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Magic Quadrant for SAP Application Services,


Worldwide
Published 26 February 2018 - ID G00340230 - 59 min read
By Analysts Kris Doering, Susan Tan, Fabio Di Capua

This Magic Quadrant evaluates 18 service providers' capabilities to deliver SAP application
implementation and management services on a worldwide basis. Sourcing and vendor
management leaders should use this research to help identify, evaluate and select potential
SAP application service providers.

Strategic Planning Assumption


By 2020, 35% of SAP Business Suite clients will be running S/4HANA.

Market Definition/Description
This Magic Quadrant is focused on the full life cycle of SAP application services, spanning
project-based implementation and multiyear application management services (AMS). Analysts
evaluate service providers for their ability to deliver a specific or comprehensive set of
implementation and management services across the SAP portfolio of products for clients
worldwide.

Comprehensive is defined as follows:

■ A distinct offering, consistent with common market service offerings as defined by the
following: scope of service, delivery structure, intellectual property (IP), roles and
responsibilities, service metrics and levels, terms and conditions, and pricing model. The
delivery structure is analyzed across all industries for general services, and is specific per
industry where applicable. The delivery structure is also analyzed with regard to consistent
internal delivery across all countries where such services are provided (through methodologies,
best-practice processes, tools, technology and people).

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


demand, where the offering is recognized by clients or analysts as an integrated offering.

SAP application implementation services are:

■ All project-based implementations of SAP applications without ongoing management


responsibilities. They include all products, applications, databases, analytics, middleware and
emerging technologies (on-premises and cloud-based). This category includes:

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■ Consulting services, which are advisory services designed to help companies analyze and
improve the effectiveness of business operations and technology strategies. Gartner divides
consulting services into two subsegments: business consulting services and IT consulting
services. Consulting services go beyond technical blueprinting to include such activities as
operating-model changes, business process improvement, and standardization and
harmonization of processes when they are part of an SAP program. They also include
program management, organizational change management and governance.

■ Development and integration services, which include application development,


implementation and integration services for first-time implementations, upgrades, rollouts,
consolidations, optimization or any combination thereof for any version. They also include
configuration, customization and enhancement of existing SAP functionalities, reports,
interfaces, conversions, extensions, forms, data loading, rollout, integration, testing and
training.

SAP AMS is:

■ All ongoing services focused on SAP applications that are provided as part of a multiyear-
based agreement and managed against defined quality metrics. This category 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 service agreement

■ All ongoing activities required to perform application monitoring and operational service
activities as formalized in run books, inclusive job scheduling and execution, and backup and
restoration of the in-scope applications

■ All ongoing activities required for providing, maintaining, securing, scheduling, backing up,
recovering and supporting inbound and outbound application interfaces (electronic data
extraction and translation and loading), web services and databases

This Magic Quadrant does not cover other SAP services, for example:

■ All activities relating to business process outsourcing

■ All ongoing infrastructure- and hosting-only services

■ Any physical — on-premises and cloud — compute assets' associated revenue

■ Product-only activities, such as from the resale of SAP licenses or the service provider's third-
party products

The list of industries included in this research can be found in Note 1.

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A more detailed analysis of the service providers' capabilities, with scoring based on use cases
(AMS or implementation), is available in "Critical Capabilities for SAP Application Services,
Worldwide."

Magic Quadrant
Figure 1. Magic Quadrant for SAP Application Services, Worldwide

Source: Gartner (February 2018)

Vendor Strengths and Cautions


Accenture
Accenture is in the Leaders quadrant.

The following numbers are Gartner estimates:

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■ Accenture has 47,750 SAP application service full-time equivalents (FTEs) worldwide; the
geographic breakdown of its FTEs is North America, 16%; Latin America, 7%; EMEA, 26%; and
Asia/Pacific (APAC), 51%.

■ Its SAP application service geographic breakdown by revenue is North America, 32%; Latin
America, 5%; EMEA, 44%; and APAC, 19%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 62% from implementation services

■ 38% from AMS

■ The top five industries from which Accenture derives its SAP application service revenue are
consumer products, retail, utilities and energy, life sciences,
science and chemicals.

Strengths
■ Strong global presence. Accenture has considerable strength and breadth in both SAP
implementations and AMS across the entire SAP portfolio. This is driven by more than 40 SAP
global delivery centers across many geographic regions, enabling Accenture to provide a
combination of local, regional and global resources.

