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G00231953

Magic Quadrant for SAP Application


Management Service Providers, Worldwide
Published: 23 October 2012
Analyst(s): Gilbert van der Heiden, Christopher Ambrose, Helen Huntley
This Magic Quadrant illustrates the current service provider landscape for 15
leading companies providing SAP application services as part of multiyear-
based agreements. We assess these companies against defined quality
metrics.
Market Definition/Description
Gartner evaluates service providers on their ability to execute and their completeness of vision in
regard to worldwide SAP application management services. SAP application management services
are defined as:

All ongoing SAP application services provided as part of a multiyear-based agreement and
managed against defined quality metrics.

It includes:

All ongoing activities related to application development, implementation, integration,


testing, maintenance and support (functional and/or technical), and help desk services
delivered within the scope of a multiyear application services agreement.

It excludes:

All business-process-outsourcing-related activities.

All project-related activities and assets without follow-up ongoing management


responsibilities. These are covered by application implementation services.

All middleware and infrastructure activities and assets. These are application operations
services.
We include SAP applications according to their primary product line:

SAP application products (SAP Applications):

SCM, ERP, CRM, BI/Analytics, Mobility

All other SAP solutions will be required to be consolidated under "Other." This also includes
PLM and SRM
We further evaluate the providers against:

The capability to deliver a comprehensive set of SAP application management services (see
below for Gartner's definition of "comprehensive") across the SAP product line

The insights across industries for SAP application management services decisions

The investments in industry-specific offerings

The insights and investments in the SAP application product line


Comprehensive in this respect means:

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

A consolidated set of distinct offerings to address industry-specific demand or cross-industry


demand, where the set can be logically recognized as an integrated offering.
Gartner evaluates service providers on their ability to execute and their completeness of vision.
Evaluation 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 and
process assets, partnerships, joint initiatives, investments and other relevant information. This
provides us with numeric and qualitative data allowing us to compare providers and analyze
them against the inclusion criteria.

A detailed vendor briefing with each provider addressing the provider's capabilities in a format
chosen by them, but at least addressing the inclusion criteria. Each briefing comprised material
that the provider had prepared for and was discussed during a telephone conference.

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

Of the 206 provided reference clients, 160 completed an online survey made up of questions
regarding the services, scope, duration, size, selection criteria, good points and challenges in
terms of the engagement and the provider (as well as multiple satisfaction questions), or else
they provided verbal feedback in a 30-minute reference call.

A service provider's representation of its organization through briefings, press releases, annual
reports and other publicly available information, other than what was presented during the
dedicated detailed briefing as described above.

Gartner clients with whom Gartner analysts have discussions throughout the year.
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For more information on Gartner's Magic Quadrant research methodology, refer to Gartner's
"Resource Documents" and/or review "Magic Quadrants and MarketScopes: How Gartner
Evaluates Vendors Within a Market."
Market Definition
Industries
This Magic Quadrant addresses the capabilities of the included vendors in the following 22
industries:

Financial Services: Banking

Financial Services: Insurance

Financial Services: Other Financial Services

Manufacturing: Oil and Gas, Chemicals, Process and Resource

Manufacturing: Automotive

Manufacturing: Aerospace and Defense

Manufacturing: Industrial Discrete

Manufacturing: High Tech

Manufacturing: Consumer Goods

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
Gartner, Inc. | G00231953 Page 3 of 34
Countries per Region
This Magic Quadrant will address worldwide capabilities of the included vendors in the following
regions:

North America (NAM): United States, 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 Arab
Emirates, United Kingdom, Yemen
Full-Time Equivalents per Region
This Magic Quadrant includes references to the number of full-time equivalents (FTEs) per provider
for all the SAP application services and for the SAP application management services. For the SAP
application management services the FTEs are further split per region. The provided numbers
represent the FTEs that are located in the respective regions and do not represent the allocated
resources 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 in
multiple regions, hence the only consistent factor is the registered base location for the FTEs.
Assets
This Magic Quadrant includes references to assets. Assets in this respect refer to industry specific
(for example, retail solution, automotive solution), business process (for example, HR, finance),
technology process (for example, ABAP [Advanced Business Application Programming] coding,
SAP testing) or service specific (for example, implementation framework, operations framework)
solutions, tools or processes. Assets are provider specific and represent the provider's intellectual
property (IP) in the respective asset area.
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Magic Quadrant
Figure 1. Magic Quadrant for SAP Application Management Service Providers, Worldwide
Source: Gartner (October 2012)
Vendor Strengths and Cautions
Accenture
Accenture has more than 36,500 FTEs providing SAP application services worldwide, of which
around 12,500 are involved in providing SAP application management services (with around 14% of
its resources in NAM, 10% in LATAM, 20% in EMEA and 56% in APJ). Gartner estimates that
Accenture generates approximately 70% of its SAP application services revenue from application
implementation services and 30% from SAP application management services. Accenture services
15 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP
application management services are oil and gas, consumer goods, energy and utilities, mining and
construction. It should be noted that from a revenue perspective, even the smaller markets for
Accenture still generate sufficient SAP application management revenue, according to estimates, to
put it in first place for 11 of the industries it services.
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Strengths

Accenture offers comprehensive and mature SAP application life cycle services, with SAP
application management services delivered from more than 50 Global Delivery centers around
the world. In addition, Accenture's "Solution" factories offer clients shared services, creating a
one-to-many model for greater efficiency and flexibility. Size matters in this respect, allowing a
balanced spread and real global coverage of all SAP services for the supported industries,
including among the highest amounts of localized industry and process assets.

Accenture has a long-standing and strong relationship with SAP and currently has 14 dedicated
Accenture Innovation Centers for SAP, focused on co-innovation with SAP, and building new
offerings and providing delivery to Accenture's client base. Its strong relationship with SAP
strengthens Accenture's ability to provide end-to-end SAP applications life cycle services to
customers. This is supported by clients' appreciation for Accenture's thought leadership.

Accenture has specifically created IP to deliver ongoing SAP optimization. While not distinct
from its competitors, it is a strength in that it is aligned at the technology (Accenture Insight for
Enterprise Systems [AIES], which provides multidimensional representations of SAP systems),
process (process standardization, covering evaluation and simplification for 80 enterprise
processes) and business impact levels (Business Optimization Seeker for SAP [BOSS] identifies
business performance improvement potential).

Accenture received high customer reference scores for relationship management, industry
experience, business acumen and customer delivery, and the highest score for cultural fit. It
should also be noted that Accenture's referenced clients represent the highest average contract
value and longest contract relationships of the included vendors most of these clients also
indicated that they have extended the scope of the contract over the years.
Cautions

Because many engagements are large scale, Accenture's size can make it difficult to maintain
capabilities for its clients. Its referenced clients indicate that Accenture experiences higher than
anticipated attrition, especially from India-based resources. SAP training and client environment
learning efforts for new individuals are sometimes passed on to clients, rather than absorbed by
Accenture.

Even with its high number of industry and process assets, Accenture is challenged to
implement its continuous improvement approach for its existing clients as, overall, its
referenced clients score Accenture low for innovation in comparison to the majority of the
included vendors. References believe that Accenture could do a better job of partnering with
SAP to bring software advances to bear in order to deliver services more efficiently and
effectively.

