Accenture, IBM among leading SAP app management service providers, says Gartner

SAP app outsourcing helps enterprises lower total costs of ownership

Accenture (NYSE: ACN), IBM (NYSE: IBM), Capgemini and CSC (NYSE: CSC) are leading vendors in the SAP (NYSE: SAP) application management service providers market, according to Gartner's latest magic quadrant report.

Wipro (NYSE: WIT), Deloitte and Ciber (NYSE: CBR) are identified visionaries; TCS, HP (NYSE: HPQ), Infosys (Nasdaq: INFY), Atos and HCL Axon are challengers; and Cognizant (Nasdaq: CTSH), NTT Data (NYSE: NTT) and Fujitsu are niche players, according to the Gartner report.

Gartner estimates that end-user spending on application outsourcing worldwide will be worth $40 billion in 2012, with that number increasing by 3.6 percent next year.

The report evaluates 15 vendors providing SAP application services as part of multiyear-based agreements based on their completeness of their vision and their ability to execute.

Gartner defines SAP application management services as all ongoing SAP application services provided as part of a multi-year-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 multi-year application services agreement.

Contracts for SAP application management services average 4.3 years for the 15 vendors, with an average yearly contract value of $1.4 million and average total contract value of $6.4 million.

Gartner said that drivers for end users 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, Gartner noted.

Outsourcing can help enterprises lower the total costs of owning and operating SAP applications, while increasing service quality and mitigating risks posed by internal application management projects.

For more:
- read Gartner's magic quadrant report

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