■ Continued investment in SAP application services. Accenture's latest delivery evolution is the
introduction of an intelligent enterprise solution for SAP. This is a platform based on intelligent
automation enabled by industry-specific templates and reference systems, leading practices
and accelerators. The expected benefits to clients are automated business case development,
faster time to value, plus ongoing business process enhancements and improvements,
reducing the overall cost of application services.

■ Positive client feedback. Reference clients scored Accenture above the peer average in 17 of
the 20 capabilities scored. Its higher scores were for SAP vision and thought leadership, quality
of functional expertise, quality of industry expertise, service integration management, and
realization of innovation. Some of its reference clients specifically mentioned how Accenture
moved from being a vendor to a strategic partner for them.

Cautions
■ Not a good fit for the lower end of the small or midsize business (SMB) market. Accenture
indicated that 100% of its SAP application service revenue came from clients with more than
2,500 FTE. It is therefore not the best fit for SMB clients. Accenture also indicates that it's not a
good fit for clients seeking tactical projects that don't require Accenture's global scale or
breadth of capabilities.

■ Not the best match for cost-focused clients. Accenture states that it is not the best service
provider for clients who seek staff augmentation with a focus on cost, where there is no

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opportunity for innovation, continuous improvement or digital transformation services.

■ Inflexibility in contracting. Accenture reference clients scored it below the group average in
flexibility in contracting practices, total cost of contracted services and quality of core
functional technical skills. Accenture reference clients also had the highest reported
percentage of contracts with no contractual "at risk" amounts for poor performance. This
indicates a lower threshold of risk taking by Accenture versus the other Magic Quadrant peers.
Some if its reference clients indicated some issues with obtaining and retaining knowledgeable
resources on their account.

Atos
Atos is in the Challengers quadrant.

The following numbers are Gartner estimates:

■ The company has 12,950 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 4%; Latin America, 5%; EMEA, 54%; and APAC, 37%.

■ Its SAP application service geographic breakdown by revenue is North America, 7%; Latin
America, 6%; EMEA, 78%; and APAC, 9%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 44% from implementation services

■ 56% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
high tech, public sector, automotive, telecommunications and chemicals.

Strengths
■ Strong presence across Europe. Atos has several hundred local SAP specialists in almost
every Western European country (see Note 2), with more than 1,200 SAP service resources in
Eastern Europe for nearshore support to meet its clients' needs.

■ Investment in automation. Atos' recent investments include robotic process automation,


intelligent automation and cognitive automation for its SAP application management service
offerings. Its goal is to fully automate a majority of core SAP transactions within the next five
years. The expected benefits of this investment are to improve the resolution time of events
and provide guidance for its delivery team, resulting in lower costs and improved service levels.

■ Proactive in delivering innovation. Reference clients scored Atos well above the group average
in quality of functional expertise, proactiveness in bringing new ideas to clients, innovation
proposed and realized innovation. Some reference clients mentioned their high satisfaction
with their Atos project leaders.
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Cautions
■ Limited scale in North and Latin America. Atos' name recognition, brand identity, and critical
mass of business and skills are relatively lower than other competitors in North and Latin
America (see Notes 3 and 4). Buyers in these regions should ensure transparency of resources
as initiatives may require Atos to leverage specific functional and technical skills from other
geographic regions.

■ Smaller, on-premises SAP projects. Atos' implementation reference clients reported smaller
sized SAP on-premises projects versus the group average. Buyers looking for larger SAP cloud-
based implementations should vet Atos' proposed delivery resources for the appropriate
project experience.

■ Resource availability issues. Reference clients scored Atos below the group average in
(worldwide) regional capability, contracting practices, service integration management,
continuity of staff, quality of technical skills for emerging SAP products, and its ability to set,
manage and deliver against expectations. Its reference clients stated some issues with
obtaining the right resources from Atos.

Capgemini
Capgemini is in the Leaders quadrant.

The following numbers are Gartner estimates:

■ The company has 17,500 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 14%; Latin America, 6%; EMEA, 23%; and APAC, 57%.

■ Its SAP application service geographic breakdown by revenue is North America, 36%; Latin
America, 4%; EMEA, 52%; and APAC, 8%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 67% from implementation services

■ 33% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
retail, consumer products, utilities and energy, public sector, and industrial machinery and
components.

