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G00251854

Magic Quadrant for SAP ApplicationManagement Service Providers, WorldwidePublished: 3 October 2013

Analyst(s): Gilbert van der Heiden, Frances Karamouzis, Ian Marriott, Ruby Jivan

This Magic Quadrant evaluates vendor capabilities for providing multiyearSAP application management services among 18 providers. Sourcingexecutives should use this Magic Quadrant to help identify and evaluate theservice providers of a broad range of these services across multiple SAPsolutions.

Market Definition/DescriptionGartner evaluates service providers on their Ability to Execute and their Completeness of Vision inregard to worldwide SAP application management services.

SAP application management services are:

■ All ongoing services focused on SAP applications provided as part of a multiyear-basedagreement and managed against defined quality metrics.

■ This category includes:

■ All ongoing activities related to application development, implementation, integration,testing, maintenance and support (functional and/or technical), and help desk servicesdelivered within the scope of a multiyear application services agreement.

■ All ongoing activities required to perform application monitoring and operational serviceactivities as formalized in runbooks, inclusive job scheduling and execution, backup andrestore of the in-scope applications.

■ All ongoing activities required for providing, maintaining, securing, scheduling, backup,recovering and supporting inbound and outbound application interfaces (electronic dataextraction and translation and load), Web services and databases.

■ This category excludes:

■ All activities related to business process outsourcing (BPO).

■ All project-related activities and assets without follow-up ongoing managementresponsibilities. These are covered through application implementation services.



■ Any product revenue, such as from the resale of SAP licenses or your own or third-partyproducts.

Services excluded from this Magic Quadrant are SAP implementation services and SAPinfrastructure services. For information purposes we add the definition of these services.

SAP implementation services are:

■ All project-based implementations of SAP applications without the follow-up ongoingmanagement responsibilities. SAP applications in this sense refers to all SAP products,including applications, database, technology, analytics, middleware and mobile, both on-premises and cloud-based.


■ Consulting services, which are advisory services designed to help companies analyze andimprove the effectiveness of business operations and technology strategies. Gartner dividesconsulting into two subsegments: business consulting and IT consulting. Consultingservices go beyond technical blueprinting to include, for example, operating modelchanges, business process improvement, standardization and harmonization of processes,when they are part of the SAP program. They also include program management, changemanagement and governance.

■ Development and integration services, which include application development,implementation and integration services for first-time implementations, upgrades, rollouts,consolidations or any combination thereof for any version. This also includes configuration,customization and enhancement of existing SAP functionalities, reports, interfaces,conversions, extensions, forms, data loading, rollout, integration, testing and training.


■ All BPO-related activities

■ All ongoing application management responsibilities

■ All ongoing application infrastructure responsibilities

■ Any product revenue, such as from the resale of SAP licenses or your own or third-partyproducts.

SAP infrastructure services are:

■ All ongoing services focused on SAP infrastructure activities and assets provided as part of amultiyear agreement and managed against defined metrics.


■ Activities required for providing, maintaining, securing, scheduling, backup, recovering andsupporting the SAP application computing environments.


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■ All BPO-related activities.

■ All project-related activities and assets without follow-up ongoing managementresponsibilities. These are covered through application implementation services.

■ All application management activities.

■ Any product revenue, such as resale of SAP licenses, your own or third-party products.

We include SAP applications according to their primary product line:

■ ERP — including financials, human capital management (HCM), operations, enterprise assetmanagement.

■ Supply chain management (SCM) — including Advanced Planning and Optimization (APO),Warehouse Management (WM), Transportation Management (TM), Manufacturing Integrationand Intelligence (MII), and others.

■ CRM — including marketing, sales and service.

■ Business analytics — including SAP BusinessObjects (BOBJ) and other reporting tools,Business Warehouse (BW), enterprise information management (EIM), enterprise performancemanagement (EPM), Business Planning and Consolidation (BPC), governance, risk andcompliance (GRC), Hana for analytics, and others.

■ Mobile — including mobile applications of ERP, SCM, CRM, analytics and other solutions,Sybase Mobile Platform (SMP)/Sybase Unwired Platform (SUP), Syclo apps, master datamanagement (MDM) using Afaria.

■ All other SAP solutions.

We further evaluate the providers for their:

■ Ability to deliver a comprehensive set of SAP application management services (see below forGartner's definition of "comprehensive") across the SAP product line

■ Insights across industries for SAP application management services decisions

■ Investments in industry-specific offerings

■ Insights and investments in the SAP application product line

In this respect, comprehensive means:

■ A distinct offering, consistent from the perspective of a services component (what is included,roles and responsibilities, service metrics and levels, terms and conditions, pricing model) anddelivery across all industries for general services. These can also be specific to an industry,where applicable, in combination with a consistent internal delivery structure across allcountries where such services are provided (through best practice processes, tools, technologyand people).

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■ A consolidated set of distinct offerings to address industry-specific demand or cross-industrydemand, where the set can be logically recognized as an integrated offering.

Gartner evaluates service providers on their Ability to Execute and Completeness of Vision. Thisevaluation is informed by:

■ A detailed survey addressing the provider's global SAP application management capabilities,covering revenue, staffing, geographic capabilities per SAP application platform, industry andprocess assets, partnerships, joint initiatives, investments and other relevant information. Thisprovides us with numeric and qualitative data, allowing us to compare providers and analyzethem against the inclusion criteria.

■ A detailed vendor briefing with each provider addressing its capabilities in a format chosen bythem, but at least addressing the inclusion criteria. Each briefing included material that theprovider had prepared and that was discussed during a telephone conference.

■ A detailed reference client list for each provider, whereby all relevant information was providedregarding services, scope, type of engagement, included services and technologies, projectdescription, executed work and delivered benefits.

■ Of the 331 provided reference clients, 226 completed an online survey — made up of questionsregarding the services, scope, duration, size, selection criteria, good points and challenges interms of the engagement and the provider (as well as many satisfaction questions) — or theyprovided verbal feedback in a 30-minute reference call.

■ A service provider's representation of its organization through briefings, press releases, annualreports and other publicly-available information, other than that which was presented during thededicated detailed briefing (as described above).

■ Gartner clients with whom Gartner analysts have discussions throughout the year.

For more information on Gartner's Magic Quadrant research methodology, refer to Gartner's"Resource Documents" and "How Gartner Evaluates Vendors and Markets in Magic Quadrants andMarketScopes."

Market Definition

Industries

This Magic Quadrant addresses the capabilities of the included vendors in the following 22industries:

■ Financial Services: Banking

■ Financial Services: Insurance

■ Financial Services: Other Financial Services

■ Manufacturing: Oil and Gas, Chemicals, Process and Resource

■ Manufacturing: Automotive


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■ Manufacturing: Aerospace and Defense

■ Manufacturing: Industrial Discrete

■ Manufacturing: High Tech

■ Manufacturing: Consumer Packaged Goods (CPG)

■ Manufacturing: Other Manufacturing

■ Manufacturing: Life Sciences

■ Healthcare (Provider)

■ Public Sector

■ Communications

■ Utilities and Energy

■ Wholesale

■ Retail

■ Services

■ Transportation

■ Agriculture, Mining, Construction

■ Education

■ Not-for-Profit

Countries per Region

This Magic Quadrant evaluates the worldwide capabilities of vendors in the following regions:

■ North America (NAM): U.S., Canada

■ Latin America (LATAM): Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador,Guatemala, Mexico, Panama, Peru, Uruguay, Venezuela

■ Asia/Pacific and Japan (APJ): Australia, Bangladesh, China, Hong Kong, India, Indonesia,Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan,Thailand, Vietnam

■ Europe, the Middle East and Africa (EMEA): Austria, Algeria, Azerbaijan, Bahrain, Belarus,Belgium, Bulgaria, Cameroon, Cote d'Ivoire, Croatia, Czech Republic, Denmark, Egypt, Finland,France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Jordan, Kazakhstan, Kenya,Kuwait, Lebanon, Libya, Lithuania, Luxembourg, Morocco, Netherlands, Nigeria, Norway,Oman, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia,




South Africa, Spain, Sweden, Switzerland, Syria, Tunisia, Turkey, Ukraine, United ArabEmirates, United Kingdom, Yemen

It should be noted that the above are Gartner's definitions of the countries that fall within aparticular region. This does not imply that the included vendors are delivering services in all thelisted countries, but in at least one of the countries per region.

Full-Time Equivalents per Region

This Magic Quadrant includes references to the number of full-time equivalents (FTEs) per providerfor all the SAP application services and for the SAP application management services. For the SAPapplication management services the FTEs are further split per region. The provided numbersrepresent the FTEs that are located in the respective regions and do not represent the resourcesallocated to clients per region. Client revenue can be consolidated in multiple ways across regions,dependent on the provider's internal account structure. FTEs can also support multiple clients inmultiple regions; hence, the only consistent factor is the registered base location for the FTEs.

Assets

This Magic Quadrant refers to "assets." Assets refers to industry-specific (for example, retailsolution and automotive solution), business process (for example, HR and finance), technologyprocess (for example, Advanced Business Application Programming [ABAP] coding and SAPtesting) or service-specific (for example, implementation framework and operations framework)solutions, tools and processes. Assets are vendor-specific and represent the vendor's intellectualproperty (IP) in the respective asset area.




Magic QuadrantFigure 1. Magic Quadrant for SAP Application Management Service Providers, Worldwide

Source: Gartner (October 2013)




Vendor Strengths and Cautions

Accenture

Accenture is positioned in the Leaders quadrant. It has an estimated 11,300 FTEs dedicated to SAPapplication management services from an estimated overall worldwide total of 38,000 FTEs acrossall SAP application services. The breakdown of the worldwide SAP application services resources isas follows: approximately 18% in NAM, 7% in LATAM, 29% in EMEA and 45% in APJ. Accenturegenerates approximately 70% of its SAP application services revenue from SAP implementationservices, 25% from SAP application management services and 5% from SAP infrastructureservices. Accenture services 20 of the 22 industries covered in this Magic Quadrant. Of these, themain markets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are CPG, the public sector, energy and utilities, mining and construction. Itshould be noted that from a revenue perspective, even the smaller markets for Accenture stillgenerate high SAP application services revenue. Accenture does not generate SAP servicesrevenue in the "other manufacturing" and not-for-profit markets (see the Market Definition section toidentify the eight manufacturing sub-industries that are listed, of which "Manufacturing: OtherManufacturing" is the "rest of" category).

Strengths

■ Accenture's geographic reach across the four major regions (NAM, LATAM, EMEA and APJ)makes it a strong contender for the largest multilocation deals. This reach, coupled withAccenture's 50 global delivery centers and 12 innovation centers, underpins its position as oneof the most comprehensive options for SAP application management services. This issupported by Accenture's client references, which showcased the highest scores in servicedelivery and service quality across the included vendors — based on the largest average SAPapplication management deal sizes included in the total reference base.

■ Accenture has extensive assets covering the industries it supports, which in general aredesigned to be industry-driven and platform-independent from a business perspective butplatform-specific at an implementation level. In addition, Accenture has specific SAP solutionsfor financial services, energy and utilities, manufacturing, the public sector, communications,media and high tech.

■ Besides the size, depth and breadth of Accenture's SAP capabilities, its focused investmentson industrialization, addressing complexity, driving analytics, and its partnering relationship withSAP are some of the key ingredients that attract clients.

■ Its work with piloting Hana solutions and combining this with business process value mapswere of particular interest to clients. In SAP application management services engagements,Accenture's pilots are yielding critical insights, proofs of concept and driving value discussionsfor leveraging technology and defining a service improvement and innovation road map.