While its clients recognize they receive value for money, Accenture is generally regarded as
expensive, especially when continuous improvement is an added charge on top of current fees.
While other providers also make separate charges for improvement, some Accenture client
references cite this as a specific nuisance.
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Atos
Atos has approximately 9,500 FTEs providing SAP application services worldwide, of which around
4,000 are involved in providing SAP application management services (with around 3% of its
resources in NAM, 8% in LATAM, 38% in EMEA and 53% in APJ). Atos generates approximately
59% of its SAP application services revenue from application implementation services, and 41%
from SAP application management services. Atos services 19 of the 22 industries included in this
Magic Quadrant. Of these, the main markets for SAP application management services are
manufacturing, public, and energy and utilities.
Strengths

Atos has done well at integrating former Atos Origin and Siemens IT Solutions (SIS) SAP
capabilities. The structure of its portfolio is based on extensive client interactions and has been
in place since 2H11. The portfolio revolves around transformational capabilities based on a
foundation of operational excellence, extending technology delivery with consulting and
expanding its offshore delivery capability from a cost competitive perspective.

Atos' strategy and its organizational and delivery structure for the NAM market is based on
expanding its services portfolio to existing (large) accounts and globally structured midsize
companies, with the majority of delivery support from India. This approach suits the size and
capabilities of Atos in NAM and allows for sustainable services in the region.

Atos' industry solutions approach is comparable to its competitors, but in the area of
environmental, health and safety management it has created distinct sustainability solutions for
the public, transport, and energy and utility markets.

Atos clients appreciate its qualified technical resources, good cultural alignment and
commitment to get the job done on time.
Cautions

Atos improved its internal delivery model to ensure that its consulting and technical delivery
capabilities were well integrated. However, in terms of the resulting industry solutions and
assets, Atos is still clearly behind its major competitors. Both Atos Origin and SIS did not have
strong consulting capabilities compared to the competition. There is still a need for investment;
a view that is supported by its clients.

While having a regional commercial approach and a global delivery approach, Atos still relies
heavily on EMEA for revenue. Although Atos has integrated the Atos Origin and SIS capabilities
globally, the combined capabilities still leave it challenged to compete for large deals in other
regions.

Atos has made aggressive strides in cloud with Canopy and Yunano, but both still need to
deliver. In addition, Atos is investing in cloud transformation services based on Canopy and has
just recently opened a High-Performance Analytical Appliance (Hana) and analytics center of
excellence (COE), and signed its first SAP Hana in the cloud deal in June 2012. While these are
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positive investments and initial results are also positive, they are quite late and results are still
limited.

Clients primarily recommend Atos based on its technical capabilities, although they refer to the
need to optimize delivery mostly to further improve cost efficiency and set directions for
the future. This aligns with the overall challenge that Atos faces in that it needs to try and "talk
the business language" of its clients.
Capgemini
Capgemini has approximately 11,500 FTEs providing SAP application services worldwide, of which
around 3,500 are involved in providing SAP application management services (with around 13% of
its resources in NAM, 9% in LATAM, 36% in EMEA and 43% in APJ). Capgemini generates
approximately 66% of its SAP application services revenue from application implementation
services, 29% from SAP application management services and 5% from other SAP-related
services. Capgemini services 17 of the 22 industries included in this Magic Quadrant. Of these, the
main markets for SAP application management services are consumer goods, life sciences and
retail.
Strengths

Capgemini demonstrates a strong vision and good execution capabilities through certified
industry-specific end-to-end solutions, including licensing (OnePath solutions). Built mostly on
its own IP and certified by SAP, the solution stack is transparent in terms of hosting (from on-
premises to software as a service [SaaS]), the extent of services (up to business process
outsourcing [BPO]), and pricing (up to utility pricing for all services, including licenses).
Capgemini has received stronger recognition than other included vendors (through SAP's
Pinnacle Awards) for its solutions and services for 2012, especially in the areas of cloud, BPO
and mobility.

Capgemini has been able to consolidate its position in Europe (where cost drives strong
competition), while clearly demonstrating growth in NAM and LATAM (where the inclusion of
CPM Braxis as a strong regional SAP service provider clearly improves Capgemini's
capabilities). Capgemini addresses its growth markets with distinct approaches (like an overall
IT outsourcing and technology focus on ERP and a sector-specific analytics focus for NAM).

Capgemini's clients appreciate its delivery capabilities, technical expertise, work ethic and
timeliness. They also appreciate the quality of references and peer connect options that
Capgemini provides, which underline its status as an engaged provider. This is further
supported by clients repeatedly stating that Capgemini invests in increasing value for them
during the contract period. Although this does not automatically result in Capgemini
implementing improvement suggestions, clients clearly appreciate the behavior itself.
Cautions

Capgemini's OnePath vision and execution have matured over the past few years and have
begun to bear fruit in 2012, but it has yet to fully integrate its approach across its entire installed
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base. While clients recognize that Capgemini invests in increasing value, they also score
Capgemini relative low compared to the competition for optimizing services, particularly as
compared to the expectations created at the beginning of the engagement or in the disconnect
from consulting and implementation to delivery.

While expanding its global capabilities, Capgemini still has much ground to cover in LATAM
where the CPM Braxis capabilities are mainly located in and focused on Brazil. However, in
regard to all other included vendors, it has virtually no revenue streams for APJ, nor has it
strategically demonstrated any intention to expand this region as a separate SAP application
management market.

Although receiving clear recognition for its mobility solutions, Capgemini only realizes a very
small portion of its SAP services revenue from mobility-based engagements, especially in
comparison with the other Leaders in this Magic Quadrant. Capgemini also has the most deals
in the $3 million to $6 million bracket for total contract value for application management
services, though it has the least number of deals in the $10 million and above bracket,
indicating a possible challenge in competing for and winning large SAP application
management deals.

Overall, Capgemini's referenced clients indicate Capgemini needs to improve its industry
expertise and resourcing continuity. When implementing improvements, it requires additional
management overhead from the client, and internally should better align service delivery
capabilities with technology capabilities.
Ciber
Ciber has approximately 1,500 FTEs providing SAP application services worldwide, of which around
550 are involved in providing SAP application management services (with around 73% of its
resources in EMEA and 27% in APJ). Ciber generates approximately 57% of its SAP application
services revenue from application implementation services, and 43% from SAP application
management services. Ciber services six of the 22 industries covered in this Magic Quadrant. Of
these, the main markets for SAP application management services are high tech, healthcare, and
energy and utilities.
Strengths

Ciber demonstrates a clear vision for the fundamental SAP applications maintenance business.
It is a relatively small player, but is using its relative size as a strength, allowing it to focus on
multinational midmarket clients with its All-in-One solutions for SAP application services. It is
focusing on existing clients as well as clients in the growth markets of retail and professional
services. Solutions are either based on Ciber IP (like Rapid Retail) or built on Rapid Deployment
Solutions (RDS for the utility industry or Hana). For the energy market, Ciber has created a
rapid deployment solution itself in strategic partnership with existing energy clients, which
allows for shorter sales and implementation cycles.

Ciber has also maximized delivery flexibility for its SAP application management services. Ciber
is able to support its U.S. SAP application management clients partially through its U.S. SAP
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application implementation staff, but mostly through remote delivery teams from India and
China. This is supported by its reference clients, who appreciate Ciber's work ethic and the
character of its staff, and indicate that they receive value for money.

Ciber's reference clients rate Ciber high for its technically skilled resources, good overall project
management and the ability to work very effectively with existing teams and SAP resources.
This applies specifically for smaller deals and midmarket customers.
Cautions

The downside of Ciber's relatively small size is the scale of the investments and industries it can
cover. As mentioned above, Ciber only supports six industries for SAP application management
services. It also has among the lowest amount of industry and process assets, and while taking
a very focused and effective solution creation and innovation approach, it is limited in the global
rollout capabilities of solutions in terms of support.

