HfS SAP services rankings shows some surprises

Profile picture for user gonzodaddy By Den Howlett July 10, 2013

SAP_Blueprint_Axis
HfS has published rankings for 26 vendors in the SAP services market. In its usual tongue in cheek fashion, HfS says:

Ever read a truly independent, unbiased, unfettered and all-encompassing analysis of those services firms hawking SAP Services, that wasn’t simply the arbitrary judgement of a single analyst?  You have?  Then you surely won’t be interested in our very first Blueprint focused entirely on the entire SAP services ecosystem led by HfS analyst Dr Thomas “The Meddler” Mendel, who’s spent the last four months exhaustively running this process out of SAP’s backyard…

With an intro like that, who could resist? Anyhoo, HfS were kind enough to send over a full copy of the findings for us to dissect. The key findings make interesting reading because there is an underlying assumption that a significant number of SAP customers want to - but will wait - to move to whatever SAP chooses to put into a full blow cloud offering. I am not so sure that's the full story. I'll pick on three topics.

SAP consolidation continues apace. Many clients told HfS that in 2013 and 2014 they are investing in the traditional way of trying to contain SAP costs—through consolidation . This approach is prudent because many of the cloud-based SAP options are still in infancy.

SAP customers have been on a march to consolidation for many years. That has been one of the key drivers behind later releases of SAP's Business Suite. Apart from simplifying the landscape, consolidation should - in theory - lead to lower TCO over the long haul. The problem is that many customers are unclear whether the attendant bundling of services leads to higher cost but without better ROI.

SAP’s relentless move into the cloud (apparently). Although still confusing for many, SAP clients – by far and large – appreciate the stronger focus that SAP is putting on the cloud. After all, it’s the future, isn’t it?

Like its nemesis Oracle, SAP believes it has to find a way to get on equal terms with the more PR attractive cloud players and especially Salesforce.com and Workday. It's a minefield across multiple dimensions. It seems to have calculated well about the market demand for its acquired SuccessFactors. But as Thomas Otter said to our Stuart Lauchlan the other day:

SuccessFactors on its own didn’t have the scale to effectively go beyond talent management. It would have been a strain to do core HR.

In the field, consultants have often been critical of what they see as a messy HR story. At least we now see a more comforting picture in this big area of the portfolio.

Business Analytics, Big Data and In-Memory.  Business analytics, big data and in-memory are already having a major impact—the most important trend, in addition to the continued uptake of cloud computing. Enterprises have already bought into the concept, and they like it. Vendors tell us that they cannot train HANA consultants fast enough to satisfy the demand. A hot long-term trend for sure…

SAP has become a victim of its own PR success with HANA. In the early days, customers struggled to find kit. Now they have a confusing set of choices from "free" with some suppliers, millions of dollars with others, and very different ways to scale out. It's unclear how this degree of variation gets ironed out. In the early days there were too many big holes for customers to get much beyond proof of concept. Now the emphasis is on rolling out automated testing so that project times can be reduced.

Nothing should surprise in the rankings. They (mostly) reflect well understood positioning with the possible exception of Cap Gemini, which in recent years, has refocused itself much better as a prime contractor. But some of the detail is revealing.

Of Accenture which shows up as the outright leader - it says of challenges:

Very large global clients report a very high satisfaction level with Accenture. Some small to midsize clients feel alienated by Accenture’s strong commitment to process quality and delivery on agreed goals. Something, smaller clients are not always used to...
Accenture is not a low price vendor. As topics like ERP consolidation mature, competition on price will become more prevalent over the next 18-24 months.

Some independent contractors I've spoken with think Accenture is overkilling process in an effort to keep hundreds of consultants busy at a time when budgets are under pressure. The consolidation point should be a warning to all the big ticket shops. Customers generally are looking for lower cost. They see the relative agility of cloud providers, see how they free up resource for internal innovation and wonder why SAP shops are so ponderous. My sense is that we will see a precipitous fall in consultant margins. It may already be happening. One way would for customers to force the issue by getting  more savvy in their contract negotiations. Quite how the Accentures (and IBMs) of this world respond remains to be seen.

Image credit: © Lsantilli - Fotolia.com

Disclosure: at the time of writing, SAP, Salesforce.com, Oracle and Workday are premium partners