Cautions

■ Accenture is sometimes not the best fit for clients that primarily seek cost-focused coreservices (basic "lights on" management deals), or require smaller focused teams.

■ Clients reported that they would like Accenture to add more value in delivering year-over-yearcost savings through operational delivery improvements as well as through technologyinnovations. This includes not only the expectation to rotate system integration and deploymentresources into the ongoing management teams, but also the expectation of cost-neutralapplication modernization programs. The caution here is that Accenture is known to have thecapability, yet clients must proactively address improvement demands upfront in theengagement and not expect it to be delivered just because Accenture can.

■ Client feedback indicates that one of the single biggest areas of improvement that they wouldlike to see from Accenture is a clearer separation of the more commoditized skills deployed forSAP basis operations, at a highly competitive pricing structure; either by increased low-costdelivery options or expanded industrialization, and while still realizing performance indicators.Such skills should be delineated from the more high-end value pricing structures for specificportions of the deal, for example business process optimization, or for business-outcome-driven transformation programs.

Atos

Atos is positioned in the Challengers quadrant. It has an estimated 4,700 FTEs dedicated to SAPapplication management services, from an estimated worldwide total of 10,600 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 3% in NAM, 6% in LATAM, 56% in EMEA and 36% in APJ. Atos generatesapproximately 43% of its SAP application services revenue from SAP implementation services, 48%from SAP application management services and 8% from SAP infrastructure services. Atos services20 of the 22 industries included in this Magic Quadrant. Of these, the main markets for SAPapplication services — each generating more than 10% of the vendor's SAP services revenue —are manufacturing, the public sector and energy and utilities. Atos does not generate SAP servicesrevenue in the aerospace and defense and not-for-profit markets.

Strengths

■ Atos has a proven capability and strong presence in Europe, and SAP services capabilitiesspread over 30 countries globally. As a part of its global delivery network, it also has five globalSAP Application Management Services (AMS) production centers and eight global SAP hostingproduction centers.

■ Atos has a broad industry focus, and has developed a set of sector-specific applicationmanagement services to support further expansion in each of its core industries. Its strategy forindustry growth is also aligned with its plans for geographic expansion, leveraging the effectiveintersection of geographic presence and industry capabilities. All services are driven from itsglobal AMS production centers to the other regions, with a focus, in addition to Europe, onNAM, LATAM, French-speaking Africa, South Africa, the Middle East and China. Examples of




regional expansion solutions are an integrated manufacturing platform, HealthPack on top ofSAP IS-H, multichannel management for banking and grid management for the energy sector.

■ Investments have been made by Atos in strategic offerings for cloud (notably to utilize Canopyto move SAP solution offerings to the cloud), consolidation and harmonization, integratedmanufacturing, sustainability solutions, mobility, Hana and business analytics. This will beimportant for Atos, to offset the erosion of the traditional SAP application managementbusiness and address future customer demand.

Cautions

■ Despite a strong presence in Europe, and a well-established global delivery network, Atos'spenetration of NAM, LATAM and APJ requires further investment. Although Atos has increasedglobal resources, following the acquisition and integration of Siemens IT Solutions (SIS), itremains challenged to compete for large deals outside of Europe that require large localpresence — as in the public sector.

■ Having a broad industry focus driven from a technical-expertise perspective works in Atos'score European markets, in part due to the level of the company's resources in the region. Atoswill need to expand its industry capabilities and focus on limited industries on a region-by-region basis. Its clients score Atos low on business change management and industryexpertise, as well as innovation. Some reference clients especially mention the need to increasecustomer satisfaction through services that are better aligned across the complete SAPservices portfolio.

■ Atos has made positive investments in the cloud, with Canopy and other strategic offerings, butthese investments need to deliver results. Having set out a transformational SAP applicationservices road map — to drive innovation in SAP environments toward a "liquid IT" state — it willtake some time for results to be reflected in actual business revenue.

Capgemini

Capgemini is positioned in the Leaders quadrant. It has an estimated 3,800 FTEs dedicated to SAPapplication management services, from an estimated worldwide total of 13,500 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 18% in NAM, 10% in LATAM, 33% in EMEA and 40% in APJ. Capgeminigenerates approximately 70% of its SAP application services revenue from SAP implementationservices, 25% from SAP application management services and 5% from SAP infrastructureservices. Capgemini services all the 22 industries included in this Magic Quadrant. Of these, themain markets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are the chemicals and process industry and CPG.

Strengths

■ Capgemini has a good spread of SAP application management skills across the globe, both interms of number and experience of resources. Its global presence has been helped byacquisitions in LATAM (full capabilities) and APJ (specific industry capabilities).




■ Capgemini's go-to-market strategy is based on life cycle services offerings, both from anindustry as well as from a process perspective, packaged in among others are the OnePathofferings that include licensing, implementation, management and infrastructure services.Capgemini has OnePath offerings certified for, among others, CPG, energy, life sciences, retailand manufacturing. In terms of technology, Capgemini continues to invest in analytics as wellas its mobility and cloud solutions. Capgemini also partners with SAP to develop industry-specific offerings, such as a mobile solution for the retail industry.

■ Capgemini provides its SAP application management services through comprehensivemethodologies and delivery models, built on its Multi-Client Factory (MCT) and nextGENapplication management delivery platform. Capgemini's nextGEN Command Center toolsetenables rapid reporting and data access for internal needs, as well as for external clients. ItsnextGEN management platform in combination with its Industrialized Managed Service Center(IMSC), is the competitive answer to maximizing reusability and standardization across clients— delivered "as a service" if required. Capgemini's technical expertise is highly appreciated byits reference clients.

■ Capgemini's reference clients further appreciate its employees' professional behavior, thecompany's cultural fit and its geographic capabilities. Some of the reference clients thatrepresent large SAP application management relationships with Capgemini (above $20 million intotal contract value), specifically refer to Capgemini as a true partner instead of a serviceprovider.

Cautions

■ Capgemini still generates more than half of its SAP services revenue from the currently slowgrowing European market. In a market with continued global expansion and focus on largeaccounts it will need to demonstrate that its global spread of SAP skills is not disproportionatelyfocused on large Europe-based enterprises, but is equally positioned to compete for globaldeals executed from — and with demand mainly focused on — other regions. This is supportedby some of its global clients who specifically mention their concern about too much of aEuropean focus.

■ Although Capgemini currently has SAP-certified, industry-specific solutions in areas such asCPG, energy, life sciences, retail and manufacturing, it also serves all 22 industries included inthis Magic Quadrant. Some of the reference clients report inconsistencies in the quality of staffleveraged, which indicates that in order to demonstrate strength across the broad set ofindustries that Capgemini serves, further investments into other industries will be requiredbesides the industry-independent process (such as HCM and CRM) and technology (such asHana and SUP) solutions. This is further supported by relatively low scores on industryexpertise and business acumen.

■ Capgemini offers OnePath alongside its application life cycle services and nextGEN applicationmanagement platforms that are offered to a client based on their requirements, the projectcharacteristics and maturity and cultural fit. While OnePath's vision and execution continues tomature and gain market traction, it is still relative new in the market and clients should verify theapplicability to their individual situation in cooperation with Capgemini.




■ Capgemini's reference clients score it as lower than the average across the included vendorsfor business and user change management. Some clients specifically mention the lack ofbusiness transformational skills.

CGI

CGI is positioned in the Niche Players quadrant. It has an estimated 1,500 FTEs dedicated to SAPapplication management services from an estimated worldwide total of 3,700 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 15% in NAM, 4% in LATAM, 74% in EMEA and 7% in APJ. CGI generatesapproximately 65% of its SAP application services revenue from SAP implementation services, 24%from SAP application management services, and 11% from SAP infrastructure services. CGIservices 17 of the 22 industries included in this Magic Quadrant. Of these, the main markets for SAPapplication services — each generating more than 10% of the vendor's SAP services revenue —are the public sector and energy and utilities. CGI does not generate SAP services revenue in theinsurance, other financial services, wholesale, education and not-for-profit markets.

Strengths

■ CGI has completed the acquisition of Logica. The combined capabilities and resources of CGIand Logica provide a geographic footprint to support the needs of multinational customers,particularly those with requirements in NAM and Europe. The developing SAP needs ofcustomers in LATAM are served from Brazil, Colombia and Spain.

■ CGI has focused go-to-market strategies through industry solutions for manufacturing, thepublic sector, healthcare and utilities. CGI's go-to-market strategy takes into account the needto support faster ROI, embedding innovation while increasing efficiency in deploying newtechnologies. In terms of technology, CGI continues to invest in mobility and has beensuccessful in delivering large Sybase projects in the manufacturing and utility sectors.

■ CGI has invested in a range of solutions for its clients across multiple sectors. One example ofthe investment is Mass Data Billing (MDB), which leverages SAP's Consume-to-Cash suite ofsoftware (recently rebranded as Billing and Revenue Innovation Management [BRIM]), as itscore component (over 70% of MDB is built on SAP). MDB is a global business process servicethat delivers an end-to-end financial customer care and billing proposition.

■ CGI's SAP Application Management Services delivery is governed through its Client PartnershipManagement Framework (CPMF), which ensures focused delivery. This is supported by itsreference clients, who appreciate CGI's service delivery capabilities in general — with a strongfocus on getting the job done — in combination with a good cultural fit.

Cautions

■ The integration of Logica into CGI has not, at face value, positively impacted CGI's SAPservices capabilities, especially during a worldwide decline in SAP services revenue. The mainmarkets of CGI and Logica have been separated and integration of delivery capabilities istherefore not straightforward, nor is creating a single interface to new and existing clients. CGI's




primary challenge lies in demonstrating real global capabilities for large accounts withexpansive multiregional requirements in the highly crowded SAP application managementservices market in its primary regions of NAM and EMEA. CGI's focus on client proximity andindustry solutions is important, but must be built on industrialized services or extensive globaldelivery capabilities to regain market share. In addition, CGI will need to pay extra attention tostaff retention according to some of its reference clients.

■ CGI's client references reflect a relatively large portion of small deals with low complexity,although many are longer than three years, but with a strong dependency on EMEA. In line withthe previous caution, and adding to this concern, is CGI's small offshore capability comparedwith its competitors and the largest dependency (across all vendors) on a single region (EMEA)for its SAP services revenue. This limits CGI's competitive position on cost-driven deals (whichmany of the larger deals are) or on global deals with a delivery focus outside of EMEA.

■ CGI is still developing its strategy on industry-specific solutions. While it is working to enhanceits traditional ERP service in the mobility area, this represents a limited example of its approachto addressing a market need for enhanced services. It will need to invest further to developindustry-specific solutions, enhancing processes and addressing key market needs such ascloud-delivered solutions. The need to invest is demonstrated by CGI's reference clients whoscore it low for innovation, both in terms of proposing innovation as well as realizing innovationduring the relationship.

■ While CGI is SAP Hosting and SAP Managed Service certified, globally, its current level ofalliance with SAP falls short of that of its leading competitors. As even more processes becomemobile in the future, a well-articulated mobility strategy will be essential. In addition,investments in Hana, big data and analytics, together with enhanced marketing of thesecapabilities, will be necessary to take advantage of growth opportunities.

Ciber

Ciber is positioned in the Niche Players quadrant. It has an estimated 600 FTEs dedicated to SAPapplication management services from an estimated worldwide total of 1,250 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 8% in NAM, 0% in LATAM, 78% in EMEA, and 14% in APJ. Ciber generatesapproximately 52% of its SAP application services revenue from SAP implementation services, 48%from SAP application management services and 0% from SAP infrastructure services. Ciberservices 11 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAPapplication services — each generating more than 10% of the vendor's SAP services revenue —are CPG, life sciences, energy and utilities, retail and professional services. Ciber does not generateSAP services revenue in the banking, insurance, automotive, aerospace and defense, high tech,other manufacturing, healthcare, communications, agriculture and mining and construction,education and not-for-profit markets.