Ciber still generates a relatively high percentage of revenue through efficiency focused
application management engagements, with a strong focus on technology metrics. It also relies
relatively heavily on staff augmentation. This is reflected in the client references, which indicate
that Ciber is less effective in functional and process knowledge, and in engaging senior
leadership in areas of process improvement and change management.

Most engagements are relatively small compared to other vendors, which reflects Ciber's focus,
but also reflects a concern regarding its limited capabilities to support large complex
application management deals.
Cognizant
Gartner estimates that Cognizant has approximately 5,500 FTEs providing SAP application services
worldwide, of which around 2,500 are involved in providing SAP application management services
(with around 22% of its resources in NAM, 3% in LATAM, 6% in EMEA and 69% in APJ). Cognizant
generates approximately 52% of its SAP application services revenue from application
implementation services and 48% from SAP application management services. Cognizant services
17 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP
application management services are oil and gas, life sciences, consumer packaged goods, retail,
and professional services.
Strengths

Although currently without any revenue or a clear strategy for LATAM, of the included vendors,
Cognizant has demonstrated the highest relative growth in the SAP application services space,
with 37% overall growth from 2010 to 2011. Even though this is only a snapshot in time,
Cognizant is able to provide client references across the board from very large deals ($20
million plus) to very small deals (below $100,000), indicating its capability to support small to
very large clients.

Cognizant's growth is supported by its flexibility in multiple SAP application management


pricing structures (capacity-based, ticket-based, application-based and user-based pricing
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options), where it allows clients to have one or multiple pricing strategies embedded in a single
deal. Cognizant further actively promotes risk-reward-based engagements, licenses its tools,
and "productizes" its industry and process IP to further provide flexibility in offerings to its
clients.

Cognizant's reference clients indicate strong satisfaction with Cognizant team members across
multiple dimensions: technical expertise, strong work ethic, responsiveness, motivated with the
ability to foster positive working relationships. They are also pleased with the quality, processes
and timeliness of Cognizant's delivery, as well as the cost competitive approach for the high
level of support received.
Cautions

To support its growth, Cognizant leverages a partnership model more than its competitors
partially due to difficulties in attracting experienced SAP skills, visa challenges in Europe and a
limited number of delivery centers. This potentially explains client concerns around the relative
high levels of attrition that Cognizant demonstrates on their accounts.

Regionally, Cognizant does not have a clear strategy for LATAM, and is also limited in its
strategy for APJ. While its growth currently allows for an opportunistic strategy, in the long term
a clear road map will need to demonstrate sustainable growth or, at a minimum, retained
competitive parity.

With 65% of Cognizant's SAP application management revenue coming from NA, clients
looking for a strong global player in this space, with a strong global delivery footprint, may find
Cognizant not yet large enough to fulfill their delivery requirements. Equally, Cognizant's strong
focus on its key industries leads to a more opportunistic approach from a technology
perspective in industries other than its core ones.

Cognizant has among the fewest industry and process assets, which might explain reference
client comments stating that Cognizant should be more proactive in bringing innovation and
new ideas to its client deals. In this respect it should be noted that while Cognizant has made
mobility one of its key investment areas and is receiving good client interest, it currently
generates little SAP-related revenue in this area.
CSC
CSC has approximately 6,800 FTEs providing SAP application services worldwide, of which around
3,700 are involved in providing SAP application management services (with around 11% of its
resources in NAM, 3% in LATAM, 32% in EMEA and 54% in APJ). Gartner estimates that CSC
generates approximately 47% of its SAP application services revenue from application
implementation services, and 53% from SAP application management services. CSC services 19 of
the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are oil and gas, chemicals, aerospace and defense, and public.
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Strengths

CSC takes an integrated approach across consulting, implementation and management.


Dependent on client maturity and capabilities, CSC deploys an evolutionary service, delivery
and pricing approach. Client-based road maps are created for technology, services and pricing
to match client demands at distinct moments in time. This model is globally aligned.

CSC also invests in Hana (among others, for CRM and insurance), cloud transformation
services (among others, for finance) and mobility solutions (among others, for geographic
information systems). Its major investment focuses on SAP application management as a
service, based on RunSAP and ITIL v3.

In this Magic Quadrant, CSC demonstrates the most balanced coverage of the included SAP
applications (SCM, ERP and CRM) and areas (BI and mobile). This is supported by the
extensive list of references provided and the general feedback of these referenced clients that
CSC demonstrates "wide SAP capabilities."

CSC's clients appreciate both the consulting capabilities of CSC and its engineering
background, which have led to strong technical skilled resources, delivered at a good price.
Overall, CSC demonstrates a clear focus on the client relationship.
Cautions

CSC's core focus is to build horizontal solutions integrated with industry IP. In this process,
CSC is developing select industry offerings, which effectively results in the lowest number of
industry solution assets of all included vendors. This is supported by referenced CSC clients
who indicate the need for CSC to invest in and retain business knowledge and capabilities.

CSC is not seen as innovative with regard to optimizing the SAP portfolio. Clients indicate that
its technical skills are not seen as being supported by functional, industry or process consulting
capabilities.

While CSC's approach to SAP is clear and focused, as a company in general, CSC is in the
midst of a turnaround. With a new operating model being announced in early September,
organizations considering CSC must perform due diligence regarding its continued capabilities
to deliver SAP application management services.
Deloitte
Deloitte has approximately 9,700 FTEs providing SAP application services worldwide, of which
around 1,500 are involved in providing SAP application management services (with around 53% of
its resources in NAM, 7% in LATAM, 27% in EMEA and 13% in APJ). Deloitte generates
approximately 90% of its SAP application services revenue from application implementation
services and 10% from SAP application management services. Deloitte services 15 of the 22
industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are aerospace and defense, consumer packaged goods, healthcare, energy
and utilities, and the public sector.
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Strengths

Although Deloitte has strong regionally based and oriented services, for key areas like SAP
services it ensures a global commitment and invests in technology, staffing, processes and
services to that end. This translates into strong executive commitment to client delivery, where
Deloitte specifically focuses on Fortune 1000 companies and existing clients for SAP
application management services. For example, on the technology side Deloitte acquired Oco
and bermind in order to expand its analytics and mobility capabilities, resulting in 161
analytics solutions and a separate Deloitte Digital brand to address mobility in the widest sense.
For cloud and on-demand services, Deloitte uses third parties to augment its own capabilities,
but limits its focus to mature clients and core processes.

Deloitte has a brand to protect in the field of talent management and prides itself on being able
to attract and retain SAP skills on a global basis, supported by a low attrition rate of its Indian
SAP capabilities of 14%. This is supported by Deloitte's client references who were pleased
with Deloitte's depth of resources (which exhibit strong SAP knowledge) and vertical industry
understanding (which offers clients the ability to solve problems and resolve issues expediently).
Deloitte has also exhibited strong business process consulting skills.

Deloitte received high customer satisfaction ratings for relationship management it has a
strong ability to work with client staff and a very positive work ethic; it responds to and resolves
issues in an efficient and effective manner; and it displays an overall good competency for
service delivery, as contractually promised and at a competitive price. Its clients are likely to
rehire and recommend Deloitte.
Cautions

Although Deloitte provided a decent split of references across the regions and clients
appreciate its global delivery capabilities, its SAP application management services revenue is
largely driven by NA, which accounts for 60% of its total. Also, the majority of the references
represent SAP application management deals with a value below $1 million per year and the
lowest average contract duration, potentially indicating a weaker competitive position for large
and long-term SAP application management services deals.

