SAP Extends Maximum Attention to More of its Services and Support Customers

SAP is known for its enterprise software solutions, but the company's focus on professional services as of late is allowing SAP to offer more of what customers need from a single source. TEC Principal Analyst P.J. Jakovljevic details SAP Services' broad range of offerings and levels of services, including the latest developments with SAP MaxAttention, SAP's RDS, BTS, and SAP Custom Development.
SAP’s main raison d’etre is to sell enterprise software, but the software company’s secondary focus is on providing professional services. One simple reason for this is that even with 15,000 professional services resources the software giant cannot possibly cater to the needs of all of its nearly 200,000 customers spanning the globe and over 20 industries (see Figure 1). There are indications that SAP’s software license revenue growth far exceeds its services revenue growth. Thus, a vast global system integrator (SI) and consulting partner ecosystem has been delivering over 85 percent of SAP’s professional services needs and filling that demand gap.

Figure 1

However, SAP’s own professional services are often needed. For instance, many companies demand that their software vendors be trusted advisors as well as software providers. Enterprises expect leading software providers to provide a bridge between the strategic management consulting and available IT landscapes that support an outlined strategic direction. As for SAP, customers and SI partners can easily be overwhelmed by a slew of new products and solutions coming both from SAP in-house development and the company’s ongoing acquisitions. In addition, in some sectors, such as banking, enterprises primarily prefer servicesled sales (e.g., particular, if not even peculiar, functionality inquiries), much more than sales based on traditional feature/function software evaluations (with architectural discussions at most). Yet, the IT consumerization trend is causing the expectation of individual (rather than mass) professional services experiences as well. Other new customer expectations for software vendors include co-innovation, reduction of total cost of implementation (TCI), total cost of ownership (TCO) and complexity, consistent quality and experience, and proactive advice. In other words, a consumer-driven software world needs ever-more experience-focused professional services. 

SAP Services vs. Traditional SIs

SAP Services does not necessarily want to be another SI; the company would rather function as provider of the key to unlocking the power of a vast number of SAP software solutions. Partners are looking to SAP to deliver tangible business value for end customers, rather than just products. SAP Services’ strategic purposes include reducing the services to software ratio; enabling software growth and consumption; supporting fast growth markets and industries and ecosystem adoption; and delivering globally with consistent quality.

SAP Services is using customer segmentation of sorts to proactively manage resources and maximize investment efficiency. As seen in Figure 2, SAP has recently laid out its main role vs. those of traditional SIs. For example, the idea is to capture the lion’s share (80 percent or so) of the services market share from new immature products during the proof-of-concept or early adoption stage (before the offerings become mainstream and commercial enough for the ecosystem to take over). SAP’s strategic and high value service offerings lend themselves well to the following situations:

  • Accelerating innovation—delivering higher business value through new technologies such as SAP HANA, mobility, cloud, advanced analytics, etc.;
  • Driving market adoption—accelerating clients’ innovation agenda and easing adoption of new solutions; and
  • Providing next-generation services—focusing on the so-called “game changers,” i.e., new solutions and technologies, and the incubation of new service offerings leveraging the center of excellence (CoE) approach.

Over time, however, it is logical that many of those innovative prototype solutions will be leveraged into more commercial and repeatable solutions for broader adoption, and mostly handed over for implementation by partners. SAP might do the bulk (roughly 80 percent) of work on the newest innovations, and then transfers that work and knowledge to partners over time along with the expertise. That is to say, SAP makes the market and then turns it over to partners.

Figure 2

In this case, we are mainly talking about SAP’s Rapid Deployment Solutions (RDS) and other “engineered services,” which are preconfigured best practices that have a fixed scope and price. SAP RDS can often be deployed, run, and supported remotely, often with help from online/social learning and knowledge repositories. In a nutshell, SAP RDS can be described as fast (addressing specific needs quickly, accelerating time-to-value, and speeding up end-user adoption) and simple (business outcome is focused and modular, yet integrated and amenable to all environments, including on-premise, cloud, and mobile).

SAP HANA is an interesting product to say the least, given that it lends itself well to many innovative “proof of concept” projects that enable business processes that could not have been automated with traditional IT tools. But when bundled with RDS to improve existing processes, HANA can be a repeatable low TCO services offering. There are about 400 SAP HANA-based projects at the moment, and many of those include 23 currently available HANA-based RDS offerings. Of over 150 available RDS offerings, HANA- and analytics-based RDS contribute to about 50 of those solutions. HANA-based customer relationship management (CRM) solutions have also contributed significantly to the SAP RDS library.

SAP Services Portfolio—Fleshing Out Some Offerings

Therefore, to provide “different strokes for different folks”, SAP offers several kinds of professional service offerings (see Figure 3). The “meat and potatoes” core consulting business, together with RDS and Business Transformation Services (BTS), makes up about 65 percent to 70 percent of SAP Services revenues. Still, core consulting is a shrinking business, in contrast to Custom Development, BTS, and RDS.

Figure 3

For its part, the SAP Custom Development organization (currently with 1,300 employees in 10 development hubs worldwide) works with customers to build individualized solutions that address unique and mission-critical business needs and fit seamlessly with existing SAP software. By providing customers with innovative applications without having to wait for commercially available software, customers can adapt quickly to changing market and customer demands and stand out from the competition. SAP Custom Development services include comprehensive design, development, project management, and support to conceptualize, build, and maintain individualized, often mission-critical business solutions. 

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