Strengths

■ Ciber's geographic footprint and its delivery centers are strong for the targeted size and scopeof its client base. Ciber is a solid midtier SAP service provider with nearshore and offshoredelivery capabilities in Germany, Poland, India and Vietnam.

■ Its industry approach is primarily focused on a select group of industries where it has investedin a number of all-in-one industry- and process-specific solutions and accelerators, with a focuson reducing costs and better time to market. Ciber offers such all-in-one solutions under theumbrella of Ciber To Go offerings for, among others, industries such as CPG, discretemanufacturing and pharma, but also for the process areas of HCM and business intelligence(BI) in general. Ciber also has distinct industry solution templates for retail.

■ Ciber's strength is in midsize deals, with smaller and more focused teams, for clients primarilyseeking cost-focused SAP application management services, through flexible managed servicemodels. Although relatively small in comparison to most of the other vendors included in thisMagic Quadrant, Ciber still demonstrates capabilities across the complete life cycle of SAPapplication services, with a relatively large investment in analytics and mobility services.

■ Its reference clients scored Ciber high on responsiveness to requests, work ethic andprofessionalism, cultural fit, technical expertise and timeliness of delivery. This reflects Ciber'sdistinct team focus for delivering its SAP services in combination with transparent insight intoits operations through reporting portals for its clients.

Cautions

■ Ciber's geographic approach works well for the demands of targeted regional clients, althoughsome of its reference clients specify the need to expand its global delivery capabilities. In orderto become a stronger candidate for larger, more complex deals there is, therefore, a need foradditional scale and investment. Note that Ciber's focus is on clients with annual revenuebetween $1 billion to $10 billion. This range is interesting to all included vendors and embracesregional as well as global enterprises.

■ Its industry depth is still evolving — Ciber's reference clients reflect some of the least complexdeals across all the included vendors — yet clients are demanding more vertical expertisethrough experienced resources and extensive knowledge assets at a speed which Ciber ischallenged to meet. This demand is further heightened as clients are asking for assistance onhow to leverage analytics aligned to industry-specific key performance indicators. Ciber'sreference clients indicated that they require more industry expertise in addition to moreinvestment in thought leadership. This is supported by some of its clients indicating clearconcerns about functional expertise.

■ Ciber's reference clients indicate it should invest in better understanding the clients' businessprocesses and delivering process-driven innovations, and at the same time spend more time onunderstanding its clients processes and improving resource continuity.

■ Ciber's clients initially seek it out for efficiency-focused application management engagements,but over time require more innovation and road maps for the adoption of newer disruptivetechnologies (that is, Hana, mobility, analytics) to drive new value from their SAP investments.




Ciber must invest in expanding its capabilities in these areas, especially considering that theseare the areas in which its competitors have, on average, greater capability.

Cognizant

Cognizant is positioned in the Niche Players quadrant. It has an estimated 3,600 FTEs dedicated toSAP application management services, from an estimated worldwide total of 6,700 FTEs across allSAP application services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 20% in NAM, 1% in LATAM, 8% in EMEA and 71% in APJ. Cognizantgenerates approximately 55% of its SAP application services revenue from SAP implementationservices, 45% from SAP application management services and 0% from SAP infrastructureservices. Cognizant services 19 of the 22 industries covered in this Magic Quadrant. Of these, themain markets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are oil and gas, life sciences, CPG and retail. Cognizant does not generate SAPservices revenue in the other financial services market (it does generate revenue in banking andinsurance), aerospace and defense and not-for-profit markets.

Strengths

■ Cognizant's delivery resources are still primarily located in India, resulting in high clientreference scores for the relatively low cost of its services. Its geographic focus and growth hasalways been based on a conservative, fiscally responsible approach to expansion: enteringthrough focused partnerships and acquisitions in combination with aggressive and flexible dealapproaches. This focus has allowed Cognizant to enter, for example, the European market laterthan most of its peer group but still demonstrate consistently high growth year over year.

■ Many of Cognizant's capabilities focus on technology and efficiency, which translates into awide array of operational and technology-driven tools and accelerators that it can apply acrossindustries. With increased investment in advisory capabilities (including the C1 acquisition),Cognizant has expanded its industry-specific assets in its key SAP application servicesindustries as well as in healthcare, financial services and retail.

■ Its service offerings include a breadth of core SAP application management services (servicemanagement, release management, incident management) as well as strong competencies inSAP testing. Cognizant offers its services with an extensive array of commercial termsstructures. Clients report positive feedback with regard to the contracting options offered.

■ Cognizant's reference clients scored them high on work ethic, professionalism and relationshipmanagement. Both quantitative and qualitative feedback from clients consistently indicatesCognizant's long-standing focus on both account management and relationships is highlyvalued.




Cautions

■ Cognizant's has a comparatively low capability in SAP application management services dealsthat are of larger scale and demand multiregional needs beyond the U.S. and specific marketsin EMEA. In comparison with its competitors, Cognizant's geographic depth is still evolving.

■ Cognizant has a go-to-market strategy by industry, yet its reference clients score it as belowaverage on industry expertise. Clients should diligently evaluate Cognizant's depth to ensure it'sa good fit, because Cognizant needs to further invest in more industry-specific knowledgeassets (such as tools, accelerators and business process blueprints).

■ Cognizant's overall enterprise strategy is driven by what it terms the SMAC stack (which blendssocial, mobile, analytics and cloud). However, its ability to articulate and showcase its thoughtleadership in these areas (Hana and social, for example) — for its SAP application managementservices practice — is relatively weak. Cognizant scored clearly below average for overallthought leadership across the included vendors.

■ In addition, Cognizant's reference clients emphasized that it needs to enhance capabilities onboth proposing as well as realizing innovation to improve, enhance or transform its SAPapplication management services. In combination with the low score on staffing engagementswith the right resources and the appropriate tenure, the caution is that clients should verifyupfront whether Cognizant's aggressive and flexible approach is only driven by operational costefficiency, or whether it includes improvement over time. Clients especially mention the need toadd more senior consultancy capabilities that better understand the business needs, aligndelivery and improve business-focused communication.

CSC

CSC is positioned in the Challengers quadrant. It has an estimated 3,700 FTEs dedicated to SAPapplication management services from an estimated overall worldwide total of 7,700 FTEs across allSAP application services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 15% in NAM, 6% in LATAM, 37% in EMEA and 43% in APJ. CSC generatesapproximately 40% of its SAP application services revenue from SAP implementation services, 50%from SAP application management services, and 10% from SAP infrastructure services. CSCservices 19 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAPapplication services — each generating more than 10% of the vendor's SAP services revenue —are oil and gas, chemicals, aerospace and defense and the public sector. CSC does not generateSAP services revenue in the healthcare, education and not-for-profit markets.

Strengths

■ CSC's long-standing SAP practice, combined with its scale and geographic reach, provides agood position to compete for SAP application management services deals worldwide. CSC'sreference clients scored them in the top quartile for geographic capability.

■ CSC has capabilities across an extensive array of industries. In its targeted verticals it hassignificantly invested in establishing and expanding industry solutions (such as ClimatEdge forinsurance, or insurance analytics through embedded Hana capabilities, or CSC's Petroleum




Enterprise Intelligence), standardized accelerators and automation tools. CSC's referenceclients report that these have been the primary reasons for selecting CSC as their provider forSAP application management services. In line with its competitors, CSC also offers clientsoptions for outcome-based services and the flexibility of per ticket pricing, built around theability to agree to a high first call resolution.

■ Its services offerings have a great deal of depth and breadth, providing a full suite of SAPapplications services, complemented by cloud-enabled infrastructure offerings. CSC hasinvested in industrializing its SAP offerings, including SAP application management as a service,SAP testing as a service, SAP Infrastructure Utility (IU) offerings, and SAP Rapid DeploymentSolutions (RDS) for industries and technologies. CSC demonstrates the most balanced spreadof revenue across the SAP platforms measured (ERP, CRM, SCM, BI, mobile and others) acrossthe included vendors.

■ CSC's reference clients scored it high on work ethic and professionalism, and geographiccapability.

Cautions

■ Although CSC demonstrated a strong growth in APJ it still has a relatively large dependency onNAM for its SAP revenue and only a small revenue stream from LATAM. Within the oftencountry-level-driven business, CSC's go-to-market strategy aims for technology and industrysolutions from a single model. While such a model improves positioning for global deals, itpotentially limits its competitive positioning for clients with highly customized or localizedenvironments, where global solutions would not apply.

■ One of the primary reasons for a shift from CSC's position from the Leaders quadrant in 2012 tothe Challengers quadrant in this year's analysis is that reference clients reported back anoticeable decline in several areas, including though leadership, business change management,organizational change management, and innovation achieved in the deal as well as proposedinnovation to improve, enhance or transform the SAP services. Some clients commented thatCSC is only just meeting SLAs and in general CSC clients refer to a need to improve the serviceand resource continuity and quality.

■ Although CSC offers testing as a service, some of its clients indicate the need to improve thetest solutions offered, enhance the quality of outcomes delivered, and increase risk-basedtesting capabilities. In addition, clients suggest a need to better verify and validate proposedstaff capabilities in the services offered.

■ CSC's reference clients demonstrate a broad spread of scores. Gartner's assessment of thisfeedback is that in areas where CSC makes targeted investments, such as for its coreindustries, it goes deep and does well. However, given CSC's large overall client footprint, thisapproach has effectively resulted in a relatively shallow approach across an array of otherindustries — resulting in lower scores.




Deloitte

Deloitte is positioned in the Visionaries quadrant. It has an estimated 1,800 FTEs dedicated to SAPapplication management services, from an estimated worldwide total of 11,000 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 41% in NAM, 12% in LATAM, 26% in EMEA and 21% in APJ. Deloittegenerates approximately 89% of its SAP application services revenue from SAP implementationservices, 11% from SAP application management services and 0% from SAP infrastructureservices. Deloitte services 20 of the 22 industries covered in this Magic Quadrant. Of these, themain markets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are manufacturing, life sciences and professional services. Deloitte does notgenerate SAP services revenue in the other financial services market (it does generate revenue inbanking and insurance) or wholesale.

Strengths

■ Deloitte has a strong understanding of the SAP services market and has chosen to selectivelypenetrate the SAP application management services arena. Its ability to increase wallet sharewith existing clients and penetrate new logos through an industry and executive relationshipfocus are well targeted and reflect this strategy.

■ As a good example of targeted investments, Deloitte has been able to demonstrate goodgrowth in its key regions of NAM and EMEA, but very strong growth in LATAM and APJ. Deloitteeffectively follows the expansion of its client base and is well able to expand wallet share withexisting clients. Its investments in technology capabilities to support SAP applicationmanagement services expansion is also recognized by its reference clients, who score Deloittehigh on technical expertise.

■ Besides continued investment in its business advisory services, Deloitte has made distinctacquisitions to expand its SAP industry (Monitor Group, Recombinant), process (Bersin) andtechnology (Übermind) capabilities. Deloitte is gaining traction through its Deloitte Digitalcapabilities, built on the Übermind acquisition. In terms of services, Deloitte aims for innovativetransformational deals and has industry-specific offerings for, among others, financial services,healthcare, manufacturing and retail.

■ Deloitte reference clients scored it very high for its service delivery, client focus and ability tomanage client demand and expectations, based on the right staff with the right mentality to getthe job done.

Cautions

■ Although Deloitte demonstrates strong growth in LATAM and APJ, these are still very small SAPapplication management markets for Deloitte — requiring it to continue its investment in theseregions.

