Author: Yamohiadeen

SAP Business Application Services for Mid-market Enterprises PEAK Matrix® Assessment 2024

SAP Business Application Services for Mid-market Enterprises

SAP’s mid-market services market has already made a significant impact, contributing an impressive US$10+ billion with a double-digit YoY growth rate. Momentum is growing for small and medium-sized businesses (SMBs) to adopt the SAP suite for modernization and consolidation initiatives since the launch of SAP BTP, RISE with SAP, and GROW with SAP programs.

SAP mid-market customers have distinct priorities compared to large clients. Unlike their large counterparts, which have the resources to build complex solutions with extensive customization, the majority of SMBs seek packaged solutions, including preconfigured industry solutions, to transform their processes and experiences. They are cost-efficient and often spend in staggered intervals on multiple short sprints of engagements.

With distinct enterprise demands and evolving SAP offerings, providers are investing in talent initiatives and building differentiated IP assets to assist enterprises in their SAP journey.

SAP Business Application Services for Mid-market Enterprises

What is in this PEAK Matrix® Report

In this report, we assess 15 providers featured on the SAP Business Application Services for Mid-market PEAK Matrix® Assessment 2024 and categorize them as Leaders, Major Contenders, and Aspirants based on their capabilities and offerings. Each profile comprehensively describes providers’ focus areas, key Intellectual Property (IP) / solutions, and domain investments.


Contents: 

This report features detailed assessments, including strengths and limitations, of 15 providers that focus on SAP business application services.

Scope:

  • All industries and geographies
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2023, interactions with leading providers, client reference checks, and an ongoing analysis of the SAP business application services market

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What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

LEARN MORE ABOUT Top Service Providers

Unlocking Success: The Rising Importance of Service Providers in the SAP Mid-Market Growth Strategy | Blog

Service providers are expected to play a vital role in meeting the unique needs of customers in the strategic SAP mid-market. To help the software company achieve its growth targets, partnerships will be crucial. Discover the five customer priority areas where service providers can make a difference in this blog.       

SAP expects the mid-market to be a large contributor to meet its revised growth forecast of 8.3% over the next three years. To effectively attract clients in this segment, the company recognizes it will need to invest in extensive industry application development and form substantial agile partnerships with service providers.

To better evaluate this market, Everest Group’s Enterprise Platform Services (EPS) practice is launching a new PEAK Matrix® assessment. Learn more to participate

SAP mid-market customers have distinct priorities compared to large clients. Service providers who can tailor solutions to meet the following five key priorities will be valuable partners:

  1. Flexibility: SAP mid-market customers need providers that offer flexible services to adapt to their changing business requirements
  2. Responsiveness: Since SAP is typically a new platform for mid-market customers, providers need to proactively educate them on its capabilities and have responsive services teams available to address queries and concerns
  3. Regional support: Mid-market enterprises demand a higher regional presence for services because they want to establish robust communication and agile collaboration
  4. Cost attractiveness: Mid-market customers seek service providers that offer the most value for their SAP and services investments, aligning with their budget needs
  5. Customized services: These enterprises want service providers that invest in understanding their business processes and deliver SAP services tailored to specific requirements

While providers of SAP services focused on this segment may lack the scale or global footprint, they are laser-focused on addressing these key priorities of mid-market SAP customers. Beyond implementation, data migration, and customization, they also offer the benefits of training and support services.

SAP’s mid-market services have already made a significant impact, contributing an impressive US$ 13 billion with a staggering year-over-year growth rate of approximately 20%. With the introduction of the RISE with SAP and GROW with SAP programs, momentum is growing for small and medium-sized businesses to adopt the SAP suite for modernization and consolidation initiatives.

SAP services market divided by buyer segmentsSource: Everest Group (2023)
SAP services market divided by buyer segments | Source: Everest Group (2023)

Based on our analysis of the service provider landscape, the below exhibit shows the prominent providers in the mid-market segment across key regions:

Prominent mid-market-focused service providers strategically located across key regions | Source: Everest Group (2023)
Prominent mid-market-focused service providers strategically located across key regions | Source: Everest Group (2023)

To better evaluate this market and assist enterprises in key sourcing decisions, Everest Group’s Enterprise Platform Services (EPS) practice is launching a new PEAK Matrix® assessment, SAP Business Applications Services PEAK Matrix® Assessment 2023 for Mid-market Enterprises.   

Providers that derive at least 40% of SAP services revenue from mid-market clients with annual revenue below US$5 billion can participate in this assessment. To participate, reach out to EPS ([email protected]) or complete the form: SAP Business Applications Services PEAK Matrix® Assessment 2023 for Mid-market Enterprises.

For information on the SAP mid-market and service providers in SAP, contact [email protected], [email protected], and [email protected].

