on outcomes. SAP will use the systems, industrialized delivery and integrated support plans developed for these most- demanding customers to better support its smaller customers, partners and alliances. TBR believes this transition is a differentiator for SAP that will enable the retention of clients and eventually shift the role of service around software to delivering the outcomes customers desire, not just sustaining the operation of technology. Even more important is adding value without adding expense. The challenges are in customer confidence in the SAP performance benchmarking figures; navigating partner relationships and overlaps; and customer willingness to have SAP lead their transformations instead of a more traditional consulting firm. In addressing the first challenge, SAP’s Value Engineering benchmark data is gathered and anonymized across its cooperating customers and is unique among software vendors. The partner challenge is more nuanced, as SAP’s strategic vision for its services business is very advanced. SAP shares best practices and “sidecars” partners in rollouts of its technologies. However a convergence or blending is underway, as SAP’s systems integration and consulting partners are beginning to develop software and cloud offerings that intrude on SAP’s traditional space.
  2. 2. www.tbri.com TBR Finally, given the major landscape shifts of cloud and mobility tied to the new SAP HANA platform migration, customers should engage more closely with SAP to ensure that road maps, solutions and executions are standardized as much as possible to reduce risk. Outcomes, industrialized packaging of services and a single client experience separate SAP from the pack SAP’s Global Services organization, led by Executive Vice President Anand Eswaran, is driving a three-part strategy: 1. Differentiate by focusing on customer outcomes. 2. Reduce the ratio of software-to-services spending through industrialized packaging of services. 3. Offer one service experience to customers across the five areas of advise, educate, deploy, manage and support. SAP will bring its Value Engineering process that anonymizes business performance metrics across its customer base to enable KPI-based contracting for its services, proving to customers that the outcomes it delivers, from IT uptime to business performance improvements, are meaningful and valuable improvements. SAP’s investment into industrialization and componentization of its services portfolio is paying off through the success of its Rapid Deployment Solutions (RDS) that simplify adoption of innovations through smaller packages of software, enabling content and deployment services in a fixed bill of materials, time and price. This also helps to extend the experience and best practices of SAP Services to the wider ecosystem. Finally, integrating the different service areas behind a single customer experience highlights the value that SAP Services delivers in simplifying the SAP software portfolio for its customers. Taken together, the three targets of customer outcomes, industrialized packaging of services and a single services experience set SAP apart from other enterprise applications providers and enhance SAP’s competitive advantage in attracting and retaining high-margin clients. There are six implications of SAP’s Services strategy: 1. Customers should prepare for a more engaged SAP Services organization, one that is eager to drive relationships and prove the value of the SAP portfolio. SAP will lead with Business Transformation services for aspirational goal-setting and with ONE Support to ensure a single support environment after deployment. In between, SAP Services will aggressively package its industrialized services to enable customers to run the latest offerings in highly standardized — and less expensive — ways. 2. Customers should look for SAP Services to prove the outcome value of the SAP software portfolio. This approach sets SAP apart from other applications vendors and enables new contracting modes other vendors cannot replicate. 3. Customers that are shifting to the DevOps model will benefit from the highly standardized approach as common core elements are prioritized over customization. 4. The shrinking community of SI partners that rely on sustaining legacy SAP custom code for their clients is a target for the new SAP Services organization. By reducing the services-to-software expense ratio, SAP addresses a cost perception problem as well as freeing capital among customers that can be spent on updates to the latest version. 5. Cloud competitors will face a challenge from the value engineering approach and the hybrid support program. SAP’s faith in hybrid clouds is shifting the firm to enable a single support model across SAP
  3. 3. www.tbri.com TBR Business Suite and the SAP Cloud portfolio, effectively setting a single experience for integrated environments. Replicating this model will be very difficult for pure-play cloud vendors. 6. Packaged applications vendors like Oracle, Microsoft and Infor are not approaching the market like SAP, and do not have the assets in place to easily copy the overall value proposition. To retain, enable and deliver value, the SAP strategy will be hard to beat. Consolidation of support services will enable SAP to drive a unified hybrid cloud message Simplifying the consumption of support services under the One Support program will enable the company to drive a more consistent message and ease customer engagements. One Support will pull together the support programs for its on-premises and cloud-delivered offerings into a single portal. Enterprise Support is the baseline tied to comparable levels for SuccessFactors and Ariba. Clients can also tie in MaxAttention and other support services. As SAP looks to take on more of a strategic advisory role, the company will leverage its strengths in deployment and education while building out its capabilities in advising and management to create an end-to-end support offering spanning cloud and on-premises services. One Support will not be a new offering or an upgrade, but rather a regrouping of existing support services. Although still early in the road map to unifying support offerings, One Support will help SAP drive hybrid deployment to sustain on-premises revenue streams while transitioning customers to the cloud. SAP will embed itself into key customers’ business processes to expand engagements SAP will continue to invest in its Business Transformation Service for key customers and drive a more advisory role, and as a result will opt for a long-lasting customer engagement model rather than one-time individual projects. Additionally, SAP’s value partnerships, although reserved for the largest customers, will enable the company to continually engage with customers as it embeds itself into customers’ business processes to determine new use cases and expand consumption. SAP currently has 120 customers signed up for the Value Partnership Service model, with a target of 160 by the end of CY14. Value partnerships enable SAP to drive upsell opportunities, and TBR expects the company to scale its value partnership strategy to smaller customers to create early penetration and grow alongside its customers as a trusted adviser. Despite an increased emphasis on consulting and advisory services, SAP will continue to rely on partners for integration and consulting services while acting as a backstop to ensure the use of best practices and the effective implementation of SAP technology. SAP Services traditionally has a 15% market share on the overall SAP-related IT Project Services market. This share should not change; rather, it has shifted to focus more on innovation enablement. Event Overview One June 2, 2014, SAP’s Global Services organization held an analyst briefing event in Orlando, Fla. SAP executives spoke about an evolution from disparate service, support, consulting, development and education groups into a coordinated service experience for clients designed to drive desired business and IT outcomes. Key executives included:  Anand Eswaran, Executive Vice President for SAP Global Services at SAP
  4. 4. www.tbri.com TBR  Marianne Heer, Senior Vice President, Global Head of Services Delivery  Ramesh Sivakaminathan, Global Head of Innovation and Portfolio  Klaus Weber, Executive Vice President of SAP Custom Development  Klaus Schmelzeisen, Vice President, Global Head of Technology Services  Ted Kondis, Global Head of Services, Procurement Line of Business  Lars Gollenia, Head of Business Transformation Services  Stefan Schoepfel, Head of Analytics and Big Data Services  Tom Kurtz, HANA Services  Elvira Wallis, Senior Vice President Analytics, Database & Technology, Mobile Solution Packages  Jan Musil, Global Services Delivery Operations, Global Lead of Project Management Practice  Jens Bernotat, Global Vice President, Strategy and Business Development, SAP Maintenance Go-To- Market and Premium Engagements  Markus Schwarz, Senior Vice President, Global Head of SAP Education  Stefan Haenisch, Senior Vice President, Knowledge Management & Enablement  Heike Laube, Global Head of tSAP Enterprise Support Academy SAP also invited customers to speak on a panel about their experiences with the evolving SAP Services organization. Customers included:  Royal Bank of Scotland  Brother Corp.  Oxford Industries  Hidrovias do Brasil Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com. ©2014 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.

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