■ Deloitte's references reflect a good spread across small to very large SAP applicationmanagement services deals with short to long durations; however, in comparison with the othervendors included in this Magic Quadrant, Deloitte's SAP application management engagements




are in general shorter, less complex and include a smaller array of services. This reflects therelatively short history of Deloitte in providing SAP application management services whencompared with the other vendors included in this Magic Quadrant.

■ Deloitte still generates only a small percentage of its SAP revenue through SAP applicationmanagement services. This gives it a lot of scope to expand its market share, but at the sametime increases the client expectations and challenges in terms of finding and retaining the rightresources that match the Deloitte brand. This is reflected in Deloitte's reference clients'perception that continuity of senior skills is an area of concern and that Deloitte could improveits SAP partnering capabilities in delivering SAP application management services.

■ Many of the technology investments made by Deloitte are on either the advisory or theimplementation side, and still are limited in the SAP application management services areas. Itsacquisitions are, in general, not focused on SAP application management services: whichindicates that Deloitte might have all the necessary abilities, but is not yet capable of fullydeploying them for SAP application management services clients. This issue is supported by itslow client feedback scores for innovation achieved in the deal as well proposed innovation toimprove, enhance or transform its SAP services.

Fujitsu

Fujitsu is positioned in the Niche Players quadrant. It has an estimated 1,000 FTEs dedicated toSAP application management services, from an estimated worldwide total of 2,700 FTEs across allSAP application services. The breakdown of worldwide SAP application services resources is asfollows: approximately 29% in NAM, 0% in LATAM, 19% in EMEA and 52% in APJ. Fujitsugenerates approximately 45% of its SAP application services revenue from SAP implementationservices, 33% from SAP application management services and 22% from other SAP infrastructureservices. Fujitsu services 21 of the 22 industries covered in this Magic Quadrant. Of these, the mainmarkets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are oil and gas, chemicals, CPG and the public sector. Fujitsu does notgenerate SAP services revenue in the education market.

Strengths

■ Fujitsu's SAP application management services strength is in the APJ region, particularly inJapan where it regularly appears on shortlists due to its Japanese heritage. Its foray into NAMand Europe, and targeted investments to grow these markets, has expanded in the past twoyears, showing a determination to expand its client base and track record. EMEA is the secondlargest market for Fujitsu's SAP services, with a strong position in the U.K.

■ Due to Fujitsu's enterprisewide coverage of many industries, it has the ability to pinpointindustry investments by service area and region. In the case of SAP application services, Fujitsufocuses its investments on, for example, retail for the U.K., manufacturing for NAM and Europe,and real estate for Asia.

■ Fujitsu uses its technology heritage to drive industrialization of its SAP services, whereby itoffers its global enterprise management services for SAP (based on Fujitsu hardware and




appliances) bundled under its Dynamic Infrastructure offerings. This includes dedicated SAPcloud, SAP infrastructure utility (SAP FlexFrame) and SAP infrastructure as a service solutions.From an SAP application management perspective, the solutions include dedicated add-on orintegrated SAP application management services. For example, Fujitsu FlexFrame Orchestratorallows for the joint management of SAP ERP and SAP Hana within one hardware-independentplatform.

■ Fujitsu's reference clients scored it high on the professionalism of the staff assigned,responsiveness to client requests, and operational delivery capabilities. Clients appreciateFujitsu's flexibility in adjusting its services and delivery model to deliver cost efficiencyimprovements.

Cautions

■ Fujitsu's SAP services revenue is still dominated by clients from APJ and it has seen a declinein SAP services revenue in NAM, while other regions demonstrated small to reasonable growth.Considering NAM is the second largest region next to EMEA, in terms of SAP servicesgenerally, Fujitsu will need to invest in its NAM services capabilities and go-to-market strategyto regain market share. In this respect, Fujitsu's international restructuring program to optimizeglobal delivery can improve its position, but this must be done through a market-drivenapproach rather than only inward focused.

■ Although Fujitsu has made strides and increased investment in its SAP application managementservices, its reference clients score Fujitsu lower than the other included vendors on offeringand realizing innovation in the agreement, indicating the need for Fujitsu to more activelyinteract with its clients and demonstrate its capabilities.

■ While on average Fujitsu's references represent longer term SAP application managementengagements, they also include a significant percentage with a lower total contract value —representing less complex services. The primary focus in these latter accounts tends to be ontechnology-driven, cost-effective core services that require smaller focused teams.

■ While Fujitsu's reference clients recognize that its staff demonstrates a strong client focus, theyalso indicate concern around staffing continuity and stated a desire to see greater thoughtleadership and further expansion in specific business and industry expertise.

HCL Technologies

HCL is positioned in the Challengers quadrant. It has an estimated 2,700 FTEs dedicated to SAPapplication management services, from an estimated worldwide total of 7,300 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 25% in NAM, 2% in LATAM, 21% in EMEA and 52% in APJ. HCL generatesapproximately 68% of its SAP application services revenue from SAP implementation services, 28%from SAP application management services and 4% from SAP infrastructure services. HCL services18 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAPapplication services — each generating more than 10% of the vendor's SAP services revenue —are discrete manufacturing, CPG, life science, and energy and utilities. HCL does not generate SAP




services revenue in the other manufacturing, healthcare, agriculture and mining and construction,and not-for-profit markets.

Strengths

■ HCL continues to achieve double-digit growth in its SAP services revenue, with the mainregions being NAM and EMEA, followed by APJ. Although LATAM is a small revenuecontributor toward its overall SAP services revenue, 50% of the SAP revenue from this region isfrom SAP application management services.

■ HCL has created very competitive RDS solutions utilizing HCL's industry-configured ERPofferings and delivering cost benefits to clients through industrialized service delivery modelsaround outcome-based commercial models, and against end-to-end accountability. In general,its clients appreciate HCL's ability to deploy the solutions and focus their expectations onresults that can be realized.

■ HCL has made extensive investments in SAP Hana and SAP cloud and mobility solutions,delivering industry-specific solutions — such as Bank Analyzer on Hana and iMRO on Hana aswell as SAP on Demand, which allows clients to quickly access best-in-class processes andachieve transformational benefits.

■ HCL's reference clients continue to cite satisfaction with HCL's technical expertise, cultural fit,professionalism and the high work ethic of its staff. Clients noted that they are getting value formoney and most would recommend HCL to other clients for SAP maintenance and supportservices.

Cautions

■ Although HCL demonstrated a relatively strong growth in SAP services revenue in LATAM, inabsolute numbers this is still low and, given the generally higher SAP revenue streams of itscompetitors in the region, HCL will need to expand its investment in LATAM to improve itscompetitive position. This is also supported by the reference data, which does not include anyLATAM delivery.

■ Though HCL has good transition and execution methodologies, and HCL's investment andinnovation effort is often pioneered from its SAP application management services, its clientsindicate some concerns around delivering continuous improvement. HCL's reference clientscite change management, project management capability and partnership with softwarevendors as areas for improvement. Its clients specifically notice the need to improve testing andquality procedures, improve automation, and better align services with SAP technologydevelopments.

■ While the technical expertise and professionalism of HCL staff is of a high caliber, its clientsscore it lower in bringing innovative proposals to enhance and transform the service. HCLcontinues to be challenged in partnering with the clients and building strong relationships withthe business to drive transformation.




HP

HP is positioned in the Challengers quadrant. It has an estimated 3,400 FTEs dedicated to SAPapplication management services from an estimated worldwide total of 9,200 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 30% in NAM, 6% in LATAM, 34% in EMEA and 30% in APJ. HP generatesapproximately 49% of its SAP application services revenue from SAP implementation services, 40%from SAP application management services, and 11% from SAP infrastructure services. HPservices 14 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAPapplication services — each generating more than 10% of the vendor's SAP services revenue —are automotive, discrete manufacturing and CPG. HP does not generate SAP services revenue inthe insurance, other financial services, other manufacturing, wholesale, professional services,agriculture and mining and construction, education and not-for-profit markets.

Strengths

■ HP is run on a regional basis with 18 SAP delivery centers in the Americas, EMEA and APJ. TheLATAM market currently has the highest growth. Investments are being made in Brazil to speedup growth in this region. HP has also been able to expand its APJ position through some goodwins — of $10 million to $20 million total contract value — during 2012, due to an executive-level account focus.

■ HP selectively accepts SAP implementation projects that include post implementationmaintenance. This methodology improves its ability to deliver at an operational level anddevelop a good relationship management capability, as evidenced by its client references. HPhas invested in several industry-specific solutions in CPG, manufacturing and financial services.HP also continues to invest in both its Next Generation Applications Management proposition,aimed at delivering a business outcome with zero downtime, and its application platform as aservice (aPaaS) model — including the recently launched HP As-a-Service Solution for SAPHana.

■ Clients benefit from HP's end-to-end capabilities in SAP implementation and applicationmanagement, and its ability to leverage its capabilities in infrastructure, data center and cloudservices. HP initiated the rollout of its Industrialized Delivery System (IDS) approximately threeyears ago: where applications, hardware and services are integrated and delivered throughindustry-aligned templates, utilizing shared resources via a standardized delivery methodology.

■ HP's reference clients rated it high for its relationship management and service deliverycapability, the cultural fit, technical expertise and work ethic. Its reference clients consistentlyappreciate HP's use of collaborative and communicative teams to deliver the services.

Cautions

■ Although HP is a large global IT service provider, capable of handling large and complex deals,many of its references represent smaller, less complex deals with smaller support teams. Whilethis demonstrates the ability of HP to support any client, it also requires clients representingcomplex SAP environments to actively verify HP's delivery capabilities.




■ HP generates most of its SAP services revenue from three industries, reflecting a limiteddomain expertise in other industries. This is reflected in HP's reference clients' relatively lowscores on business acumen and industry expertise. Some of HP's reference clients specificallycite the need to improve the business priority alignment of its services. As part of itstransformation effort, HP will need to continue to grow and accelerate the investment it ismaking in building industry-specific IP.

■ While HP's IDS model is a step in the right direction for integrated global delivery, and issuccessfully deployed for a still increasing number of clients, its integrated processes and toolsacross the HP organization are still in development. Therefore, clients must diligently evaluatewhether the solution is mature enough and a good fit for its industry-specific needs, scope anddeal size.

■ Although HP offers an array of end-to-end SAP services, reference clients scored it among thelowest on innovation and proactiveness compared with its peers in the same quadrant. Clientsconsistently indicate challenges with embedding best practices and in realizing continuousimprovement.

IBM

IBM is positioned in the Leaders quadrant. Gartner estimates that IBM has 13,000 FTEs dedicatedto SAP application management services, from an estimated worldwide total of 32,000 FTEs acrossall SAP application services. Gartner estimates the breakdown of the worldwide SAP applicationservices resources is as follows: approximately 17% in NAM, 8% in LATAM, 26% in EMEA and49% in APJ. Gartner estimates that IBM generates approximately 58% of its SAP applicationservices revenue from SAP implementation services, 28% from SAP application managementservices and 14% from SAP infrastructure services. IBM services 21 of the 22 industries covered inthis Magic Quadrant. Of these, the main markets for SAP application services — each generatingmore than 10% of the vendor's SAP services revenue — are oil and gas, process industry, CPG andhigh tech. It should be noted that from a revenue perspective, even the smaller markets for IBM stillgenerate high SAP application services revenue. IBM does not generate SAP services revenue inthe not-for-profit market.

Strengths

■ IBM's SAP revenue is well balanced across all regions, but EMEA leads in applicationmanagement revenue contribution, followed by NAM and APJ. IBM continues to invest in theemerging markets, including Brazil, Asia, Russia and South Africa.

