HfS Blueprint Report

Architects of Global Business
HfS Blueprint Report
SAP Services
Excerpt for Infosys
September 2014
Dr. Thomas Mendel, Ph.D.
Senior Vice President, Global IT Services
HfS Research
[email protected]
Table of Contents
Topic
© 2014 HfS Research Ltd.
Page
Executive Summary
3
Research Methodology
7
Service Provider Capabilities & Key Results
12
Service Provider Profile & Detailed Results
21
About the Author
23
Proprietary │Page 2
Executive Summary
Introduction to the HfS Blueprint Report: SAP Services
 The SAP Services HfS Blueprint Report is the second annual Blueprint on SAP Services to
cover high-profile IT markets in the series of upcoming Blueprints by HfS. Unlike other
quadrants and matrices, the HfS Blueprint identifies relevant differentials between service
providers across a number of facets under two main categories:
– Innovation
– Execution
 HfS Blueprint Report ratings are dependent on a broad range of stakeholders with specific
weightings based on 1,079 crowd-sourced responses. Stakeholders include:
–
–
–
–
© 2014 HfS Research Ltd.
SAP Enterprise Buyers
SAP Service Providers
SAP Industry Influencers (sourcing advisors)
HfS Analysts
Proprietary │Page 4
What Has Changed in SAP Services for 2014-15?
The Market View
 One global SAP system, SAP consolidation & SAP upgrades. Many clients told HfS in 2013
that they are investing in the traditional way of trying to contain SAP costs—through
consolidation. This trend is becoming a wave in 2014, with three of the top five investment
areas falling into the overall consolidation space. This approach is prudent because many of
the Cloud-based SAP options are still in their infancy in 2014.
 Rapid SAP deployment. Believe it or not, there are still enterprises out there which are
deploying SAP software for the first time. The ones that do, expect to learn from experience,
since they are the late majority. Rapid deployment solutions can help big time.
 SAP in the Cloud. Although still confusing for many, 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? HfS expects
the Cloud topic to accelerate again by 2015.
 HANA is already mainstream. In mindshare at least, if not in actual implementations yet.
SAP is putting a lot of pressure on Oracle and clients are following suit. However, many
enterprises are considering stepping stones like MaxDB on the voyage to HANA. The general
feeling is that HANA is the way to go, but SAP needs to reduce the HANA price point. HfS
believes that this will happen in early 2015, which will result in a big HANA implementation
wave shortly after.
© 2014 HfS Research Ltd.
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What Has Changed in SAP Services for 2014-15?
The Service Provider View
 A market with a very long tail. The SAP Services market has more than 5,000 active competitors. It
is a very dynamic market with many different facets. The total market in 2014 will be around $50
billion, roughly ten times SAP’s software revenue. Apart from the full range service providers, the
landscape is compiled of companies specializing in one or more of the five market segments, like
strategy consulting, or hosting. With such a diverse and dynamic environment, it is no surprise that
the service provider landscape is constantly changing. To even stay within the top 20 year after
year is a major achievement for most.
 The top three service providers are turning into the “Big Three”. The gap between the top three
service providers and the rest of the market is widening. While Accenture continues to lead, SAP
has managed to move past IBM in 2014. Accenture and IBM have the most extensive, yet balances
set of capabilities, while clients increasingly value SAP having “skin in the game” when
implementing and servicing new software capabilities.
 A lot of movement in the top 20. Six service providers entered the top 20 in our 2014 evaluation.
They are a mix of highly specialized (EY, Realtech, Virtusa) and full service companies (Fujitsu, FIT,
Dell) which shows the highly dynamic nature of the SAP Services market.
 Established service providers in danger of disappearing from the evaluation. On the flipside,
standing still means going down. There are a number of well-known service providers (e.g. TSystems, LH Systems, Tieto) trying to keep the status quo, which resulted in dropping of the top 20.
Others, like the Scheer Group, suffered from client confusion caused by a reverse acquisition.
© 2014 HfS Research Ltd.
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Research Methodology
Research Methodology
Data Summary
 More than 850 data points were
collected.