Even with an overall low attrition rate in India, some of Deloitte's reference clients expressed
concern with Deloitte's employee retention, as they feel it is losing employees with significant
technical depth and business skills. This is also a concern as Deloitte demonstrated a relatively
limited amount of industry and process assets.

Overall, Deloitte client references indicate the need for improved communication structures,
both internally within Deloitte (in terms of knowledge transfer between the business and
technology teams) as well as with clients (focusing on improved reporting and better
communication with business users).
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Fujitsu
Fujitsu has approximately 2,500 FTEs providing SAP application services worldwide, of which
around 1,050 are involved in providing SAP application management services (with around 33% of
its resources in NAM, 24% in EMEA and 43% in APJ). Fujitsu generates approximately 34% of its
SAP application services revenue from application implementation services, 28% from SAP
application management services and 38% from other SAP-related services. Fujitsu services 18 of
the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are oil and gas, chemicals, discrete manufacturing, consumer goods, and the
public sector.
Strengths

Fujitsu continues to focus on application services in general, and SAP in particular, through
standardized methodologies and industrialized technologies that integrate both third party and
Fujitsu technologies under the Global Enterprise Management Services (GEMS) framework. For
SAP, GEMS is expanded with Hana and mobility transformation solutions, including Fujitsu
hardware and appliances.

Fujitsu demonstrates a realistic vision with regard to increasing its SAP application services
market share. It focuses on solutions for defined industries per geography (for example,
healthcare for the U.K., manufacturing for Europe, real estate for Asia and logistics for NAM) in
combination with its own technology IP to address the generic growth areas of Hana, mobility
and cloud.

More than most other included vendors, Fujitsu's reference clients selected Fujitsu for its
technical expertise and cost of service, without expecting thought leadership, strong
partnerships or dependence on references. This perpetuates a clear perception of Fujitsu as
providing technical, reliable and flexible resources with a culture of, and commitment to, service
excellence.
Cautions

Fujitsu's group size and global coverage has led to wide industry coverage, yet the actual size
of Fujitsu's SAP application management capabilities is relatively small in comparison to most
vendors and also in relation to its overall size. This has resulted in a spread of more
opportunistic deals rather than focused solution services. This is also represented in the
relatively low amount of industry- and process-based assets that Fujitsu can deploy, as well as
the relatively high dependency on SAP ERP-related business.

Fujitsu is clearly improving with regard to its capabilities, especially on the technology side, yet
it does not have the capabilities required to meet the needs of larger vendors in the Americas
and, in general, is challenged when confronted with business-outcome-based engagements.
This is also supported by Fujitsu's overall SAP deal size as well as concerns among client
references regarding industry expertise.

While viewed as a credible provider, Fujitsu's reference clients consider it to face challenges
with regards innovation and delivery as contracted, which mostly relates to a perceived
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disconnect between sales and delivery. Although this could be the result of its continued
investment in solutions at the front end, Fujitsu should improve its internal alignment.
HCL Axon
HCL Axon has approximately 6,100 FTEs providing SAP application services worldwide, of which
around 2,200 are involved in providing SAP application management services (with around 17% of
its resources in NAM, 5% in LATAM, 18% in EMEA and 61% in APJ). HCL Axon generates
approximately 52% of its SAP application services revenue from application implementation
services and 48% from SAP application management services. HCL Axon services 14 of the 22
industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are high tech, life sciences, and energy and utilities.
Strengths

HCL Axon continues to expand on Axon's strong SAP heritage and has been able to increase
the SAP application management revenue streams in NAM and APJ. In addition, HCL Axon has
among the most balanced spread of revenue streams across the SAP product portfolio and a
good spread of revenues across industries. This is realized through global aligned frameworks
(MaSCoT for managed services, ASSeT for transitions and Prizm for portfolio optimization). This
is combined with HCL's Unified Service Portal with a front-end dashboard and a back-end,
industry-specific process repository to identify client-specific process improvements, as well as
the Business Aligned IT (BAIT) framework, so as to continuously align infrastructure and
applications to deliver desired business outcomes. Client references note that HCL continues to
strive to succeed and often goes above and beyond the SLAs to realize business value.

HCL Axon has improved its competitive position through the bundling of infrastructure,
application and business process services (for example its Pre-Paid for Utilities [industry]
solution), as well as maximizing factory-based development support and co-investments with
clients to implement new technologies. HCL Axon offers flexibility with regard to contracts and
pricing. It balances risk appropriately between the client and itself, which reference clients view
as positive, as they do not often see this with other suppliers in outsourcing contracts.

HCL Axon's reference clients also cite satisfaction with its employees who have a strong work
ethic, work well with client staff and go the extra mile to resolve issues.
Cautions

HCL Axon is investing in industry solutions and bundling of services. However, its industry
solutions are mainly technology related.

Although its clients indicate HCL delivers beyond expectation, at the same time they score HCL
Axon relative low on innovation. This is partially due to the focus on technology-oriented
solutions instead of business solutions. This is reflected by clients that indicate the need for
more on-site leadership to drive the relationship forward.
Gartner, Inc. | G00231953 Page 15 of 34

While clients generally appreciated HCL Axon employees, the consensus was that they would
be even stronger if they were able to demonstrate more business knowledge next to technology
expertise when dealing with business users.

HCL Axon's transition methodology is executed successfully in general for small as well as
large transitions, and is built on aggressive timelines to reduce the cost of such transitions. The
approach integrates on- and off-site delivery in a seamless model. In some cases this hasn't
been so successful, with clients indicating that HCL needs to improve internal communication
and knowledge transfer between on- and off-shore delivery.
HP
HP has approximately 8,700 FTEs providing SAP application services worldwide, of which Gartner
estimates around 4,800 are involved in providing SAP application management services (with
around 33% of its resources in NAM, 2% in LATAM, 38% in EMEA and 27% in APJ). Gartner
estimates that HP generates approximately 55% of its SAP application services revenue from
application implementation services, and 45% from SAP application management services. HP
services 12 of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP
application management services are automotive, discrete manufacturing, high tech, consumer
goods and transportation.
Strengths

HP has end-to-end service capabilities and a road map for commoditizing IP-based services. It
has positioned its capabilities around its core technology strengths and focuses on mobility,
(predictive) analytics and cloud. HP has been awarded global recognition from SAP both for
Hana and RunSAP implementations. This is supported by HP reference clients that appreciate
its technical expertise.

HP demonstrates clear SAP application management revenue streams in LATAM and APJ, next
to its stronger presence in NAM and EMEA. It supports this through a very low dependency on
staff augmentation and a good balance between technical and business-metrics-based
engagements.

HP's account and project teams demonstrate effective contract and relationship management,
highlighting its focus on expanding existing large accounts. HP's relative strength lies in the
potential client base it can reach through its hardware and software businesses, besides
existing services clients. In this approach, HP's reference clients appreciate the delivery teams
that link effectively with client teams and an ethic focused on solving problems.

HP is one of the few providers with in-depth experience in the core technologies underlying its
offerings. Internally, it has aligned its hardware, software and services pillars in order to go-to-
market with an integrated solution under the Industrialized Delivery System (IDS) banner.
Cautions

HP's SAP application management focus and road map are heavily infrastructure and
technology driven. While this is in line with HP's full services vision, it is light on industry-
Page 16 of 34 Gartner, Inc. | G00231953
specific solutions. This is supported by HP reference clients, which perceive a lack of industry
and consulting capabilities.