■ Though IBM has deep expertise in many industries, over the next three years it will focus onselected high-growth industries such as banking, CPG, energy and utilities and travel andtransportation. Its reference clients score IBM high for business consulting skills, indicating IBMis able to build SAP application management engagements through its consulting capabilitiesand also making it a strong competitor in these focus industries.

■ IBM excels in managing large global SAP engagements and this is supported by its clientreferences generally reflecting large and complex SAP application management deals. IBM's




SAP application management services are life cycle-based propositions, addressing everythingfrom technology, processes and services up to business outcome. The focus is on continuousimprovement and value realization, supported by analytics and standardized problem resolutiontools such as Catapult Wisdom. IBM prefers to drive productivity improvements through newtools and capabilities.

■ IBM's aim is "partnering" with clients rather than being a service provider, and it has a stateddesire to move clients to outcome-based service models — especially in its larger deals. Itstransformation strategy is to help its clients integrate the back office, while digitizing the frontoffice for enhanced business value and flexibility. Reference clients cite IBM's responsivenessto their requests as the biggest differentiator, but also highly appreciate how IBM supports theirdecision-making process by providing direct access to other clients.

Cautions

■ IBM's desire to digitize the front office and offer productivity improvements usually requiresassets (such as tools, knowledge data bases) that, at times, come with an additional price. IBMengagements often leverage a mix of SAP and IBM commercial software offerings. IBM needsto improve its packaging of these offerings to allow clients to acquire them as operatingexpenditure. In addition, more transparency is required regarding the use of IBM versus SAPsoftware (for analytics, for example).

■ Although IBM demonstrates the ability to provide end-to-end value services through outcome-based delivery models, the majority of its clients continue to have efficiency-based contracts.

■ Most reference clients agree that while IBM's quality of delivery is high, this comes with a pricethat is generally higher than the market.

■ IBM scores above the average across the included vendors for realizing innovation during theengagement, but its reference clients still expect improvement. IBM's proposition continues tobe that clients who are willing to invest in innovation will receive it; this implies the continuedneed to improve the management of client expectations.

Infosys

Infosys is positioned in the Leaders quadrant. It has an estimated 3,200 FTEs dedicated to SAPapplication management services from an estimated worldwide total of 11,000 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 16% in NAM, 1% in LATAM, 24% in EMEA and 60% in APJ. Infosysgenerates approximately 61% of its SAP application services revenue from SAP implementationservices, 29% from SAP application management services and 10% from SAP infrastructureservices. Infosys services 17 of the 22 industries covered in this Magic Quadrant. Of these, the mainmarkets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are oil and gas, process industry, automotive, CPG, life sciences and miningand construction. Infosys does not generate SAP services revenue in the other financial services,healthcare, public sector, education and not-for-profit markets.




Strengths

■ Infosys SAP application management revenue is well balanced across the regions, although themajority of its SAP application management revenue is, in absolute terms, generated fromEMEA and NAM. With the acquisition of Lodestone, Infosys is well positioned to meet the needsof LATAM and APJ, given that buyers are expecting more business-focused solutions andconsulting capabilities. Reference clients scored Infosys exceptionally high for its geographicalcapabilities. Infosys used a recent win in the U.S. to create its first U.S.-centric SAP applicationmanagement services delivery center. This may prove to be a wise investment given thedevelopments around visa legislation in the U.S.

■ Infosys has good penetration across many industries, and has made heavy investments intoindustry-specific platforms for its main markets. It is expected that Life Sciences will gainmomentum through Lodestone's Clinical Trials Supply Management add-on suite. In line withits competitors, Infosys is investing in new technologies, yet positions Hana and mobile moreaggressively as an investment and growth engine. It has a wide variety of offerings where itcombines Hana and mobile solutions with existing industry IP, such as in CPG, manufacturing,retail, and oil and gas.

■ Infosys is utilizing more onshore low-cost SAP application management service delivery centersto service clients, and plans to expand its SAP maintenance capability in these centers toprovide higher intimacy and improved services to multiple clients.

■ Reference clients rate Infosys's ability to be flexible and go beyond the contract as a keydifferentiator. Infosys received the highest overall satisfaction rating among all includedvendors. This satisfaction is also based on its standard deployment of its value creationframework, which identifies value specific to each client, and utilizes all tools and mechanismsto realize the value — such as its Impact framework and Value Realization Method (VRM).

Cautions

■ The Lodestone acquisition has brought expansion in LATAM and Europe, however, integrationefforts are still ongoing and will take time to fully enable the benefits of the acquired capability.Clients considering Infosys based on the Lodestone capabilities should verify the level ofintegration for the involved services.

■ Although Infosys supports clients across many industries, it has a high dependency on its mainmarkets, which generate 80% of its SAP services revenue. While this can be seen as a strength— in that Infosys limits its investments — it also implies that clients in industries outside of itscore markets should challenge Infosys to invest more broadly in relevant industry-specificsolutions.

■ The reference clients of Infosys indicate resourcing issues as a concern. Infosys has had recentchallenges with its middle management staff retention, which impacted some ongoingengagements. Although new leadership and investments in resource retention are expected torestore these relationships, clients should actively verify the company's resourcingimprovements.




■ Some reference clients suggested that Infosys needed to improve its investment in client-facingand change-management roles.

L&T Infotech

L&T Infotech is positioned in the Niche Players quadrant. It has an estimated 2,600 FTEs dedicatedto SAP application management services, from an estimated worldwide total of 3,000 FTEs acrossall SAP application services. The breakdown of its worldwide SAP application services resources isas follows: approximately 16% in NAM, 0% in LATAM, 5% in EMEA and 79% in APJ. L&T Infotechgenerates approximately 11% of its SAP application services revenue from SAP implementationservices, 89% from SAP application management services and 0% from SAP infrastructureservices. L&T Infotech services 15 of the 22 industries covered in this Magic Quadrant. Of these, themain markets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are oil and gas, process industry, CPG and discrete manufacturing. L&TInfotech does not generate SAP services revenue in the other financial services, othermanufacturing, healthcare, communications, professional services, education and not-for-profitmarkets.

Strengths

■ L&T Infotech is the IT services company within the Larsen & Toubro conglomerate of multi-industry companies. It is a new entrant for the SAP application management services MagicQuadrant, with 70% of its revenue coming from SAP application management services in NAM,20% from EMEA and 10% from APJ. L&T Infotech currently does not have any presence inLATAM though it services LATAM from its global delivery centers.

■ L&T Infotech benefits from the L&T conglomerate by building up SAP application managementexperience across multiple industries. It has positioned itself as a technology provider, focusedon optimizing and evolving service delivery. Although L&T Infotech has industry solutions itdifferentiates through an extensive amount of productivity, collaboration and optimization tools— in combination with governance tools. It deploys its tools to improve delivery and improvebusiness value from its SAP application management services. L&T Infotech has furtherinvested in industrializing services around ABAP, BI/BW, testing and Hana applicationdevelopment.

■ It offers a 360-degree, guaranteed managed services model using a flexible catalog-styleoffering (Platinum, Gold, Silver), that commits to the enhancement of business enablement andthe movement of risk to the vendor. This is done through a solution assurance group dedicatedto working on process enhancements and value delivery.

■ Reference clients rate L&T Infotech highly on its relationship management and flexibility inworking with clients, and report a clear appreciation of the competitive pricing of its services.This has allowed L&T Infotech to compete for deals up to $20 million in total contract value,although the majority of its deals are below $5 million.




Cautions

■ While L&T Infotech is following its existing global clients to expand their regional capabilities —demonstrating strong growth in EMEA — it still has a high dependency on NAM. Following theneeds of existing clients is a pragmatic approach, yet L&T Infotech is delivering mostly SAPapplication management services with a technology focus. To improve its competitive positionfor more business-focused deals, L&T Infotech needs to improve its business knowledge andskills. This is reflected in the overall low reference scores for industry and business expertise.

■ In addition to its guaranteed performance commitment and partnering relationship managementstyle, it needs to invest further in execution capability. L&T Infotech has the highest dependencyon SAP ERP services revenue (66%), with relatively limited revenue from SCM (13.5%) and BI(16.5%) and little revenue from CRM and mobile.

■ Reference clients cited its need to improve on its thought leadership and change-managementskills. In general, L&T Infotech's reference clients indicated clear concerns regarding theresourcing of services as well as the seniority of the staff provided. This is supported bycomments regarding its focus on operational efficiency, and its maintaining "as is" servicesrather than providing innovation or service improvement. L&T Infotech has recognized theseconcerns and established a thought partnership program for its top five clients, and plans toexpand this to the top 10 clients to identify and propagate value creation. Clients outside thetop five should actively challenge L&T Infotech on the application of improvements for theiraccount.

■ Despite the investment in IP/RDS to improve existing services, L&T Infotech generates thelowest level of SAP services revenue for mobility and other new technologies (such as Hana,OnDemand, cloud) across the included vendors. There needs to be a strong demonstration ofinvestment in new technologies and industrialization of services. This raises concerns that whileL&T Infotech is a mature provider of more traditional services, it lacks the capabilities or theinvestments to compete for new technology deals.

NTT Data

NTT Data is positioned in the Niche Players quadrant. It has an estimated 1,800 FTEs dedicated toSAP application management services, from an estimated worldwide total of 6,200 FTEs across allSAP application services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 17% in NAM, 1% in LATAM, 35% in EMEA and 45% in APJ. NTT Datagenerates approximately 68% of its SAP application services revenue from SAP implementationservices, 21% from SAP application management services and 11% from other SAP infrastructureservices. NTT Data services 21 of the 22 industries covered in this Magic Quadrant. Of these, themain markets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are discrete manufacturing, high tech and CPG. NTT Data does not generateSAP services revenue in the not-for-profit market.




Strengths

■ NTT Data continues to expand its global reach through acquisition, in combination with goodorganic growth in all regions. While earlier NAM and European acquisitions brought the high-end SAP capabilities and IP with new clients, expansion into Canada, Brazil and Vietnam haveprovided a larger footprint and ensured a more balanced revenue split across the regions. NTTData executes regional and country-specific industry and solution strategies for the benefit ofits clients.

■ The company invests in BI and analytics as a competitive differentiator with some success.Across all the vendors in this Magic Quadrant, NTT Data has among the highest growth in thisarea — primarily due to acquisitions. On SAP Hana, NTT Data has executed over a dozenproofs of concept (POCs), and has created POC hosting delivery centers for client convenienceand faster takeup.

■ In line with other vendors, NTT Data identifies cloud and mobile as distinct growth areas, butdoes better than most in using pinpointed solution strategies to meet growth targets, includingover 400 industry add-ons. As NTT Data retains the characteristics of a smaller regionalprovider, it also has more than 50 RDS solutions in place.

■ NTT Data operates regionally, utilizing its local resources to be closer to clients — especiallydue to its extensive SAP implementation projects. This is reflected in extensive processes andtools, which also encompass SAP application management. NTT Data's process-drivenapproach is also reflected in among the highest overall satisfaction scores across referenceclients. These references score NTT Data especially high on its cultural fit, relationship, and itspeople-management- and work-management-related skills.

Cautions

■ NTT Data is integrating its acquired companies to form a global operating model and commonbrand. However, current operations are more regional and client specific, with the regionaloperating groups having distinct businesses and profit and loss (P&L) accountabilities. Thisstructure makes it challenging to ensure consistency in both quality and brand value. Whileclients score NTT Data high on geographic capabilities and people skills, they also indicatechallenges with resourcing in general and in building the team to deliver the services. Staffretention of senior staff is identified as a key concern.