Pega Platform: Constrained Talent and Higher Implementation Spend Limits Adoption | Blog

A BigTech battle seems to be heating up in the business process management (BPM) and CRM space. So, after completing our PEAK Matrix Assessment on Pega Services, our Enterprise Platform Services team conducted a Voice of the Market study on the company’s platform. They interviewed the 16 global IT service providers covered in the PEAK Matrix and 35+ of Pega’s enterprise clients to gauge their reactions to the Pega platform and Pega’s main competitors. The individuals we interviewed ranked Appian, Bizagi, IBM, Pega, and Salesforce “above, on, or below average” in multiple areas and drilled down on those areas to explain their rankings.

Here’s a summary of how Pega fared from that study.

Strong technology sophistication

Pega’s depth of products and its ability to enable rapid process automation leveraging low-code development and next-generation technology capabilities like artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA) helped it receive the highest score among the providers. Enterprise clients rated its peers above average on their platform capabilities but cited dependencies on third-party capabilities to be a key gap.

Constrained talent availability

The enterprise clients perceive a high demand-supply gap for Lead System Architects (LSAs), Customer Decision Hub (CDH), and marketing specialists, and business architects for the Pega platform, so it received a below-average score for this parameter. In contrast, its peers have built a sizable talent pool, gaining them an above average score.

Complex licensing construct

Pega’s clients cited that its commercial flexibility could be better and that it’s often difficult to understand Pega’s licensing construct. On the other hand, they believe Pega’s peers are effectively bundling their offerings and provide flexible licensing and contracting options.

Good customer experience

According to customers, Pega’s collaboration with systems integrators (SI) in driving large engagements earned it an above average score, but they believe its proactivity in responding to client questions could be better. Its peers also received an above average score for their client-centric engagement.

What’s working well for Pega

  • Strong product portfolio: Pega’s well-knit product offerings across BPM and key CRM areas and domain specific capabilities help position it as an important transformation partner of choice for enterprises in the BFSI, Telecom, HLS, and public sector industries. Enterprises in these sectors have consistently rated Pega higher than average for its technology capabilities
    in the BPM domain.
  • Seamless integration and high customizability: Pega’s ability to easily integrate with all the major enterprise applications and its high level of customizability addressing complex use cases are viewed as its unique strengths. Service providers consider Pega a vendor-agnostic platform and cited multiple instances of adoption along with other key enterprise platforms to drive expansive digital transformation for their clients.
  • High enterprise mindshare: Pega’s transformational proof points with quantitative business impact in the above-mentioned industries across areas such as case management and BPM, low-code platform, RPA, customer service, and customer decision hub have instilled confidence among enterprise clients looking for end-to-end support.

What do customers expect from Pega in 2021?

  • Expanded partner ecosystem: Enterprises in emerging European markets, MEA, and Latin America cited that Pega needs to further its SI network investments across these regions to enhance delivery capabilities. They also believe Pega should enable visibility into its partners’ delivery capabilities by further structuring its partner program and upgrading its partner portal.
  • Ensure talent availability: As Pega’s product portfolio rapidly expands beyond its core focus, enterprises have cited difficulties in hiring, retaining, and training resources on newer modules. So, they believe Pega should better structure its certification programs and make larger investments in well-curated learning and training initiatives for enterprises and service providers.
  • Deliver out-of-the-box solutions: Enterprises perceive Pega to be a complex platform that increases time-to-market and implementation spend. They also believe Pega should further invest in enhancing mindshare and adoption of Pega Marketplace to facilitate the development of out-of-the-box solutions.

While Pega’s rapidly expanding product portfolio makes it one of the important vendors for digital process transformation initiatives, it needs to continuously evaluate its platform capabilities and make targeted investments to consistently drive higher value for its clients.

How has your experience been with Pega? Please write to us at [email protected] and [email protected].

What Is Your Post-COVID-19 M&A Strategy | Blog

The International Monetary Fund has recently confirmed what most of us already know – we have entered a recession. Given the evolving COVID-19 situation, in the short-term, organizations are doing their best just to implement business continuity plans and keep the lights on. At this point, they simply don’t have the bandwidth to take a forward-looking view.

However, now – or at least very soon – maybe the best time to be bold – to consider the opportunity to slingshot through and out of the recession with a strong M&A strategy.

Increasing acquisition activity

As part of our technology research over the past few years, we’ve analyzed innovative firms (which we call Trailblazers) to identify high potential start-ups based on their growth stories, innovation, and the impact they have created in the market.

More recently, we’ve seen an uptick in M&A activity across the IT services market as organizations have sought exponential inorganic growth to expand their geographic footprints and/or fill gaps across their services portfolios. (See the exhibit below.)

timeline of acquisitions of high potential start ups presented by everest group 1

How we expect the recession to impact this activity

Although this has been an acquisition-rich industry in recent years, everything is completely different now – the post COVID-19 market is clearly headed straight into recession, or worse. If previous recessions are any indication, M&A activity is likely to take a hit. While we believe M&A activity in the immediate aftermath of the pandemic will be subdued, we also believe there will be some interesting opportunities for those willing to invest some thinking and strategizing.

Is now the right time for you to consider M&As?