While HP's clients recognize they receive services at a competitive unit cost, they also indicate
that HP demonstrates resource quality inconsistencies. For some this resulted in delivery
inefficiencies that negatively impacted the overall cost of HP's services and thereby diluted the
benefits of the competitive unit cost.

HP is currently facing major reorganizations, including executive changes. However, HP's head
count reduction has not been focused on the SAP business. It is planning to grow SAP head
count and capabilities faster than the market average for the next three years. Organizations
considering HP must perform due diligence regarding its actual performance against this
strategy.
IBM
IBM has approximately 26,500 FTEs providing SAP application services worldwide, of which
Gartner estimates around 12,000 are involved in providing SAP application management services
(with around 36% of its resources in NAM, 6% in LATAM, 26% in EMEA and 32% in APJ). Gartner
estimates that IBM generates approximately 65% of its SAP application services revenue from
application implementation services, and 35% from SAP application management services. Gartner
estimates that IBM services all 22 of the industries covered in this Magic Quadrant. Of these, the
main markets for SAP application management services are consumer products, life sciences, and
energy and utilities.
Strengths

IBM supports the entire SAP application services life cycle. Its strategy focuses on business
transformation and combines many industry and technology assets for implementation and
management services. IBM drives reusability and standardization through its Smarter ADM
approach, building on its Catapult service management framework and on its optional
Evergreen offering to include ongoing upgrades.

IBM's combined strengths in business and technical consulting are helping it move from
offering a basic break/fix service to transforming how clients use and maximize business
benefits from its SAP applications. Examples include redefining business-to-business and
business-to-consumer processes with mobile, cloud/SaaS and business process as a service,
innovation-based productivity, and Smarter ADM.

IBM's contracting practices can be very flexible during the deal negotiation and structuring
stage. They tend to be based on value analysis, in order to optimize the contracting model for
the client. IBM is able to support this with a competitive rate structure, especially when
leveraging offshore resources. IBM indicates that its Business Value Assessment approach
allows for deal structure and delivery model adjustments based on client maturity.
Gartner, Inc. | G00231953 Page 17 of 34

IBM typically operates larger and more complex SAP environments and contracts than a
number of its competitors, leveraging its experience in managing complex projects across many
geographies.
Cautions

Despite a standardized and global delivery model, some clients indicated that IBM
demonstrates inconsistent execution across geographies. This relates to IBM's worldwide
delivery model, which integrates IBM's location-based, nearshore and offshore resources to
support any client anywhere. Some clients indicate staffing challenges regarding visas in
combination with attrition for the acquired services.

The focus on end-to-end solutions is implemented more from a technology stack perspective
than from a business perspective, and is generally aimed at new clients rather than existing
ones. This is reflected in clients comments that indicate IBM needs to enhance delivery in terms
of staffing mix consistency (across projects) and speed of emerging technology (for example,
solutions developed for infrastructure as a service and cloud) to further drive down costs and
maximize client benefits.

IBM is evolving its model toward value creation through life cycle services capabilities and
delivery models that aim to create business value and innovation. However, the majority of
IBM's referenced clients have an efficiency focused contract, indicating a potential challenge for
IBM as it aligns sales with delivery.
Infosys
Infosys has approximately 9,250 FTEs providing SAP application services worldwide, of which
Gartner estimates around 4,000 are involved in providing SAP application management services
(with around 45% of its resources in NAM, 3% in LATAM, 45% in EMEA and 8% in APJ). Infosys
generates approximately 62% of its SAP application services revenue from application
implementation services, and 38% from SAP application management services. Infosys services 17
of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are oil and gas, automotive, consumer goods, life sciences, and mining and
construction.
Strengths

Infosys has strong service delivery capabilities, which enable it to deliver against both
foundational break/fix and support requirements, as well as other optimization requirements.
Infosys has structured its delivery capabilities primarily into industry focused teams, supported
by technology centers of excellence (more so than its Indian-heritage peers). As such, business
demands lead solution and service development and delivery, for which Infosys has created
distinct business process and knowledge management IP.

Overall, Infosys demonstrates solid industry (Impact), implementation (i-SIF) and operations
(Mantra) frameworks that it deploys for its SAP application services and brings to its clients.
Around SAP application management Infosys invested in solutions to shift support toward more
Page 18 of 34 Gartner, Inc. | G00231953
self help, portal solutions, knowledge extraction and analysis to improve delivery and client
processes, as well as toward eliminating root-causes in a structured way to reduce the influx of
issues). The overall capabilities are supported by client references Infosys received the
highest satisfaction scores across the included vendors.

Infosys clients indicate that they receive value for money against attractive unit and total costs.
Even though its coverage is limited in LATAM and APJ, the benefits apply on a global level
referenced clients scored Infosys exceptionally high for its geographical capabilities, with
attention to overall delivery in combination with the quality of staff especially lauded resources.
Cautions

Infosys should better communicate its overall vision for the future of SAP application
management to its existing customers. Its clients recognize they receive good quality at a
competitive price, but they indicate some challenges around vision, thought leadership and
functional and business process capabilities. This is partially due to concerns that some clients
have relating to resource turnover and subsequent issues around timely knowledge transition.

In order to increase its competitive position in LATAM and APJ, Infosys needs to make strategic
investments in capabilities in these regions. While Infosys scores high for its geographical
delivery capabilities, its reference APJ clients indicate quality differences in delivery compared
to the EMEA and U.S. clients. Infosys should potentially reconsider its global strategic
directions to ensure a sustainable delivery model worldwide.

While proactive in dealing with project issues, day-to-day operations and management
oversight, Infosys needs to improve on bringing forward optimized solutions in existing
accounts. Clients recognize that they receive value for money, but the current focus is more on
an efficiency-focused delivery to decrease cost.

Infosys is very rigorous in deploying its processes and frameworks from a commercial
perspective, but it needs to ensure the continuation of those capabilities during delivery. As a
consequence, some issues of service delivery and fit are worked out over time, requiring a
period of transition that could be lengthy at times.
NTT Data
Note: NTT Data has been active in acquiring IT services companies and majority stakes in IT
services companies over the past decade, and this activity continues today. Acquired companies
Value Team, Keane, Intelligroup, Cirquent and Qunie have been consolidated into NTT Data, but
were run and managed as stand-alone organizations up to 2012. In U.S., Intelligroup and Keane are
among the companies that go to market under the NTT Data brand, and have done so since
February 2012. Further, NTT Data has acquired a majority stake in itelligence, Extend Technologies
and Business Formula. itelligence will continue to operate globally under its own brand. The SAP
capabilities of all these companies have been consolidated for the purposes of this Magic Quadrant.
As such, NTT Data's positioning will reflect both the combined strength of aligned and shared
capabilities, as well as the inherent weaknesses of companies acting as independent providers
themselves. In this report the combined entities are referred to as "NTT Data." Not included is
Gartner, Inc. | G00231953 Page 19 of 34
Dimension Data, which was acquired by NTT, but is still a separate brand and a sister company to
NTT Data.
NTT Data has approximately 5,500 FTEs providing SAP application services worldwide, of which
around 1,500 are involved in providing SAP application management services (with around 17% of
its resources in NAM, 17% in EMEA and 67% in APJ). NTT Data generates approximately 57% of
its SAP application services revenue from application implementation services, 27% from SAP
application management services and 16% from other SAP-related services. NTT Data services 21
of the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are automotive, discrete manufacturing, consumer goods, wholesale and
professional services.
Strengths

The strength of NTT's many acquisitions lies in the SAP technology and services capabilities
that are core to companies like itelligence, Intelligroup, Cirquent and Keane. These acquisitions
have filled out SAP application management and application hosting capabilities. The combined
capabilities also include varied investment and solution capabilities in the areas of cloud, mobile
and Hana as well as creating access to a variety of industry solutions.

