Early in the millennium, while working as an industry analyst at META Group, I was asked by a number of clients what service providers could help them in planning and building an SAP center of excellence. To get a handle on these requests, I contacted SAP leaders at all of the usual suspects (Accenture, Deloitte, IBM, BearingPoint, and CapGemini) as well as a number of second tier firms. All initially assured me that they provided such a service but all hedged dramatically when pressed for a methodology, references, and costing. Instead I was invariably ushered into a meeting with the head of a nascent applications outsourcing practice where I was assured that applications outsourcing was the wave of the future. This led me to write a brief article entitled “Option A or Option A: Funneling Clients to Application Management.”

Thwarted in my attempt to find firms that could build SAP centers of excellence, I turned my attention back to clients to see how interested they’d be in outsourcing their applications.

During a presentation on post-implementation SAP strategies to a group of META Group clients in Chicago, I was asked again if servicer providers had a methodology and service offering for helping build SAP centers of excellence. No, I replied, but they would offer to take over the applications in an outsourcing environment. To gauge audience interest I asked for a show of hands of those who would consider outsourcing the management of their SAP applications. No hands were raised but many voices were. Whatever SAP cred I had earned to that point in the presentation was largely lost as my both my wisdom and sanity were questioned. I especially remember a VP of IT laughing a bit and remarking, “Applications are what we do.”

About a year later, we did some primary research that indicated fully 41% of respondents would not even consider outsourcing their applications. This part of our research was a standard “adoption scale” in which respondents told us in what time-frame they might consider a given technology or service. We had never seen a result of “will not consider” higher than 20%.

While resistance is still extant, service providers continue to offer application outsourcing, which is called by various names: application maintenance outsourcing (AMO), application management outsourcing (also AMO), or application management services (AMS). Behold, another confusing set of three letter acronyms.

In more recent years, client acceptance of the service has risen as the notion of “applications are what we do” has morphed into “why are we maintaining these applications ourselves?”

Service provider quality remains mixed, primarily because too many of the service providers have poor or unproven delivery models. I have often referred to such providers as “accidental outsourcers” in that they tend to inherit maintenance from implementing clients who do not feel apt to maintain their SAP after go-live. “Accidental outsourcers” tend to make it up as they go and should be avoided.

If you have not considered outsourcing your applications, this paper should challenge you to do so. If you are already considering outsourcing your applications, this paper should provide you a roadmap.

For the sake of clarity, I will be addressing two levels of application outsourcing:

Application Maintenance: end user help desk, basic applications hosting/operations, break/fix, debug, backup, etc. (Keeping the lights on)

Application Management: maintenance functions (above) plus a level of application improvement, upgrade, and/or business process transformation. (Expanding the span of light).

For the latter, there are various levels of management:

§ Functional application enhancement as needed to assure basic continuity

§ Frequent application enhancements to provide some optimization

§ Defined levels/stages of business process transformation

The difference between optimization and transformation is enormous. In optimization mode, you are improving the as-is state of your applications. In transformation, you are moving to another to-be state. Optimization is like tuning your car; transformation is like getting a new engine (or a whole new car).

When people say “applications are what we do”, they are thinking more about optimization and transformation than about continuity. In this regard, a key misconception regarding the outsourcing of applications support is that clients are “giving it up” when in point of fact they may be giving up redundant, low-level, non-strategic labor while still keeping both hands on the applications steering wheel. There is still a capital W to the We do it themselves.

(Read Full Whitepaper from Michael Doane attached to this article)

Michael Doane has 35 years of enterprise applications experience. He is the author of The New SAP Blue Book, a Concise Business Guide to the World of SAP and The SAP Green Book, Weathering the Global Fiscal Crisis with SAP. He can be reached at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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Michaeldoane