As the world adjusts to the next normal following the pandemic, some specific technologies/tools are likely to see a surge in adoption, including cloud, collaboration and CX, network and security, IoT and edge, to name a few. These technologies will play an important role in ensuring business resiliency and serving a distributed and remote workforce.

Within this context, a well-planned acquisition strategy can enable competitive advantage for those organizations willing – and able – to take a bold approach. We believe this segment-specific activity will be further fueled by:

  • Lower valuations: Most start-ups take a relationship-based selling approach, with about 80% of their revenue coming from a few high-value, large clients or markets. As the recession deepens, start-ups that are highly dependent on a few clients and markets will struggle to survive, lowering their valuation and increasing their propensity to be acquired. The lower cost of capital and the impact of the financial stimulus are also going to provide acquirers an impetus to re-examine their M&A playbooks. One such example is Magic Leap, which is looking at opportunities to be acquired as the hardware sector faces threats from the COVID-19 crisis, the impending recession, and the trade war between the US and China. Cash-rich organizations (PE/VC firms, service providers, and BigTech companies) are already looking at leveraging their balance sheets amidst this downturn
  • An opportunity to fill portfolio gaps: As growth across IT services is expected to soften for the foreseeable future, now may be the time – and the price may be right – for organizations to augment their capabilities, expand their addressable market, and increase their top line

We are already seeing interest from acquiring firms focused on cloud services (AWS, Azure, GCP), enterprise platform adoption (capabilities in ServiceNow and Salesforce), network services, and security, to name a few. As we approach the fallout from the pandemic, a range of investors will be eyeing the technology sector for M&A opportunities, and we believe there will be a lot of activity. Picking the right segment bets and timing these initiatives will be crucial.

What is your post-COVID-19 M&A Strategy? Please write to us at [email protected] and [email protected].

Oracle Wins Over Microsoft and SAP in the Cloud ERP BigTech Battle

As part of our enterprise platform services research, we reached out to 15 global IT service providers and some of their key enterprise clients to understand their views on the leading cloud ERP vendors: Microsoft Dynamics 365, Oracle ERP Cloud, and SAP S/4 HANA.

We then analyzed their input against five important parameters.

Who’s the winner? Oracle ERP Cloud.

snapshot of cloud ERP vendor assessment

Here’s a drill-down on our analysis of the five parameters.

Technology sophistication/product excellence

Microsoft and SAP are still struggling to migrate all the on-premise functionalities to their cloud offerings. In fact, many of the enterprises we spoke with consider Dynamics 365 and S/4 HANA simplified versions of their on-premise offering, but with some functionality gaps. On the other hand, Oracle has made significant headway in its migration and is stepping up to integrate emerging technology capabilities into its cloud offering. Microsoft and SAP also lack case study-based proof points that demonstrate the maturity of their solution.

Ease of implementation and integration

Although implementation completion time is consistent among the three vendors’ cloud offerings, there are significant variations among their ease of integration. Because of its Fusion middleware, Oracle ERP Cloud is considerably easier to integrate with on-premise systems and other third-party applications than the others. SAP ranks lowest on this parameter, mainly because of challenges associated with integrating other SAP cloud offerings, such as SuccessFactors, Ariba, Concur, and Hybris, with the core S/4 HANA and on-premise SAP products.

Commercial flexibility

Here, Microsoft fares better than both Oracle and SAP. It has a friendlier licensing model wherein it bundles its cloud ERP offering with CRM and other Microsoft products. In comparison, SAP’s limited features and functionalities make mid-sized enterprises its largest buyer group. And Oracle’s hosting environment isn’t particularly flexible; it is pushing to keep the NetSuite and Oracle ERP Cloud workloads in-house on the Oracle platform.

Talent availability

Because of Oracle’s and SAP’s strong presence in the on-premise ERP market, there’s an abundance of talent with the knowledge to be upskilled to implement, integrate, and manage their cloud-based offerings. In fact, supply is larger than demand. But Microsoft is struggling here, with a ~20 percent demand-supply gap for trained developers and integration consultants.

Overall customer experience

Over the past few years, Oracle has been able to improve its end-user experience with software updates. Microsoft is trying to create a better customer experience with its integrated enterprise offering. Dynamics 365 engagements are no longer just standalone ERP or CRM engagements; instead, oriented around a transformational impact message, they also encompass Office 365, Azure cloud services, and the Power platform. SAP is creating a better customer experience by collaborating effectively with its clients on implementation and maintenance issues. But it still delivers an inconsistent user experience between its on-premise and cloud version. While all three vendors have made strides in delivering a better customer experience, Oracle rose to the top on this parameter.

Our analysis shows that Oracle ERP Cloud is the clear, present winner in the war among the top three vendors. Although Microsoft and SAP are catching up with Dynamics 365 and S/4 HANA, and are doing great in specific niches, it will take some time before they evolve their offerings and establish some credible proof points across different industries.

Watch this space for additional blogs on the kind of challenges enterprises are facing with cloud ERP adoption, and what they should do to tackle them.

What has been your experience with cloud ERP? Please write to us at [email protected] and [email protected].

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