While not implemented across all geographies, the consolidation of capabilities follows a
distinct path for branded service areas like SAP, whereby, across the regions and companies, a
SAP Global One team leads the process to integrate methodologies, solutions, technology and
delivery. The strength lies in the consistent approach to providing services to existing and new
clients in order to benefit from consolidation for SAP under the SAP iTran (for implementations
and transitions) and OME (operate, maintain, evolve) methodologies. It also allows NTT Data to
support local, regional and global organizations.

NTT Data clients indicate that it provides skilled technical resources that have the right mindset
for delivery and that offer a good fit with the clients' internal organization. The fit is realized by
combining NTT Data's shared services model (flexible staffing) and its COEs, which are
measured through efficiency, effectiveness, risk and cost mitigation from a client perspective.
Cautions

More than any other included vendor, NTT Data depends on SAP ERP-related services. While
covering the complete SAP product portfolio and recognizing NTT Data for its ERP coverage,
this also indicates that, relative to the other providers, NTT Data may find it difficult to compete
for deals in the SCM and CRM areas, and especially in the BI area where it is clearly behind its
peers. Overall, NTT Data has among the lowest amount of industry and process assets, which
further impacts it competitive position.

While NTT Data indicates that it supports clients ranging from the small to the very large, the
provided references represent the lowest average deal size and average deal length among all
included vendors.

The back-end integration and consolidation of technologies and delivery entities across the
acquired companies is a complex process. Until full consolidation occurs, separate company
Page 20 of 34 Gartner, Inc. | G00231953
delivery structures will remain. This means that while the capabilities are there, the availability
and ramp up of resources (people as well as technology) should not be expected immediately.
This is also supported by the fact that reference clients referred to the acquired companies
instead of NTT Data.

NTT Data generates more revenue through application implementation than application
management services. However, client references seem to indicate that there is a disconnect,
as NTT Data scores lowest overall for assisting with change management within its
engagements and in the application of its own methodologies. It also scores low for innovation
and being proactive, which is supported by statements that clients expect NTT Data to bring in
more SAP technology developments.
TCS
TCS has approximately 8,500 FTEs providing SAP application services worldwide, of which around
3,750 are involved in providing SAP application management services (with around 45% of its
resources in NAM, 1% in LATAM, 35% in EMEA and 19% in APJ). TCS generates approximately
54% of its SAP application services revenue from application implementation services and 46%
from SAP application management services. TCS services 19 of the 22 industries covered in this
Magic Quadrant. Of these, the main markets for SAP application management services are discrete
manufacturing, energy and utilities, and professional services.
Strengths

TCS continues to expand its industry solution approach across platforms, clearly making
industry demand its primary focus. From a services perspective, this leads to a transparent
solution stack independent from the technology chosen. Consistency in the approach is
realized through rotation of staff between industry-based delivery units and technology-based
COEs, which are jointly responsible for delivery success. These joint centers support the
application management delivery, which is managed by the global competency center (GCC)
approach, aiming to maximize the improvement of operations. This is supported by the highest
reference client scores of the included vendors for service delivery quality and thought
leadership.

TCS continues to invest in IP to support the improvement process it has among the highest
amount of industry and process assets of the involved vendors. Most of this IP is aimed at
minimizing application management overhead: analyzing the level of customization tools, data
migration simplification, knowledge transfer and extraction, business process repositories, and
industry-specific IP. TCS's focus for this approach is to expand the wallet share of existing
clients (97% of its SAP-related services revenue is realized through existing clients), rather than
to go out and aggressively acquire new clients.

TCS achieved the highest satisfaction scores across all surveyed areas. It demonstrates a
strong service delivery performance supported by qualified technical, process and functional
resources. Its clients especially mention the company's work ethic, in combination with the
value for money they receive, and would happily expand services with TCS.
Gartner, Inc. | G00231953 Page 21 of 34
Cautions

TCS has not yet achieved scale in its SAP offerings. It generates more than 50% of its SAP
application management revenue in five industry areas (discrete manufacturing, energy and
utilities, professional services, retail, and consumer packaged goods), which is disproportionate
from the 14 other industry areas it supports. Clients outside these industries requiring a provider
with in-depth industry capabilities need to perform proper due diligence in order to determine
long-term suitability of TCS for their SAP application management services.

While TCS demonstrates a strong application implementation capability, some of its clients
indicate the need to improve the internal hand over to application management and the
continuation of improvements over the contract life cycle. Although TCS only has a low attrition
rate of, on average, 13%, clients indicate a clear lag between the agreed improvements and the
actual execution of the improvements.

Although it has staff in all regions, TCS clients indicate that there's an issue with regards the
right staff being available locally to implement improvements. This signifies that the business
and technology capabilities of the COEs and industry units are not fully embedded in the local
delivery capabilities of the GCC. Furthermore, although TCS clearly aims to move its clients to
business-level metrics, it currently has among the lowest revenue streams based on business
metrics across the included vendors and among the highest streams based on staff
augmentation.
Wipro
Gartner estimates that Wipro has approximately 8,750 FTEs providing SAP application services
worldwide, of which around 3,300 are involved in providing SAP application management services
(with around 39% of its resources in NAM, 3% in LATAM, 36% in EMEA and 21% in APJ). Wipro
generates approximately 60% of its SAP application services revenue from application
implementation services and 40% from SAP application management services. Wipro services 17 of
the 22 industries covered in this Magic Quadrant. Of these, the main markets for SAP application
management services are discrete manufacturing, consumer packaged goods, and energy and
utilities.
Strengths

Wipro has established a multiyear road map of services. It is based on transformational impact
of technologies and market developments, and its capabilities to match the required capabilities
locally, regionally and globally. While this is in itself logical, Wipro deploys the road map in close
cooperation with long-term and strategic clients to maximize applicability. Wipro supports the
process by extensive investments in its own infrastructure assets in its main regions (the U.S.
and Europe) to enable and improve utility, cloud and hosting capabilities as well as BPO, and to
gain access to potential new clients. Wipro's main SAP growth engine is the APAC region (38%
from 2010 to 2011), and especially Australia.

Wipro continues to expand the number of services and clients it supports through its Flex
Delivery model, supported by its development factories and COEs. Its strength lies in the
Page 22 of 34 Gartner, Inc. | G00231953
inclusion of more business and transformational capabilities beyond operational support, as
well as having sufficient local staff to balance client demand with operational efficiency gains
through global delivery. This is also supported by the referenced client data indicating among
the highest average contract value with good global and industry spread.

Reference clients clearly appreciate the cost competitiveness of Wipro in combination with its
global delivery capabilities while meeting services at agreed levels. In regard to service delivery,
Wipro's clients score its employees high on work ethic.
Cautions

Wipro's growth strategy is sound for the U.S., continental Europe and the mature markets in
APJ, but it lacks clarity on the positioning for LATAM and the emerging markets in APJ. This
lack of clarity for LATAM is similar to most other included vendors.

Although Wipro is increasing its transformational and business capabilities, these are still being
built up within the Flex Delivery model. Wipro's referenced clients note that Wipro delivery staff,
while dedicated, in general are reactive and have limited business knowledge. Clients would like
to see Wipro improve its guidance for and support of its delivery staff, and demonstrate more
proactive behavior in increasing the value add of its services.

