The WGroup team worked closely with the client's IT department to develop and execute a sourcing strategy for outsourcing the client's SAP application maintenance. WGroup conducted interviews and workshops to understand the client's IT needs and challenges. They developed models to analyze the costs and benefits of internal vs. external support. WGroup helped build a business case, create an RFP process, and negotiate a contract with an outsourcing provider. The resulting outsourcing arrangement reduced costs by 20-25% while improving service levels and flexibility.

1. Opportunity
Realizing that demand throughout
the enterprise for best-in-class
IT solutions was outpacing the
organization’s capacity to deliver
them, the client sought a new
sourcing model for maintaining its
SAP applications. Although SAP
application maintenance is an essential
support service, it is not one of the
organization’s differentiators or core
competencies.The client believed
that extending its IT capabilities
and improving service levels cost-
effectively meant outsourcing this
mission-critical IT function.The
client needed sourcing expertise and
an evaluation process to inform a
rational sourcing decision. How should
they build a business case to drive
consensus on the necessity for moving
from an internal service delivery
model to an external one? Who are
potential business partners capable of
delivering the required capabilities,
service levels, competitive prices and
solid governance models? How should
they structure an RFP and evaluate
provider responses to select the best
service provider? The client engaged
WGroup to help them navigate this
process. WGroup’s services included:
• Developing a strategic sourcing
strategy
• Assessing the client’s existing
application portfolio for
opportunities to improve
performance and align IT solutions
and processes to strategic objectives
• Building a business case to compare
costs and benefits of external versus
internal sourcing
• Analyzing service provider candidate
profiles and managing due diligence
• Creating an RFP and managing its
lifecycle
• Facilitating evaluation and
clarification of service provider
candidate proposals
• Developing negotiation strategy and
facilitating negotiations
• Supporting the contracting process
Approach
Working with the client, WGroup
collected extensive information
about the organization’s current
and desired future states for SAP
application maintenance. WGroup
consultants identified client subject
matter experts for various aspects of
the project and conducted interviews
and workshop sessions with the
SMEs to understand the client’s IT
requirements and challenges.This
start-up process ensured all project
Drive Your Business
Outsourcing SAP
Applications Maintenance
WGroup Helps Global Consumer Products Company
Strengthen Core Business by Evaluating and
Implementing a Strategic Service Delivery Model
Consumer Products | Applications Management
1
The WGroup team
worked closely with
the client’s IT department
to develop and execute a
sourcing strategy for SAP
application maintenance.
The resulting outsourcing
arrangement significantly
reduced the cost of
managing and maintaining
the client’s SAP application
suite while improving
service levels and flexibility.

2. Insights and Advice
The client sought to transition
from supporting a vital business
function in-house to an outsourced
solution. Not surprisingly, competing
constituencies resisted this potentially
disruptive change. Rigorous analysis
and benchmarking of sourcing
options and a persuasive business case
were necessary to build consensus
for the outsourcing initiative.
WGroup’s systematic and adaptive
methodologies provided clear, objective
performance comparisons that
helped the client define a sourcing
strategy, effectively build stakeholder
understanding and acceptance,
and implement it successfully.
Value Delivered
The outsourcing arrangement that
WGroup guided to fruition improved
the service levels of SAP application
maintenance delivered to the client
while reducing costs by 20 to 25 percent
compared with in-house application
support. WGroup’s broad analysis of
business value as opposed to a single-
minded pursuit of lowest cost solutions
served the client well.The client’s
operational and financial performance
now benefits from costs tied to service
consumption, ready availability of
required skills, high-quality services
at competitive prices, expanded IT
service management capabilities
through use of industry standard
frameworks, and flexibility to respond
to changing business requirements.
stakeholders shared an understanding
of project scope, objectives, and
timeframes, and committed to fulfilling
their roles and responsibilities.
The WGroup team guided the
development of models that examined
key aspects of internal versus external
sourcing strategies.The team built a
financial model to establish the costs
of delivering IT services using internal
resources and compare them to prices
available in the marketplace. WGroup
used these comparisons for evaluating
proposals from prospective providers.
A service and technology model
documented the scope, capabilities
and limitations of the client’s existing
IT services, skills, and technology
to identify sourcing alternatives.The
model helped establish the scope of
services best outsourced and those best
kept in-house, and assign responsibility
for delivering them. WGroup’s policy
and process model evaluated the
client’s existing IT processes and
service management capabilities,
and identified opportunities for
improvement by adopting alternative
sourcing strategies. Based on these
models, WGroup helped identify
and build sourcing solutions based
on the client’s business requirements,
core competencies, personnel skills,
market pricing, and IT strategy.
The WGroup team guided development
of the client’s RFP to translate the
client’s outsourcing objectives into
specific requirements, and facilitated
clarification and interpretation
of the RFP to enable prospective
service providers to prepare detailed
proposals aligned to these objectives.
The WGroup team also facilitated
proposal evaluation, vendor selection,
negotiation of the business deal, and
execution of the legal documents.
Contact Us
WGroup
301 Lindenwood Drive, Suite 301
Malvern, PA 19355
610-854-2700
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About WGroup
Founded in 1995, WGroup is a boutique management consulting firm
that provides Strategy, Management and Execution Services to
optimize business performance, minimize cost and create value. Our
consultants have years of experience, both as industry executives and
trusted advisors, to help clients think through complicated and pressing
challenges to drive their business forward.
For more information on WGroup, visit http://thinkwgroup.com