 Data was collected in Q1 and Q2 of 2014,
covering 740 buyers, providers, and
advisors/influencers of SAP Services.
 31 providers of SAP Services were
evaluated.
This Report Is Based On:
 Tales from the Trenches: Interviews with buyers who
have evaluated service providers and experienced their
services. Some were supplied by service providers, but
many were collected through interviews conducted with
HfS Executive Council members and participants in our
extensive market research.
 Sell-Side Executive Briefings: Structured discussions
with service providers were intended to collect the data
necessary to evaluate their innovation, execution,
market share, and deal counts.
 HfS “IT Budget &Trends” Survey: Purchasing plans and
buying decisions of buyers, providers, and influencers of
SAP Services.
 HfS “State of Outsourcing” Survey: The industry’s
largest quantitative survey, conducted with the support
of KPMG, covering the views, intentions, and dynamics
of 1,355 buyers, providers, and influencers of
outsourcing.
 Publicly Available Information: Financial data, website
information, presentations given by senior executives,
and other marketing collateral.
© 2014 HfS Research Ltd.
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HfS Blueprint Scoring Percentage Breakdown
INNOVATION
50%
1 Strength of vision & strategy
20%
2 Co-innovation (SAP, partner ecosystem & clients)
3 Processes & tools
4 SAP solution category innovation
Business applications
Database and technology solutions (incl. HANA)
Analytics & Business Intelligence
Cloud solutions
Mobile solutions
5 Competitive differentiation & USP
20%
10%
25%
How well is the strategy articulated and is it in sync with where HfS believes the
market is headed?
How well does the vendor manage the process of co-innovation?
How mature are the vendor's innovation and management processes?
Is the investment in innovation in sync with the overall strategy?
25%
Does the vendor have a clearly articulated value proposition?
EXECUTION
50%
1 Market share & growth of the SAP practice
2 Global, vertical coverage & industry solutions
3 Value chain of services capabilities
20%
15%
25%
How big is the market share and how fast is the vendor growing?
How well is the vendor positioned in all geographies, verticals and industries?
How many areas of the SAP value chain does the vendor cover and to what
extend?
SAP strategy consulting & business process design
SAP solution implementation
SAP operational management support
SAP hosting
SAP upgrades, migrations & consolidation
4 Customer satisfaction & mindshare
5 Price versus value
20%
20%
How satisfied are the clients with the vendor?
How do clients rate the overall value delivered by the vendor?
TOTAL
© 2014 HfS Research Ltd.
100%
100.00%
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Definition of SAP Services
Innovation: SAP Solution Categories
HISTORICAL
Business
applications
BIG DATA
Analytics and
business
intelligence
CONSUMERIZATION
Mobile solutions
PERFORMANCE
Database and
technology
solutions (incl.
HANA)
FUTURE
Cloud solutions
Execution: SAP Services Value Chain
PLAN
SAP strategy
consulting and
business process
design
IMPLEMENT
SAP solution
implementation
MANAGE
SAP operational
management
support
OUTSOURCE
SAP hosting
OPTIMIZE
SAP upgrades,
migrations and
consolidation
HfS Value Chain Definition: Value chain refers to the series of departments that carry out value-creating activities to design,
produce, market, deliver, and support a company’s product or service. In this usage, we refer to the range of primary processes
and support services that providers offer to their clients.
© 2014 HfS Research Ltd.
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Winners Circle and High Performers Methodology
To distinguish service providers that have gone above and beyond within a particular line of delivery,
HfS awards outstanding providers with a “Winner’s Circle” or “High Performer” designation. Below is
a brief description of the characteristics of each designation:

Winner's Circle. Organizations that demonstrate excellence in both execution and
innovation.
̶
̶
From an execution perspective, Winner’s Circle service providers have developed strong
relationships with clients, execute services beyond simply hitting green lights, and are highly
flexible when meeting clients’ needs.
From an innovation perspective, Winner’s Circle service providers have a strong vision,
concrete plans to invest in future capabilities, a healthy cross-section of vertical capabilities,
and a demonstrated ability to leverage external drivers to increase value for their clients.

High Performers. Organizations that demonstrate strong capabilities in both execution and
innovation, but are lacking in an innovative vision or execution against their vision.