■ Although NTT Data demonstrates growth in all regions, it has among the lowest revenuestreams in LATAM of all the vendors in this Magic Quadrant for its overall SAP services. InEMEA and APJ, SAP application management comprises only a minor part of its SAP servicesrevenue.

■ Similarly, while NTT Data scores among the highest overall satisfaction across referencedclients, these clients represent among the lowest overall SAP application managementcontracts, in terms of total contract value, yearly revenue and SAP team sizes. While NTT Datahas a few global contracts, the average deal size indicates that it might be challenged tocompete for complex global engagements.




■ NTT Data lags behind its competitors on global solutions and templates, as well as inarticulating a common approach to clients for SAP application management services. Currently,its delivery model is still traditional, with a minimum concentration on outcome-based pricingand coordinated end-to-end SAP application management. Reference clients scored NTT Dataas low on its change management and innovation capability.

Softtek

Softtek is positioned in the Niche Players quadrant. It has an estimated 1,800 FTEs dedicated toSAP application management services, from an estimated worldwide total of 2,500 FTEs across allSAP application services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 23% in NAM, 57% in LATAM, 4% in EMEA and 15% in APJ. Softtekgenerates approximately 43% of its SAP application services revenue from SAP implementationservices, 57% from SAP application management services and 0% from other SAP infrastructureservices. Softtek services 18 of the 22 industries covered in this Magic Quadrant. Of these, the mainmarkets for SAP application services — each generating more than 10% of the vendor's SAPservices revenue — are discrete manufacturing and CPG. Softtek does not generate SAP servicesrevenue in the other financial services, healthcare, transportation and education markets.

Strengths

■ Softtek is the only LATAM heritage service provider included in this Magic Quadrant with morethan 50% of its SAP services revenue from LATAM. SAP services are a core part of its businessand with this focus on SAP they have been able to penetrate and grow strongly in the NAMmarket and in APJ. Its delivery centers are primarily in LATAM, coupled with targeted resourcesin Spain, India and China for European and Asia/Pacific coverage. Softtek is able to penetratemarkets and attract large accounts by a 360-degree application services life cycle approach,from strategy to continuous improvement, where Softtek combines its own capabilities withthose of partners on a region-by-region basis.

■ Softtek is a relatively small service provider (based on overall revenue), and one of the fewproviders whose primary delivery centers are not based in India. Softtek does, however, haveseveral SAP application management deals with large multinationals (in some cases, Fortune500 companies), demonstrating its ability to operate above its midtier structure. Demands ofthis kind force Softtek to raise the bar and according to its reference data it is performing well.

■ Softek's SAP services are mainly generated in a few select industries (manufacturing and CPG),with a more opportunistic approach to other verticals, where retail, high-tech and financialservices are its major growth-potential markets. To improve its competitive position, Softtek hasdeveloped RDS solutions for, among others, automotive, chemical, pharma, and metal andpersonal care products, alongside solutions for its main industries. In the same way, Softtek hasa focus on ERP and BI solutions and services, with a more opportunistic approach to CRM andSCM deals, but including RDS solutions for mobile, Hana, SAP SaaS and SAP cloudimplementations.




■ Softtek reference checks revealed high scores across a significant number of categories,resulting in a strong relative performance across all of the vendors evaluated. Specificcategories where Softtek scored in the top quartile included technical expertise, cultural fit,work ethic and professionalism, and "going the extra mile."

Cautions

■ Even though Softtek indicates it has core SAP application management competencies inEurope, it generates relatively little revenue from EMEA and will need to invest heavily in itsEuropean capabilities if it wishes to compete in a crowded and highly demanding competitivemarket.

■ Softtek acquired Systech Integrators in February 2013, which clearly expanded its Indianservice delivery capabilities. The acquisition will increase Softtek's ability to offer services atsignificantly lower price points. This is necessary as its reference clients consistently mentionthe cost challenges of its services, especially where clients have experienced lower-costalternatives. This means Softtek can't rely only on its value proposition — focused on drivingbusiness benefits — to mitigate against somewhat higher costs for the services.

■ Softtek is still maturing in terms of investments in digital transformation efforts and disruptivetechnology trends (that is, Hana and analytics). Besides low revenue in new technology areas,Softtek applies partners widely (such as Telmex, Amazon, Illumiti, and Sperry Global) and hasmade recent acquisitions (SCAi, VTEC, Systech Integrators) to support new technologies andregions. This is, potentially, a good way to penetrate a market, but it reduces the flexibility ofSofttek to absorb client or partner changes and also reduces the overall reliability of Softtek asa provider to its clients — given the dependencies on partners and the ongoing integration of itsacquisitions.

■ Softtek had low client feedback scores for organizational, business and user changemanagement skills. In addition, its reference clients scored Softtek lower on managingexpectations and realizing innovation within the deal. Given Softtek's differentiation focus onvalue for performance, it will need to improve its business case for value delivery to its clientsand ensure it builds up the right expertise to help its clients realize that value.

Tata Consultancy Services

Tata Consultancy Services (TCS) is positioned in the Leaders quadrant. It has an estimated 4,800FTEs dedicated to SAP application management services, from an estimated worldwide total of10,200 FTEs across all SAP application services. The breakdown of the worldwide SAP applicationservices resources is as follows: approximately 8% in NAM, 8% in LATAM, 9% in EMEA and 81%in APJ. TCS generates approximately 55% of its SAP application services revenue from SAPimplementation services, 45% from SAP application management services and 0% from other SAPinfrastructure services. TCS services 19 of the 22 industries covered in this Magic Quadrant. Ofthese, the main markets for SAP application services — each generating more than 10% of thevendor's SAP services revenue — are discrete manufacturing, high tech, utilities and energy andretail. TCS does not generate SAP services revenue in the wholesale, education and not-for-profitmarkets.




Strengths

■ TCS's client references reflect its global SAP application management delivery capability acrossits delivery centers in APJ, LATAM, NAM and EMEA, utilizing 15 global delivery center locationsand nine proximity centers. This allows TCS to compete for deals of all sizes in terms ofcontract value, duration, complexity and support team sizes.

■ TCS has broad industry vertical coverage and wide partnerships and joint go-to-marketstrategies with SAP on delivery (for selected clients SAP is part of the delivery steeringcommittee), technology (Hana, mobility), process (HCM, procurement) and industry areas(manufacturing, automotive, pharma). Its go-to-market strategy is based on realizing businessbenefits during the contract period through detailed and transparent transformation planning,pricing, roles and responsibilities. TCS's differentiator is its capability and willingness to sign upfor the benefits and realization planning at the beginning of the deal.

■ TCS has invested extensively in SAP application management services tools and accelerators,and a comprehensive range of horizontal innovations covering development, testing and codeinspection, migration and transition, service desk and dashboarding.

■ Across all included vendors, TCS's reference clients score it the highest for relationshipmanagement and the ability to get along with the client's staff at all levels. Consideringreference clients represent a wide range of deals and the appreciation is consistent, thisindicates that TCS is able to demonstrate a clear individual client focus, independent of size. Inaddition, clients appreciate TCS for its technical delivery capabilities, staffing, staffing continuityand staff capabilities.

Cautions

■ Although TCS has a broad geographic footprint, 81% of its SAP staffing is located in the APJregion (mostly in India). Although TCS specifically targets deals in the mature markets thatinclude staff transfer, further investment in onshore and nearshore delivery capabilities will berequired to align its staffing profile with customer demands.

■ TCS generates more than 75% of its SAP services revenue from five industry verticals. Clientsoutside these industries requiring a provider with in-depth industry capabilities should performdue diligence in order to determine the long-term suitability of TCS for their SAP applicationmanagement services.

■ With a go-to-market strategy focused on business benefits, and a relatively large percentage ofits clients already managed against business outcome metrics, much of TCS's investment istechnology focused — reflecting infrastructure with application integration. This is also reflectedin TCS's clients scoring it lower on business and industry expertise and user, organizational andbusiness change management.

■ TCS's reference clients cite proactivity and innovation as areas where they would like to seefurther improvement. Across all the reference clients there is a consistent demand for moreimprovement in combination with more senior skills and the ability to take the lead. Incombination with the previous caution, its references indicate that TCS has created certain




perceptions and puts in the effort to generate an understanding of transformation and a wayforward with the client, but lacks the required capabilities to realize the full potential.

Wipro

Wipro is positioned in the Challengers quadrant. It has an estimated 3,900 FTEs dedicated to SAPapplication management services, from an estimated worldwide total of 9,600 FTEs across all SAPapplication services. The breakdown of the worldwide SAP application services resources is asfollows: approximately 38% in NAM, 2% in LATAM, 44% in EMEA and 16% in APJ. Wiprogenerates approximately 60% of its SAP application services revenue from applicationimplementation services and 40% from SAP application management services. Wipro services 17 ofthe 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP applicationmanagement services — each generating more than 10% of the vendor's SAP services revenue —are oil and gas, process industry, discrete manufacturing, CPG and energy and utilities. Wipro doesnot generate SAP services revenue in the not-for-profit market.

Strengths

■ Wipro has demonstrated the development of a good global footprint, with presence in 40countries. South Africa has been a focus of recent investment, while China, Brazil, Poland andMalaysia are important delivery locations for Wipro; the first two are also targeted for industry-solution-based client growth. Wipro reference clients represent a wide variety of sizes, with amedian in the 25- to 50-FTE team sizes and total contract value of $5 million to $10 million.Relative to the other vendors included in this Magic Quadrant, Wipro has many long-termrelationships of more than five years.

■ Wipro has broad industry coverage and recognizes the importance of a strong industry-specificstrategy. The aim is to continue to develop a set of industry-specific solutions, assets andcapabilities across its focus industries. Besides the main markets, strengths in, among others,the high tech and chemicals markets are backed up with strong asset investment. Wipro'smultiyear investment road map follows the SAP technology developments, but with a focus onrapid deployment and short-term ROI through cost-efficiency improvements.

■ The development of its Packaged Enabled Transformation approach is an effective method ofexecuting transformation programs. Wipro is introducing a range of tools in addition to its"solution manager," which is used to assess the client's utilization of SAP tools and to helpbring forward opportunities for clients to increase the utilization of their licensed modules.Wipro's SAP application management services have outgrown SAP implementation servicesduring the past 12 months, which reflects Wipro's focus on multiyear engagements.

■ Wipro's reference clients greatly appreciate the cost of its services and the cultural fit.

Cautions

■ While Wipro continues to grow its SAP services revenue worldwide, its growth in NAM andEMEA is behind that of its Indian peers. Wipro continues to move skills around the world asneeded, supported by a continued training effort on new technologies, allowing it to compete




worldwide. However, in comparison with its peers, it needs to accelerate investments inonshore delivery capabilities to improve its competitive position. The use of local partners in thebuying markets is also indicative of a cautious growth strategy.

■ Wipro generates revenue in many industries, but applies a strategic approach to the so-called"big bet" industries (oil and gas, chemicals and process, industrial discrete, high tech, CPG,energy and utilities, natural resources, and banking) and uses a more opportunistic approach toother industries. While this demonstrates focus, it also implies that clients outside theseindustries should challenge Wipro on its investment in their industry over time.

■ Although Wipro is increasing its transformational and business capabilities, these are still beingbuilt up within the FlexDelivery model — currently through the adoption of its next-generationapplication management platform ServiceNXT. Wipro, however, still needs to improve itsguidance for, and support of, its delivery staff and to demonstrate more proactive behavior inincreasing the value-add of its services.

■ Wipro has low satisfaction scores on thought leadership, vision, business acumen, tenure ofconsultant, and staffing challenges. All of these lead to a low score on overall service quality.Staff continuity and a lack of skills in niche technology areas is a continuous challenge thatnegatively impacts Wipro's competitive position.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as marketschange. As a result of these adjustments, the mix of vendors in any Magic Quadrant orMarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope oneyear and not the next does not necessarily indicate that we have changed our opinion of thatvendor. This may be a reflection of a change in the market and, therefore, changed evaluationcriteria, or a change of focus by a vendor.