While already generating a large number of application implementation engagements through


an outcome-based strategy, Wipro's aim for more business-level deals on the application
management side has not yet paid off this is because it has among the lowest percentage of
business-metrics-based revenue. Its provided references indicate a disconnect between
implementation and management deals, which suggests that clients select Wipro because of
either implementation or maintenance considerations, but see limited benefits in moving
implementation forward into maintenance.

Wipro has a decent amount of industry and process assets it can deploy, yet its clients indicate
that Wipro needs to ensure that common processes and methodologies are followed across
their staff, especially by new team members. In relation to the perceived separation between
application integration and application management, and the concerns around business
knowledge, this means that assets are deployed more on a case-by-case basis than actually
being embedded in the core delivery structure.
Vendors Added or Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets
change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or
MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one
year and not the next does not necessarily indicate that we have changed our opinion of that
vendor. This may be a reflection of a change in the market and, therefore, changed evaluation
criteria, or a change of focus by a vendor.
Gartner, Inc. | G00231953 Page 23 of 34
Added
Not applicable, as this is a new Magic Quadrant.
Dropped
Not applicable, as this is a new Magic Quadrant.
Inclusion and Exclusion Criteria
Quantitative Criteria

A minimum of $150 million in external revenue (estimated for fiscal year 2011) per application
suite in Oracle and SAP application management services worldwide.

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

A minimum amount of allocated revenue per region, where providers need to be able to
demonstrate at least three of the four regional revenue numbers below. Independent of the
minimum worldwide revenue, providers must confirm that they have at least the following
percentages of their global revenue in the respective regions:

NAM = 20%

EMEA = 20%

APJ = 10%

LATAM = 5%

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 for
selection from enterprise clients.

Gartner analysts' interactions with enterprise buyers, which reveal interest in specific SAP
application management service 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 of
SAP applications as defined above.
Specifically excluded are services for SAP infrastructure support or hosting.
Page 24 of 34 Gartner, Inc. | G00231953
Explicitly excluded are services related to SaaS, BPO, or independent service provider offered
maintenance or software support.
Evaluation Criteria
Ability to Execute
Gartner analysts evaluate vendors on the quality and efficacy of the processes, systems, methods
or procedures that enable vendor performance to be competitive, efficient and effective, and to
positively impact revenue, retention and reputation. Ultimately, vendors are judged on their ability in
capitalizing on their vision.

Product/Service: Core services offered by the provider that compete in/serve the SAP
applications life cycle services market. This includes current service offerings, as defined in the
Market Definition section, and expressed by growth, capacity, market penetration, skills
availability, 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 to deliver against business-outcome-based objectives and metrics.

Overall Viability: (Business Unit, Financial, Strategy, Organization): Viability includes an


assessment of the overall organization's financial health, the financial and practical success of
the business unit, and the likelihood of the individual business unit to continue to invest in the
service, continue offering the service and advancing the state of the art within the organization's
portfolio of services.

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

Market Responsiveness and Track Record: Ability to respond and adapt to changing
competitive forces as opportunities develop, competitors act, customer needs evolve and
market 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 the their experience working with SAP applications life cycle
services vendors

Demonstrated ability to deliver on key metrics that drive the overall "client experience"
Gartner, Inc. | G00231953 Page 25 of 34

Operations: The ability of the organization to meet its goals and commitments. Factors include
the quality of the organizational structure, including skills, experiences, programs, systems and
other vehicles that enable the organization to operate effectively and efficiently on an ongoing
basis.
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
Evaluation Criteria Weighting
Product/Service High
Overall Viability (Business Unit, Financial, Strategy, Organization) Standard
Sales Execution/Pricing Low
Market Responsiveness and Track Record High
Marketing Execution No Rating
Customer Experience High
Operations High
Source: Gartner (October 2012)
Completeness of Vision
Gartner analysts evaluate vendors on their ability to convincingly articulate logical statements about
current 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 create
opportunities for themselves and their clients.

Market Understanding: Ability of the vendor to understand buyers' needs and translate these
needs into products and services. Vendors that show the highest degree of vision listen to and
understand buyers' wants and needs, and can shape or enhance those wants and needs with
their 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, continuity
and operational capabilities).
Page 26 of 34 Gartner, Inc. | G00231953

Marketing Strategy: A clear SAP services marketing strategy with a differentiated set of
messages consistently communicated throughout the internal vendor organization and
externalized through appropriate channels emphasizing differentiated positioning statements.

Sales Strategy: The strategy for selling SAP application services that uses the appropriate
network of direct and indirect sales, partner networking and alliance relationships that extend
market reach to both prospects and the customer base.

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

A vendor's strategies for partnerships and alliances

A vision for creating new and/or additional Oracle and/or 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 to
meet the specific needs of individual market segments, including verticals.
Subcategories include:

A vendor's strategies for partnerships and alliances

A vendor's comprehensive set of industry offerings

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 to meet
the specific needs of geographies outside the "home" or native geography, either directly or
through partners, channels and subsidiaries, as appropriate for that geography and market.
Gartner, Inc. | G00231953 Page 27 of 34
Table 2. Completeness of Vision Evaluation Criteria
Evaluation Criteria Weighting
Market Understanding High
Marketing Strategy Standard
Sales Strategy Standard
Offering (Product) Strategy Standard
Business Model No Rating
Vertical/Industry Strategy Standard
Innovation Standard
Geographic Strategy High
Source: Gartner (October 2012)
Quadrant Descriptions
Leaders
Leaders are performing well today, and are gaining traction and mind share in the market. They
have a clear vision of market direction and are actively building competencies to sustain their
leadership position in the market. The Leaders in this Magic Quadrant are Accenture, Capgemini,
CSC and IBM.
Challengers
Challengers execute well today for the portfolio of work selected, but they have a less-defined view
of market direction. Consequently, these service providers may be the "up and comers" of the
future, or they may not be aggressive and proactive enough in preparing for the future. The
Challengers in this Magic Quadrant are Atos, HCL Axon, HP, Infosys and TCS.
Visionaries
Visionaries articulate important market trends and direction. However, they may not be in a position
to fully deliver and consistently execute. They may need to improve their optimization of service
delivery. The Visionaries in this Magic Quadrant are Ciber, Deloitte and Wipro.
Page 28 of 34 Gartner, Inc. | G00231953
Niche Players
Niche Players focus on a particular segment of the market such as vertical industry, client size,
functional area (for example, human capital management, order management and others) or project
complexity. Their ability to execute is limited to those focus areas and, therefore, is assessed
accordingly. Their ability to innovate may be affected by this narrow focus. The Niche Players in this
Magic Quadrant are Cognizant, Fujitsu and NTT Data.
Context
This Magic Quadrant addresses the worldwide SAP application management services capabilities
of vendors that meet our criteria for inclusion.
Market Overview
Gartner estimates that end-user spending on application outsourcing worldwide will be worth $40
billion in 2012 (see "Forecast: IT Services, 2010-2016, 3Q12 Update"). This forecast indicates
growth of 0.25% for 2012, with further growth of 3.6% expected for 2013. On the other hand,
Gartner's "IT Key Metrics Data 2012: Key Outsourcing Measures: Outsourcing Profiles: Multiyear"
indicates that the outsourcing of application support declined from 41% in 2010 to 38% in 2011,
and that only application development has seen growth, from 41% to 42% during the same period.
It should be noted that in this Magic Quadrant, application development can be included in
application management when development activities are embedded in multiyear engagements and
are always followed by maintenance of the developed deliverables.
In practice, 2012 hasn't been much different from 2011 in terms of market drivers. Market
developments reveal a continued cost focus. Contracts for SAP application management services
are, on average, 4.3 years long for the included vendors (across the 160 reference clients) with an
average yearly contract value of $1.4 million and average total contract value of $6.4 million. Drivers
for end-user organizations to consider outsourcing SAP application management services include
legacy modernization through to consolidation, rationalization and optimization of a business
applications landscape. Providers commonly tend to address this through "transformational
services," as buyers commonly tend to use the SAP migration as a means to refresh internal
processes and prepare for business changes. However, in many cases buyers prefer, as much as
possible, a "vanilla" implementation whereby they can redefine processes to minimize
customizations.
In addition, buyers of SAP Applications life cycle services continue to expect, and demand,
business-outcome-based services. This is clearly expanding along with the investments of SAP
itself, as well as providers in industry solutions and capabilities, as they build around the next hype
of cloud, analytics and mobile. All included vendors list their investments and capabilities and all
indicate their partnership with SAP in these areas. Buyers can hardly get around the technology and
the potential benefits it might offer. Nonetheless, while it is recognized that buyers often ask for
industry capabilities and the ability to meet business-outcome-based objectives, the majority still
Gartner, Inc. | G00231953 Page 29 of 34
focus on operational efficiency metrics. However, in comparison with "Magic Quadrant for SAP
Application Service Providers, Europe," worldwide there is clearly more interest in business metrics.
The core product at the epicenter of this Magic Quadrant analysis, namely SAP, is continuing its
prioritized 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, which
tends to be adopted more by its midsize partners but less so by the large vendors who often have
their own implementation offerings.
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/or
markets. 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 few
years for services, capabilities, projects, specific client engagements or achievements. With all
the new technologies, the number of awards that can be won is rapidly expanding, which is
decreasing the actual importance of individual awards as the coverage area is declining.