̶
̶
© 2014 HfS Research Ltd.
From an execution perspective, High Performer service providers execute some of the
following areas (but not all) with excellence: developing worthwhile relationships with
clients, executing their services and hitting all of the green lights, and being very flexible
when meeting clients needs.
From an innovation perspective, High Performer service providers execute some (but not all)
of the following areas with excellence: having a vision and demonstrating plans to invest in
future capabilities, having experience in delivering services over multiple vertical capabilities,
and illustrating a good ability to leverage external drivers to increase value for their clients.
Proprietary │Page 11
Service Provider Capabilities
& Key Results
HfS Blueprint 2014: SAP Services
Winner’s Circle
SAP
IBM
Fujitsu Infosys
NTT Data
EY
Wipro
Atos
Realtech FIT
HP
Virtusa
Dell
Tech Mahindra
Deloitte
IGATE
CSC
BearingPoint Cognizant
Scheer Group
HCL
CGI Capgemini
LH Systems
T-Systems
PwC
Tieto
TCS
Xerox
Ciber
INNOVATION
High Performers
EXECUTION
© 2014 HfS Research Ltd.
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Accenture
Major Service Provider Dynamics – Highlights
INNOVATION
EXECUTION
• Accenture: Moving ahead of IBM in 2014. Accenture
has the largest SAP team and is the market share
leader. The company continues to improve its’ SAP
Services with new initiatives like the SAP Business
Solutions Group Joint Venture with SAP – unique in
this market.
• IBM: A strong number two. Well ahead of the rest of
the competition at number two in terms of market
share, IBM continues to impress customers with
strong integration capabilities of new topics like Cloud
and Big data into the SAP story.
• SAP: Catching-up fast, solidifying the number three
spot. SAP is the best partner for complex and
innovative projects with very fast escalation
capabilities. Focus on innovative engagements
creates high value and high impact for the customers.
• NTT Data: A surprise number four. Long considered a
well-kept secret, NTT Data is now becoming much
more visible in the market. The company is much
more active, and a stronger focus on marketing and
positioning is already paying off.
© 2014 HfS Research Ltd.
• SAP: Leads. Unsurprisingly, SAP has the best integration
and alignment with SAP’s innovation and strategy, as
well as the deepest knowledge about rapid deployment
solutions.
• IBM & Accenture: Joint second. Both companies have
very deep relationship with SAP for many years. Huge
investments in innovation around the SAP ecosystem of
solutions is paying off and both are far ahead of the rest
of the market. This is also shown by the large number of
SAP Pinnacle award wins by both companies.
• Infosys: Stable number three after successful
acquisition. The Loadstone acquisition put Infosys on the
map a serious competitor in the SAP Consulting market.
After one year, client feedback shows that the integration
with the traditional Infosys SAP tem has been highly
successful and many SAP Services innovations have been
brought to market e.g. for SAP Retail Execution.
• NTT Data & Fujitsu: The Asian force. Not just in
execution, Asia is also becoming more and more
important for SAP solution innovation and both NTT Data
(M-SAP) as well as Fujitsu (HANA integration) are ahead
of the pack.
Proprietary │Page 14
HfS Blueprint 2014: SAP Services – Vendor Positioning
Changes From 2013 (Top 20)
Accenture
SAP
IBM
NTT Data
Infosys
Wipro
Fujitsu
EY
Atos
HP
Tech Mahindra
Deloitte
Capgemini
CGI
FIT
Dell
Realtech
CSC
Cognizant
Virtusa
© 2014 HfS Research Ltd.
2014
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
WC
WC
WC
WC
WC
WC
WC
WC
WC
WC
WC
HP
HP
HP
HP
HP
2013
1
3
2
11
5
6
22
New
8
7
15
9
4
21
New
New
New
13
12
New
WC
WC
WC
HP
WC
WC
WC
HP
HP
HP
WC
HP
HP
Proprietary │Page 15
Unifying and Consolidation are Key Priorities for SAP IT
Professionals
What is your number one investment area in the SAP space for 2014 (Top 10 Results)?