Added

The following vendors have been added to the 2013 version: CGI, L&T Infotech and Softtek.

Dropped

No vendors have been dropped.

Inclusion and Exclusion Criteria

Quantitative Criteria

■ A minimum of $150 million in external revenue (estimated for fiscal year 2012) per applicationsuite in SAP application management services worldwide.




■ Demonstrated SAP application management services revenue derived from clients in NAM,LATAM, EMEA and/or APJ. This revenue must, at the very least, be generated by and allocatedto clients in three of the four regions, with at least five separate clients per region. Such clientscan be global clients with subsidiaries, or local or regional clients.

■ A minimum amount of allocated revenue per region. Vendors needed to be able to demonstrateat least three of the four regional revenue numbers below:

■ NAM = $30 million

■ EMEA = $30 million

■ APJ = $15 million

■ LATAM = $7.5 million

■ A minimum of 10 reference submissions, with at least two references provided per region.

Qualitative Criteria

■ Overall market interest in and visibility of the provider, determined by serious consideration forselection from enterprise clients.

■ Gartner analysts' interactions with enterprise buyers, which reveal interest in specific SAPapplication management services providers.

■ Vendors are analyzed according to their breadth of capability and technical/package expertise,in combination with deep domain and process knowledge for the application management ofSAP applications, as defined above.

Excluded are all SAP implementation and all SAP infrastructure services capabilities.

Evaluation Criteria

Ability to Execute

Gartner analysts evaluate vendors on the quality and efficacy of the processes, systems, methodsor procedures that enable vendor performance to be competitive, efficient and effective, and topositively impact revenue, retention and reputation. Ultimately, vendors are judged on their ability incapitalizing on their vision.

■ Product/Service: Core services offered by the provider that compete in/serve the SAPapplications life cycle services market. This includes current service offerings (as defined in theMarket Definition section), and is expressed by growth, capacity, market penetration, skillsavailability, breadth and depth of offering. Subcategories include:

■ A vendor's effective use of partnerships and alliances

■ A vendor's end-to-end capabilities




■ A vendor's comprehensive set of industry offerings

■ A vendor's capabilities in delivering against business-outcome-based objectives andmetrics

■ Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes anassessment of the overall organization's financial health, the financial and practical success ofthe business unit, and the likelihood of the individual business unit continuing to invest in theservice, offer the service and advance the state of the art within the organization's portfolio ofservices.

■ Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structurethat supports them. This includes deal management, pricing and negotiation, presales supportand the overall effectiveness of the sales channel.

■ Market Responsiveness and Track Record: Ability to respond and adapt to changingcompetitive forces as opportunities develop, competitors act, customer needs evolve andmarket dynamics change. This criterion also considers the provider's history of responsiveness,and the ability to quickly address changing requirements.

■ Customer Experience: This criterion considers the provider's:

■ Specific client feedback on their experience of working with SAP applications life cycleservices vendors

■ Demonstrated ability to deliver on key metrics that drive the overall "client experience"

■ Operations: The ability of the organization to meet its goals and commitments. Factors includethe quality of the organizational structure, including skills, experiences, programs, systems andother vehicles that enable the organization to operate effectively and efficiently on an ongoingbasis. Subcategories include:

■ Organizational and business model

■ Applied use of methodologies, industry standards and control frameworks

■ Global delivery model capabilities




Table 1. Ability to Execute Evaluation Criteria

Criteria Weight

Product or Service High

Overall Viability Medium

Sales Execution/Pricing Low

Market Responsiveness/Record High

Marketing Execution Not Rated

Customer Experience High

Operations High


Completeness of Vision

Gartner analysts evaluate vendors on their ability to convincingly articulate logical statements aboutcurrent and future market direction, innovation, customer needs, and competitive forces. Ultimately,vendors are rated on their understanding of how market forces can be exploited to createopportunities for themselves and their clients.

■ Market Understanding: Ability of the vendor to understand buyers' needs and translate theseneeds into products and services. Vendors that show the highest degree of vision, listen to andunderstand buyers' wants and needs, and can shape or enhance those wants and needs withtheir added vision. Subcategories include:

■ A vendor's knowledge and articulation of key market direction and trends

■ The analysis of the vendor's executive leadership (including thought leadership, continuityand operational capabilities)

■ Marketing Strategy: A clear SAP services marketing strategy with a differentiated set ofmessages, consistently communicated throughout the internal vendor organization andexternalized through appropriate channels — emphasizing differentiated positioningstatements.

■ Sales Strategy: The strategy for selling SAP application services that uses an appropriatenetwork of direct and indirect sales, partner networking and alliance relationships that extendmarket reach to both prospective and existing customers.

■ Offering (Product) Strategy: A vendor's approach to product development and delivery thatemphasizes differentiation, functionality, methodology, and feature set as they map to currentand future requirements. Subcategories include:




■ A vendor's strategies for partnerships and alliances

■ A vision for creating new and/or additional SAP services business

■ A vendor's focus on end-to-end capabilities

■ Business Model: The soundness and logic of the vendor's underlying business proposition.

■ Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings tomeet the specific needs of individual market segments, including verticals. Subcategoriesinclude:

■ A vendor's strategies for partnerships and alliances

■ A vendor's comprehensive set of industry offerings

■ Innovation: Direct, related, complementary and synergistic outlay of resources, expertise orcapital for investment, consolidation, defensive or pre-emptive purposes.

■ Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meetthe specific needs of geographies outside its "home" or native geography, either directly orthrough partners, channels and subsidiaries, and as appropriate for that geography and market.

Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding High

Marketing Strategy Low

Sales Strategy Low

Offering (Product) Strategy High

Business Model Not Rated

Vertical/Industry Strategy High

Innovation Medium

Geographic Strategy Medium





Quadrant Descriptions

Leaders

Leaders are performing well today and gaining traction and mind share in the market. They have aclear vision of the market's direction and are building competencies to sustain their leadershipposition in the market.

Challengers

Challengers execute well today for their portfolio of work, but they have a less-defined view of themarket's direction. Consequently, these vendors may be tomorrow's Leaders or they may not beaggressive and proactive enough in preparing for the future.

Visionaries

Visionaries articulate important trends and directions in the market. However, they may not be in aposition fully to deliver and consistently execute on their vision. They may need to optimize theirservice delivery.

Niche Players

Niche Players focus on a segment of the market, such as a particular industry, client size, functionalarea (for example, human capital management and order management) or project complexity. TheirAbility to Execute is limited to their area of focus and assessed accordingly. Niche Players' ability toinnovate may be limited by their narrow focus.

ContextThis Magic Quadrant addresses the worldwide SAP application management services capabilitiesof vendors that meet our criteria for inclusion. The relative positioning of vendors in this MagicQuadrant is based on factors determined by Gartner as relevant to this market of multiyear SAPapplication management services.

When considering service providers for a request for information or request for proposal, do notsimply select service providers in the Leaders quadrant. All selection processes are enterprise-specific; consequently, vendors in the Challengers, Visionaries or Niche Players quadrants mayprove to be more appropriate for your engagement. For example, each provider will have a differentdeal sweet-spot, reflecting the scale of deals that they do well at, their culture and industrycoverage, as well as the maturity of the service provision that their clients value (see "Deal 'Sweet-Spot' Analysis Accelerates Service Provider Evaluation and Selection").

This Magic Quadrant is a point-in-time analysis, where all profiles reflect the status at the end of2012, and the view covers key competitors with the breadth and scale of offerings across a widearray of criteria.




An IT services provider may appear in a specific quadrant given its strategy as compared with thefull market criteria set in this evaluation. As a result, in any given deal, provider selection is bestdecided by a client's needs.

IT services providers not evaluated in this Magic Quadrant may present alternatives for yourbusiness requirements. We would like to name a few that were considered for this Magic Quadrant,but not included for different reasons.

Note that Mahindra Satyam was invited to participate in this Magic Quadrant and made the regionalminimum revenue criteria, yet failed to meet the overall worldwide minimum SAP applicationmanagement revenue of $150 million. We do, however, want to share the same basic information asis provided for the included vendors, because Mahindra Satyam is demonstrating good growthfigures and could be a viable alternative to the included vendors. Note that Mahindra Satyam wasrenamed Tech Mahindra on 25 June 2013, but for this Magic Quadrant data was collected withreference to Mahindra Satyam, its name at the time. Hence this Magic Quadrant refers to MahindraSatyam. Mahindra Satyam has an estimated 1,700 FTEs dedicated to SAP application managementservices, from an estimated worldwide total of 3,600 FTEs across all SAP application services. Thebreakdown of the worldwide SAP application services resources is as follows: approximately 7% inNAM, 12% in LATAM, 8% in EMEA and 72% in APJ. Mahindra Satyam generates approximately49% of its SAP application services revenue from SAP implementation services, 50% from SAPapplication management services and 1% from SAP infrastructure services. Mahindra Satyamservices 16 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAPapplication services are discrete manufacturing, high tech, CPG and life sciences.

Note that SAP itself is not included in this Magic Quadrant for SAP application management serviceproviders, although its increased investment in management services — such as SAP Max Attentionservices — implies the clear interest of SAP in the market. SAP has, however, not been includedbecause it does not provided sufficient insight into these revenue streams and in our view has notyet realized the minimum revenue levels defined for inclusion. As a buyer, please note that SAPdoes not offer a wide array of SAP application management services, but distinct high-valuesupport with limited scalability. The services are delivered at a premium price and should beconsidered by organizations where SAP applications are business-critical and application failureshave a critical impact on brand or revenue, and where the organization lacks expertise and has avery risk-averse culture.

T-Systems is also not included in this Magic Quadrant. T-Systems has extensive SAP servicescapabilities, especially in the SAP application management and SAP infrastructure servicessegments. T-Systems' SAP infrastructure services capabilities, in particular, are a clear strength inthe market. T-Systems has not been included because it has a very high dependency on Europeand is not expected to meet the minimum regional revenue requirements for SAP applicationmanagement services for three out of four regions. However, buyers considering SAP IU services orSAP cloud-based services, especially in Europe, should consider T-Systems as a viable and maturealternative in the market.

Besides these, there are many others that might be a better fit. Consider contacting Gartner to gaininsight into alternative vendors to those addressed in this document.




For more information on how to use a Magic Quadrant, see "How Gartner Evaluates Vendors andMarkets in Magic Quadrants and MarketScopes."

Market OverviewGartner estimates that end-user spending on application outsourcing worldwide will be worth $41billion in 2013 (see "Forecast: IT Services, 2011-2017, 1Q13 Update"). This forecast indicatesgrowth of 3.0% for 2013, with further growth of 4.3% expected for 2014. The forecast for 2013 hasreduced in a six-month period from 3.6% to 3.0%, which indicates more challenges at theoutsourcing end. However, Gartner's "IT Key Metrics Data 2013: Key Outsourcing Measures:Outsourcing Profiles: Multiyear" indicates that the outsourcing of application support increasedfrom 38% in 2011 to 44% in 2012, and application development grew from 42% to 45% during thesame period. It should be noted that in this Magic Quadrant, application development can beincluded in application management when development activities are embedded in multiyearengagements and are always followed by maintenance of the developed deliverables. Whencombining the forecast with the key metrics it is fair to presume that the higher degree ofoutsourcing is combined with reduced spending on outsourcing, indicating continuous costpressure and the need for competitive offerings.

