SAP is by far the most dominant global ERP vendor, with some sources saying that about 80% of Fortune 500 companies use SAP for processes like inventory planning.
But with SAP’s top clients typically paying between $2 million and $5 million a year on SAP support costs, high maintenance fees are giving SAP a bad rap. As Constellation Research analyst R “Ray” Wang said in a 2013 Computer World article, “Every four years, they’re paying the same amount [maintaining SAP] as they paid for the licenses.”
But going without a maintenance contract is often not practical.
Today’s SAP implementations are complex environments that require a vast array of skills and knowledge. Traditional in-house or on-demand consultant-based service models can be expensive and tend not to perform with the responsiveness that the business demands. Many mid-sized companies find themselves caught in a classic Catch-22: they need to support an application that’s critical to their business, but the traditional cost of keeping that support has become exorbitant.
So what’s the Smart CIO to do?
The “as a service” term has become pretty popular lately, and usually refers to cloud-based software solutions. When it comes to SAP application management it takes on a different meaning. The latest trend is outsourcing SAP support to a shared services model. Customer demand is handled by a common pool of skilled SAP consultants around-the-clock and customers pay by the ticket.
“CIO’s are demanding more from their providers and rightfully so”, says Joe Gudino, VP of ERP, Softtek. “To answer the need, Softtek developed a high-performance, consumption-based global delivery service that maintains and enhances SAP’s technology performance, while also being highly effective in terms of costs. “
How the SAP Management as a Service Concept Works
Sometimes referred to as “pay by the drink”, the as a service model offers the best of both worlds: the fractional economic model of the as a service concept, and the benefit of an “on-call” SAP expert. Designed to help you not only with the day-to-day requirements, but also with the continual process improvements.
For example, if your company has a global footprint, you could contract with a third party (such as Softtek) that has global delivery centers in regions such as Latin America and Asia. SAP experts on staff at these locations support various companies, so their services are shared across firms in similar industries and regions.
However, if you have a major upgrade, an acquisition, or your manufacturing process has suddenly stopped working because somebody entered a Z instead of a 2, then your service can scale to handle your problem.
You pay only for what you use instead of paying a fixed fee “just in case.”
What are these “just in case” scenarios? Actually, they can be pretty mission critical. Here are a few examples.
SAP Enhancements or Upgrades
Every few years SAP introduces an upgrade, and some of these upgrades are major undertakings. They typically require re-implementing the software and replacing every single customization.
This requires specialized knowledge of SAP’s modules and the company’s processes, the type of expertise that isn’t required all the time but is essential (and expensive).
Or for example, when acquiring new companies that might be on another platform, such as Oracle or JD Edwards, migrating all the data into SAP, or creating tight integrations between the two systems, requires additional specialized knowledge.
As SAP is very complex there are many instances where user error can cause an SAP process to completely shut down. This can be mission critical, and happens more often than you think. Fixing this type of user error also requires a major effort.
Again, the type of knowledge required to manage a break fix is not needed on a daily basis, but is important to have on standby if (and usually when) it happens.
Security and Profile Management
Finally, a common yet complex task is provisioning and de-provisioning employees who are hired or leave the company.
The above scenarios, though falling squarely in the “keeping the lights on” category, are nevertheless critical components of a company’s operation. And they don’t require an army of SAP professionals, just a few highly experienced, knowledgeable, and highly paid experts
Want to Learn More?
With cloud-based applications and the as a service model becoming a regular feature at most enterprises, it would probably benefit you to look into how this model can help reduce your SAP support and management costs and improve business performance.
If you’re interested in learning more about Softtek’s SAP Management as a Service, click here to learn more.