One Global SAP system
SAP consolidation
#1
SAP in the Cloud
6.5%
#4
SAP for Social Computing
5.5%
#8
Global SAP BPaaS
© 2014 HfS Research Ltd.
7.4%
#5
Business analytics, Big Data and in-memory (HANA)
x
7.6%
#7
SAP for mobile Apps
#
8.3%
#2
TCO reduction
N=527 IT Managers in Enterprises
10.2%
New
SAP upgrade
New
2%
11.0%
10.8%
#3
Rapid SAP deployment
0%
13.5%
New
4.6%
4%
Changes from 2013 N=468
Proprietary │Page 16
6%
8%
10%
12%
14%
16%
The Future of the SAP Services Market
Please rate your ERP strategy
IT COST
IT VALUE
PROCESS
• Focus on local
automation
• Focus on global IT
standardization
• Initiatives centered
around system
upgrades and
replacements
• Local IT spending
reduction
• Initiatives centered
around system
harmonization and
standards rollout
• Global IT RoI
optimization
27,6%
• Focus on end-toend process redesign
• Focus on
revolutionary
innovation
• Initiatives centered
around IT and
business alignment
• Global business
value of IT
optimization
• Initiatives centered
around new
competitive
differentiators
• Improving global
competitiveness
36,1%
5,3%
© 2014 HfS Research Ltd.
13,1%
20,5%
18,1%
IT Project
N=1048 IT and Business Managers in Enterprises
BUSINESS MODEL
43,8%
27,9%
Business Transformation Initiative
#
x
Changes by 2020 N=1025
Proprietary │Page 17
The Future of the SAP Services Market
 TCO (Total Cost of Ownership) reduction. Running SAP today is an expensive proposition. The RoI
(Return on Investment) is there, but the overall cost is still significant. Clients expect SAP to provide
an answer – maybe Cloud?
 One global SAP system. But first, Once over the first the growing necessity for compliance and
faster time-to-market reasons will drive companies to consolidate the zoo of existing SAP systems
into a global one. This will be achieved by most companies until the end of 2016. So, what’s next?
 SAP in the Cloud and HANA. Clients, as well as SAP, know that Cloud and in-memory are the
future. That is why long-term, clients want SAP to provide a realistic Cloud road map and a more
attractive HANA price point, but not too fast!
 Moving from business support to business model innovation. We’ve always been told that
competitive advantage comes from own software development. With the huge penetration of SAP
in the enterprise market, this is changing. Companies will increasing use SAP to drive business
model transformation to achieve breakthrough competitive advantages which in turn will further
increase the SAP share of wallet .
© 2014 HfS Research Ltd.
Proprietary │Page 18
The Future of the SAP Services Market – Where Service
Providers Need To Invest to Stay Ahead of the Game in 2015
 The “SAP-automation” journey. At the 2014 SAPPHIRE (the annual SAP conference), simplification
was revealed as the new company mantra. This new strategic focus will accelerate the trends
towards consolidation, one global SAP System and TCO reduction. Service providers have to invest
in making the SAP spending more transparent, and also making it easier to fulfill the full
automation potential SAP has to offer.
 End-to-end process re-design. As discussed before, the share of wallet of SAP is increasing quickly
in many enterprises. One of the major consequences will be the heavy use of SAP for another
round of (this time really) more global business process re-design. This is another huge area for
potential differentiation for service providers in the SAP Services space.
© 2014 HfS Research Ltd.