In terms of market drivers, 2013 effectively follows on from 2012. Market developments reveal acontinued cost focus, with industrialization as a catalyst. SAP IU offerings are expanding andmaturing, inviting more buyers, but are as yet a small percentage of the market (between 0% and5% of the included vendors' revenue). It is noteworthy that cost focus also translates into moredemand for third-party maintenance services. Third-party maintenance services focus on SAPsoftware product maintenance, which is delivered by SAP itself against 17% to 22% of the licensecost. Providers such as Rimini Street and Spinnaker deliver these services against clearly lowercost. While this was a service mainly acquired for nonsupported versions of SAP products, clientsnow also move to third-party maintenance providers for current products. Such productmaintenance services are also provided by some of the vendors included in this Magic Quadrant,but due to their partnership with SAP they tend to do this in a very limited way.

Comparing 2012 results across the included vendors, contracts for SAP application managementservices are, on average, four years long (across the 226 reference clients), with an average yearlycontract value of $2.6 million and an average total contract value of $11.5 million. Note that theoverall contract value shows a broad spread across the included vendors: from a low of $2.7 millionto a high of $32.5 million, for average deal size; and from a low of $730,000 to a high of $6.4 millionper year across the included vendors.

There is no change in the primary drivers, for end-user organizations considering outsourcing SAPapplication management services, from 2012. The drivers remain focused on legacy modernizationthrough to consolidation, rationalization and optimization of a business applications landscape.Providers commonly tend to address this through "transformational services," because buyerscommonly tend to use the SAP migration as a means to refresh internal processes and prepare forbusiness changes. However, in many cases buyers prefer, as much as possible, a "vanilla"implementation whereby they can redefine processes to minimize customization. Note that




modernization flows over into innovation in combination with the need to report at businessoutcome level. Thinking about innovation, across all included vendors only 7% of revenue isgenerated on average by new delivery models (including SAP Utilities, Hana, Sybase UnwiredPlatform [SUP], SuccessFactors, SAP OnDemand, SAP cloud offerings).

In addition, buyers of SAP application services continue to expect, and demand, business-outcome-based services. This area is clearly expanding; not only with the investments of SAP itself,but also of providers — in industry solutions and capabilities — as they build around the emerginghype of cloud, analytics and mobile. All included vendors list their investments and capabilities andall indicate their partnerships with SAP in these areas. Buyers can hardly get their heads around thetechnology and the potential benefits it might offer. Nonetheless, while it is recognized that buyersoften ask for industry capabilities and the ability to meet business-outcome-based objectives, themajority still focus on operational efficiency metrics. In comparison with "Magic Quadrant for SAPApplication Service Providers, Europe," worldwide there still is clearly more interest in businessmetrics. However, when looking at the data, on average only 7% of deals are measured againstbusiness outcomes (with actual percentages between 0% and 26% across the vendors). So, whilethe demand is reflected consistently, the reality is low. Note that Gartner's "IT Key Metrics Data2013: Key Outsourcing Measures: Outsourcing Profiles: Multiyear" indicates that during 2012 morebuyers outsourced application support against efficiency metrics than ever before (64% versus55% over 2011 and 60% in 2010). There was also an increase in transformational deals (14% in2012 over 13% in 2011), but clearly cost reductions topped it all.

The core product at the epicenter of this Magic Quadrant analysis, namely SAP, is continuing itsprioritized focus on the above-mentioned areas of cloud (with on-demand offerings), mobile(through its Sybase acquisition SAP is better able to create real mobile offerings) and analytics(through its investment in Hana, to handle big data through in-memory processing in near real time).In addition, SAP has been able to extend its offerings to the midmarket through its RDS, whichtends to be adopted more by its midsize partners and less so by the large vendors that often havetheir own implementation offerings. However, throughout 2012 and into 2013 the large vendorshave also created RDS solutions because the midmarket is the next generation of clients. In regardto Hana, it should be noted that SAP claims more than 1,000 clients; however, some probingindicates these are mostly proofs of concept and the actual value to end users is often notdemonstrated because the complex underlying systems and databases — in combination withcomplex client processes — highly impacts the benefit of Hana and leads to advisors tending tocaution clients.

The following conclusions are derived from information provided regarding the included providers:

■ All are engaged in development initiatives with SAP, either for new products, services and/ormarkets. Some are even involved at SAP's own development centers.

■ All have multiple (global) partnerships with SAP and have won multiple awards over the past fewyears for services, capabilities, projects, specific client engagements or achievements. With allthe new technologies, the number of awards that can be won is rapidly expanding, which isdecreasing the importance of individual awards as the coverage area is declining.




■ The total generated revenue for SAP application services worldwide was more than $25.5 billionfor the vendors included in this year's Magic Quadrant ($24 billion of which relates to thevendors included last year, compared with the $22 billion they accounted for last year). Of thetotal revenue for SAP application services, approximately $8 billion was generated by SAPapplication management services: of which $7.4 billion was generated by the vendors that wereincluded in last year's Magic Quadrant, indicating a decrease in management revenue in favorof implementation services. On average, 37% of the total SAP application services revenue isgenerated in NAM, 6% in LATAM, 43% in EMEA and 14% in APJ. For SAP applicationmanagement services, the regional split is 39%, 7%, 41% and 13%, respectively.

■ SAP application services are still predominantly delivered to large enterprises, with 9% toclients between 1,000 and 2,500 users, 25% to clients between 2,500 and 10,000 users and59% to clients with more than 10,000 users.

■ As can be expected, the biggest revenue stream for SAP application services across theincluded service providers is SAP ERP, accounting for 53% of the average share of all SAPapplication platforms revenue (see the Evaluation Criteria Definitions section for what isincluded). On average, SCM represents 13%, CRM 9%, BI 17%, mobile 3% and other 5%.

■ In terms of industries, the overall top five (out of the 22 included) are CPG, utilities and energy,oil and gas/chemicals/process industry, the public sector, and discrete manufacturing. Thebottom five industries are healthcare, wholesale, financial services, education and not-for-profit.It should be noted that SAP applications services are delivered to many industries (which wehave grouped into 22 industries) and that the individual spread per provider indicates a focus onlimited industries for vertical solutions and a more opportunistic approach for horizontalofferings. The main industries per provider are mentioned in the individual profiles, where"main" represents 10% or more of the revenue in that industry.

■ The 226 references given by the providers gave us good insight into their worldwidecapabilities. The clients indicated that their primary driver for outsourcing is a focus on corecompetencies, to lower costs and make up for a lack of internal capabilities. The referencedclients primarily picked their vendor based on service delivery capabilities, followed by technicalexpertise and then total cost of services. The least important selection criteria were productindependence, influence of the sales team on the delivery team, and user change-managementcapabilities. However, these least important criteria also received low scores once providershad been selected. This indicates both a disconnect in the provider organization between salesand delivery, and a disconnect in the client organization between the buying team and theservice management team. It is relevant to note that the same situation applied to the 2012Magic Quadrant, indicating that it could be common human behavior to assume that the vendorunderstands the client's people and culture and that, as we are all human, everyone will alignand help each other. This expectation leads clients to place less emphasis on these factors asselection criteria.

■ On average, the vendors in this Magic Quadrant perform well on work ethic and professionalbehavior, the ability to get along with end users, and service continuity. Proactiveness hasimproved, yet still scores at the low end. Nonetheless, the overall tendency in the responses isthat this could be better but that the clients also need to be more proactive in this area. Arepetitive statement was that clients received what they paid for. This also affects the lowest




score overall — for innovation. Vendors do not deliver as expected on innovation, but again theclients recognize their own role and shortcomings here. Overall, however, there is a clear issuein that the perception is a direct consequence of vendor behavior: they sell a story on whichthey do not deliver.

The 18 providers included in this Magic Quadrant are a small fraction of the total number that offerSAP application management services. We selected these 18 because they met our inclusioncriteria. Many potentially capable providers are not included in this Magic Quadrant — for example,those that specialize in the delivery of application management services primarily to the midmarketor a single geographic region, or that focus on hosting and utility services. These vendors areexcluded either because they did not meet the minimum revenue requirement or because they didnot meet the minimum requirement for revenue distribution by region.

Recommended ReadingSome documents may not be available as part of your current Gartner subscription.

"How Gartner Evaluates Vendors and Markets in Magic Quadrants and MarketScopes."

"Magic Quadrant for Enterprise Application Service Providers, China"

"Magic Quadrant for Oracle Applications Service Providers, Europe"

"Magic Quadrant for SAP Application Service Providers, Europe"

"Magic Quadrant for SAP Implementation Service Providers, North America"

Evidence

The analysis included in this Magic Quadrant is based on the following sources:

■ All included providers completed a detailed vendor survey addressing their global SAPapplication management capabilities, covering revenue, staffing, geographic capabilities perSAP application platform, industry and process assets, partnership, joint initiatives, investmentsand other relevant information. This gave us the required numeric and qualitative data to allowus to compare providers and analyze them against the inclusion criteria.

■ A detailed vendor briefing with each provider addressing the provider's capabilities in a formatchosen by them, but at least addressing the inclusion criteria. Each briefing comprised materialthat the provider had prepared and which was discussed during a telephone conference.

■ A detailed reference client list per provider where, for each client, all relevant information wasprovided regarding services, scope, type of engagement, included services and technologies,project description, executed work and delivered benefits.

■ Information from 226 reference customers (out of the 331 identified) who either completed anonline survey comprising questions about services, scope, duration, size, selection criteria, and




good points and challenges in terms of the engagement and the vendor (as well as multiplesatisfaction questions), or provided verbal feedback in a 30-minute telephone call.

■ A service provider's representation of its organization through briefings, press releases, annualreports and other publicly available information, in addition to what was presented during thededicated detailed briefing as described above.

■ Gartner clients with whom Gartner analysts have discussions throughout the year.

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the definedmarket. This includes current product/service capabilities, quality, feature sets, skillsand so on, whether offered natively or through OEM agreements/partnerships asdefined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financialhealth, the financial and practical success of the business unit, and the likelihood thatthe individual business unit will continue investing in the product, will continue offeringthe product and will advance the state of the art within the organization's portfolio ofproducts.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and thestructure that supports them. This includes deal management, pricing and negotiation,presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible andachieve competitive success as opportunities develop, competitors act, customerneeds evolve and market dynamics change. This criterion also considers the vendor'shistory of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designedto deliver the organization's message to influence the market, promote the brand andbusiness, increase awareness of the products, and establish a positive identificationwith the product/brand and organization in the minds of buyers. This "mind share" canbe driven by a combination of publicity, promotional initiatives, thought leadership,word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enableclients to be successful with the products evaluated. Specifically, this includes the wayscustomers receive technical support or account support. This can also include ancillarytools, customer support programs (and the quality thereof), availability of user groups,service-level agreements and so on.




Operations: The ability of the organization to meet its goals and commitments. Factorsinclude the quality of the organizational structure, including skills, experiences,programs, systems and other vehicles that enable the organization to operateeffectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needsand to translate those into products and services. Vendors that show the highestdegree of vision listen to and understand buyers' wants and needs, and can shape orenhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistentlycommunicated throughout the organization and externalized through the website,advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network ofdirect and indirect sales, marketing, service, and communication affiliates that extendthe scope and depth of market reach, skills, expertise, technologies, services and thecustomer base.

Offering (Product) Strategy: The vendor's approach to product development anddelivery that emphasizes differentiation, functionality, methodology and feature sets asthey map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying businessproposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills andofferings to meet the specific needs of individual market segments, including verticalmarkets.

Innovation: Direct, related, complementary and synergistic layouts of resources,expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings tomeet the specific needs of geographies outside the "home" or native geography, eitherdirectly or through partners, channels and subsidiaries as appropriate for thatgeography and market.




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