The total generated revenue for SAP application services worldwide is almost $22 billion, of
which $8 billion is generated through SAP application management services. On average, 37%
of the total SAP application services revenue is generated in NAM, 4% in LATAM, 45% in EMEA
and 15% in APJ. For SAP application management, the split is 40%, 4%, 41% and 15%,
respectively.

SAP services are still predominantly delivered to large enterprises, representing 86% of all
revenue streams.

As can be expected, the biggest revenue stream for SAP application services across the
included service providers is SAP ERP, accounting for 51% of the average share of all SAP
application platforms revenue (see the Evaluation Criteria Definitions section for what is
included). On average, SCM represents 13%, CRM 10%, BI 17%, mobile 4% and other 5%.

In terms of industries, the overall top five industries (out of the 22 included) are consumer
goods, utilities and energy, oil and gas/chemicals/process industry, public, and life sciences.
The "bottom" five industries are insurance, wholesale, financial services, education and not-for-
profit. It should be noted that SAP Applications services are delivered in many industries (which
we have grouped into 22 industries) and that the individual spread per provider indicates a
focus on limited industries for vertical solutions and a more opportunistic approach for
horizontal offerings. The main industries per provider are mentioned in the individual profiles.

The references given by the providers gave us good insight in their worldwide capabilities. The
clients indicated that they primarily pick providers based on service delivery capabilities in the
first place, followed by technical expertise and then total cost of services. The least important
selection criteria were partnership with software partners (like SAP), product independence and
influence of the sales team on the delivery team. However, the least important criteria also
received low scores once providers had been selected. This indicates both a disconnect in the
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provider organization between sales and delivery, as well as a disconnect in the client
organization between the buying team and the actual service management team.

On average, the providers in this Magic Quadrant scored better for being proactive than they
did in the European Magic Quadrant, but innovation remains a challenge. Similar to the
European Magic Quadrant, part of this challenge lies in the fact that during the selection
process, the client does not rate innovation so highly, but then when it comes to execution they
do and are surprised the provider does not demonstrate innovative behavior. However, overall
there is a clear issue that is a direct consequence of provider behavior: they sell a story to
which they do not deliver.
Needless to say, the 15 providers included in this Magic Quadrant are a small fraction of the service
providers who provide SAP application management services. We selected these 15 based on them
meeting our inclusion criteria. As a result, many potentially capable providers are not included in
this study. For example, providers that specialize in delivery of application management primarily to
the midmarket and/or to a single geographic region and/or focus on hosting and utility services.
These vendors were not included in the study either because they did not meet the minimum
revenue criteria or could not meet the minimum revenue distributions by geographic region.
Recommended Reading
Some documents may not be available as part of your current Gartner subscription.
"Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market"
"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 SAP
application management capabilities, covering revenue, staffing, geographic capabilities per
SAP application platform, industry and process assets, partnership, joint initiatives, investments
and other relevant information. This gave us the required numeric and qualitative data to allow
us to compare providers and analyze them against the inclusion criteria.

A detailed vendor briefing with each provider addressing the provider's capabilities in a format
chosen by them, but at least addressing the inclusion criteria. Each briefing comprised material
that the provider had prepared for and was discussed during a telephone conference.
Gartner, Inc. | G00231953 Page 31 of 34

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

Of the 206 provided reference clients, 160 either completed an online survey made up of
questions regarding the services, scope, duration, size, selection criteria, good points and
challenges in terms of the engagement and the provider (as well as multiple satisfaction
questions), or else they provided verbal feedback in a 30-minute reference call.

A service provider's representation of its organization through briefings, press releases, annual
reports and other publicly available information, other than what was presented during the
dedicated 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 that compete in/
serve the defined market. This includes current product/service capabilities, quality,
feature sets, skills and so on, whether offered natively or through OEM agreements/
partnerships as defined in the market definition and detailed in the subcriteria.
Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes
an assessment of the overall organization's financial health, the financial and practical
success of the business unit, and the likelihood that the individual business unit will
continue investing in the product, will continue offering the product and will advance
the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all presales activities and the
structure that supports them. This includes deal management, pricing and negotiation,
presales support, and the overall effectiveness of the sales channel.
Market Responsiveness and Track Record: Ability to respond, change direction, be
flexible and achieve competitive success as opportunities develop, competitors act,
customer needs evolve and market dynamics change. This criterion also considers the
vendor's history of responsiveness.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed
to deliver the organization's message to influence the market, promote the brand and
business, increase awareness of the products, and establish a positive identification
with the product/brand and organization in the minds of buyers. This "mind share" can
be driven by a combination of publicity, promotional initiatives, thought leadership,
word-of-mouth and sales activities.
Customer Experience: Relationships, products and services/programs that enable
clients to be successful with the products evaluated. Specifically, this includes the ways
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customers receive technical support or account support. This can also include ancillary
tools, 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. Factors
include the quality of the organizational structure, including skills, experiences,
programs, systems and other vehicles that enable the organization to operate
effectively and efficiently on an ongoing basis.
Completeness of Vision
Market Understanding: Ability of the vendor to understand buyers' wants and needs
and to translate those into products and services. Vendors that show the highest
degree of vision listen and understand buyers' wants and needs, and can shape or
enhance those with their added vision.
Marketing Strategy: A clear, differentiated set of messages consistently
communicated 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 of
direct and indirect sales, marketing, service, and communication affiliates that extend
the scope and depth of market reach, skills, expertise, technologies, services and the
customer base.
Offering (Product) Strategy: The vendor's approach to product development and
delivery that emphasizes differentiation, functionality, methodology and feature sets as
they map to current and future requirements.
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 to meet the specific needs of individual market segments, including vertical
markets.
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 to
meet the specific needs of geographies outside the "home" or native geography, either
directly or through partners, channels and subsidiaries as appropriate for that
geography and market.
Gartner, Inc. | G00231953 Page 33 of 34
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