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Key Results: HfS Blueprint on SAP Services
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Innovation
Execution
Total
Revenue ($m)*
Market Share*
Employees*
Accenture
SAP
IBM
NTT Data
4,45
4,70
4,45
3,90
4,90
4,45
4,60
4,15
4,68
4,58
4,53
4,03
5.000
3.300
4.350
1.436
10,00%
6,60%
8,70%
2,87%
39.000
18.000
35.000
8.000
Infosys
Wipro
3,95
3,60
3,90
4,00
3,93
3,80
1.445
975
2,89%
1,95%
Fujitsu
EY
3,90
3,75
3,60
3,60
3,75
3,68
555
750
1,11%
1,50%
Atos
HP
Tech Mahindra
Deloitte
Capgemini
FIT
CSC
Dell
3,50
3,45
3,30
3,15
2,80
3,35
2,95
3,20
3,75
3,75
3,60
3,25
3,60
3,05
3,45
3,10
3,63
3,60
3,45
3,20
3,20
3,20
3,20
3,15
1.350
1.700
351
2.150
1.890
145
810
200
2,70%
3,40%
0,70%
4,30%
3,78%
0,29%
1,62%
0,40%
11.000
9.250
4.800
11.000
13.500
700
8.400
750
Realtech
CGI
Cognizant
Virtusa
T-Systems
BearingPoint
IGATE
PwC
HCL
LH Systems
Scheer Group
TCS
Tieto
Xerox
Ciber
3,40
2,80
3,05
3,25
2,65
3,10
3,15
2,40
2,75
2,70
2,75
2,20
2,25
1,80
1,85
2,70
3,30
3,00
2,70
3,25
2,65
2,55
3,20
2,80
2,70
2,50
2,95
2,65
2,40
2,30
3,05
3,05
3,03
2,98
2,95
2,88
2,85
2,80
2,78
2,70
2,63
2,58
2,45
2,10
2,08
40
750
600
70
1.700
250
150
780
625
205
175
665
110
180
275
0,08%
1,50%
1,20%
0,14%
3,40%
0,50%
0,30%
1,56%
1,25%
0,41%
0,35%
1,33%
0,22%
0,36%
0,55%
210
4.000
7.000
600
3.500
1.000
2.000
3.600
5.800
720
500
8.500
1.000
1.300
2.000
* HfS Estimates Y2014
© 2014 HfS Research Ltd.
Proprietary │Page 20
Top 3 Verticals
Consumer products/retail, oil, utilities
Automotive, consumer products, manufacturing
Life sciences, consumer products, retail
Manufacturing, high-tech, financial services
12.500 Life sciences, manufacturing, consumer products/retail
9.600 Utilities, manufacturing, consumer goods
3.500 Manufacturing, consumer products, oil
4.000 Financial services, life sciences, utilities
Manufacturing, public sector, consumer products/retail
Manufacturing, consumer products, transportation
Manufacturing, retail, TIMES
Consumer products, aerospace and defense, utilities
Utilities, retail, public sector
Automotive, manufacturing, high tech electronics
Manufacturing, public sector, aerospace and defense
Discrete manufacturing, process manufacturing, financial services
Manufacturing, financial services, IT services
Utilities, public sector, financial services
Manufacturing, utilities, retail
Financial services, insurance
Automotive, telecommunications, public sector
Public sector, financial services, professional services
Consumer products, high tech, chemicals
Utilities, professional services, chemical
Oil, utilities, aerospace and defense
Travel, transportation, logistics
Manufacturing, process industries, public sector
Utilities, retail, automotive
Retail, manufacturing, forest
Financial services, healthcare, public sector
Retail, high tech, manufacturing
Service Provider Profile &
Detailed Results
Infosys
WINNER’S CIRCLE
Market Share: 2.89 %
Overall Score: 3.93
Infosys is now a top five SAP service provider and also needs to
be taken seriously for strategic SAP projects.
Key Strengths
Key Challenges
•
One of two primarily offshore-oriented service
providers that have moved up into the Winner’s Circle
for SAP Services.
•
Infosys is making heavy investments in broadening its’
global footprint outside the offshore centers and is
scaling up onshore capabilities across the globe.
•
Infosys has a good track record for keeping large
projects in time and on budget.
•
Clients are impressed by Infosys’ willingness to enter
outcome-based pricing deals.
• Infosys’ Lodestone acquisition done almost two years
ago has proven to be the right measure to extend the
Infosys footprint in the high value space. However,
compared to the other Winner’s Circle players, the
Infosys’ overall price point is still lower and the
consulting and advisory space needs further expansion
to provide high value capabilities globally. This is good
for clients but hurts the Infosys profit margins. Overall,
Infosys still has some work to do on the merging of
Lodestone with almost 3,000 consultants and a partnerled model and the more IT Services-oriented Infosys
organization.
•
With the Lodestone acquisition, Infosys has seriously
strengthened its’ strategy consulting capabilities. This is
increasingly being appreciated by clients and is helping
the Infosys brand.
Innovation
• Score: 3.95
• One of only a few
Indian service providers
that is driving
innovation in the SAP
Services space with a
number of codevelopment
agreements with SAP.
Execution
• Score: 3.90
• Below the top three
but still very strong
across the whole SAP
services spectrum.
SAP Services Scale
SAP Services Coverage
• Market Share: 2.89 %
• Estimated revenues: $ 1,445 M
• Consulting: $ 1,350 M
• Hosting: $ 150 M
• Largest one of the Indian vendors
by revenue.
• # of SAP practitioners: 12,500
• Top 3 Verticals: Life sciences,
manufacturing, consumer
products/retail.
• Good vertical coverage with
growing onshore presence.
• Good and broad portfolio mix, but
hosting and cloud capabilities
need to be improved.
Scale Explanation: 1 (Low) To 5 (High) – Innovation 50%, Execution 50%
© 2014 HfS Research Ltd.
• Infosys’ hosting capabilities and revenues are still weak.
To remain competitive long-term, the company needs to
develop a hybrid cloud strategy for its’ SAP Services
offering.
Proprietary │Page 22
Customer Satisfaction And
Competitive Differentiation
• High level of customer satisfaction.
• Through the Lodestone and other
acquisitions, Infosys is now able to
bridge the gap between the traditional
bread and butter mainstream
implementation projects and more
complex initiatives.
About the Author
Dr. Thomas Mendel, Ph.D.
Senior Vice President, Global IT Services, HfS Research – Bonn Area, Germany
[email protected]
© 2014 HfS Research
Overview
• Primary focus on Cloud Computing and SAP Services.
• Maintains research interests in the areas of infrastructure and applications
outsourcing, converging IT, and telecommunication technologies and markets, as
well as IT for business alignment.
Previous Experience
• IT industry veteran with over 15 years of experience in advising IT vendor and
end-user clients and performing research-based writing and consulting.
• Internationally recognized authority on Cloud Computing and IT Service
Management.
• 9+ years of service at Forrester Research, where he held various analyst and
management positions.
• Vice president of the Solution Center Global Network and program director of
Global Information Technology Infrastructure at Heidelberger Druckmaschinen
AG.
• IT manager at ABB Kraftwerke AG.
Education
• A native of Germany, Thomas is a graduate of business studies at Mannheim
University and holds a Ph.D. in computer science from the University of Wales in
Swansea.
Proprietary │Page 24
About HfS Research
HfS Research is the leading analyst authority and global network for IT and business services, with specific focus on global business
services, digital transformation and outsourcing. HfS serves the research, governance and services strategy needs of business operations
and IT leaders across finance, supply chain, human resources, marketing, and core industry functions. The firm provides insightful and
meaningful analyst coverage of best business practices and innovations that impact successful business outcomes, such as the digital
transformation of operations, cloud-based business platforms, services talent development strategies, process automation and
outsourcing, mobility, analytics and social collaboration. HfS applies its acclaimed Blueprint Methodology to evaluate the performance of
service and technology in terms of innovating and executing against those business outcomes.
HfS educates and facilitates discussions among the world's largest knowledge community of enterprise services professionals, currently
comprising 150,000 subscribers and members. HfS Research facilitates the HfS Sourcing Executive Council, the acclaimed elite group of
sourcing practitioners from leading organizations that meets bi-annually to share the future direction of the global services industry and to
discuss the future enterprise operations framework. HfS provides sourcing executive council members with the HfS Governance Academy
and Certification Program to help its clients improve the governance of their global business services and vendor relationships.
In 2010 and 2011, HfS Research's Founder and CEO, Phil Fersht, was named “Analyst of the Year” by the International Institute of Analyst
Relations (IIAR), the premier body of analyst-facing professionals and achieved the distinctive award of being voted the research analyst
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Now in its seventh year of publication, HfS Research’s acclaimed blog “Horses for Sources” is widely recognized as the most widely-read
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To learn more about HfS Research, please email [email protected].
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