Strengths
■ Presence across Europe. Capgemini has a strong global delivery model with a large presence
in Europe, especially in France, Italy and the Benelux countries, with hundreds of local
resources in the other Western European countries (see Note 2). Nearshore support for Europe
is provided out of Poland.

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■ End-to-end automation and analytics. Capgemini has invested in the development of its own
automation tools coupled with third-party automation and analytic tools to provide end-to-end
automation across the phases of SAP implementation and management services. The client
benefit of this library of automation tools has resulted in several referenced client wins over
competitors.

■ Relationship and delivery focus. Reference clients scored Capgemini well above the group
average for relationship management, service integration management, contracting practices,
and its desire to go beyond contractual obligations. Several of its reference clients stated the
strength of Capgemini as a strategic partner.

Cautions

■ Low fees at risk for nonperformance. Even though a higher percentage of Capgemini's
reference clients indicated the presence of at-risk amounts in their contracts, the percentage at
risk was much lower than the group average. This is not the optimal structure for clients
looking to drive the right delivery behavior from their service provider. Capgemini's reference
clients also reported the highest use of time and materials of the peer group for SAP
implementation projects.

■ Regional structure. Several reference clients indicated issues with gaining access to the right
skilled Capgemini resource in other regions due to the way that Capgemini is organizationally
structured by regions that created artificial barriers.

■ Skills challenges. Reference clients scored Capgemini below the group average for quality of
technical skills for emerging SAP products, quality of industry expertise, continuity of staff and
innovation realization. Multiple reference clients indicated an issue with the experience and
knowledge level of some Capgemini resources.

CGI
CGI is in the Niche Players quadrant.

The following numbers are Gartner estimates:

■ The company has 3,218 SAP application service FTEs worldwide; the geographic breakdown of
its FTEs is North America, 10%; Latin America, 2%; EMEA, 70%; and APAC, 18%.

■ Its SAP application service geographic breakdown by revenue is North America, 17%; Latin
America, 1%; EMEA, 75%; and APAC, 7%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 43% from implementation services

■ 57% from AMS

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■ The top five industries from which the company derives its SAP application service revenue are
industrial machinery and components, retail, public sector, telecommunications, and insurance.

Strengths
■ Targeted strength in local European countries. CGI is among the smallest vendors included in
this Magic Quadrant in terms of resources. However, its combined presence in the U.K., Spain
and France totals more than 1,200 SAP service resources. This is augmented by more than 100
local resources in each of the Benelux and Nordic countries, and in Germany.

■ Targeted industry focus. CGI supports eight industries globally, with more than one-third of its
SAP service revenue in industrial machinery and components. Clients in these industries
should seek out CGI for its depth in the combination of its functional and technical SAP
capabilities.

■ Focus on HANA. Considering its smaller size versus its peer group, CGI has a good track record
in attracting and converting existing and new clients to SAP HANA-based solutions. The
breadth of these conversions includes SAP Enterprise Central Component (ECC), HR, SAP
Process Control, SAP Enterprise Data Warehouse (EDW), and SAP Business Warehouse (BW).

Cautions

■ Limited resources in emerging markets. CGI has limited resources based in Latin America (see
Note 4) and no presence in the Middle East, and it does not indicate any intentions to invest in
these regions.

■ Limited experience in cloud projects. Based on feedback from reference clients, CGI had one
of the lowest percentages of cloud-based SAP implementation engagements. Buyers looking
for SAP cloud-based implementations should vet CGI's proposed delivery resources (and
process methodology) for the appropriate cloud project experience.

■ Lower qualitative scores compared to peers. Reference clients scored CGI the lowest across
the included vendors for 14 out of the 20 measured categories, with the lowest scores for
innovation realized, service integration management and continuity of staff.

Cognizant
Cognizant is in the Challengers quadrant.

The following numbers are Gartner estimates:

■ The company has 10,472 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 17%; Latin America, 2%; EMEA, 11%; and APAC, 70%.

■ Its SAP application service geographic breakdown by revenue is North America, 54%; Latin
America, 3%; EMEA, 37%; and APAC, 6%.

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■ The revenue breakdown of its worldwide SAP services is as follows:

■ 58% from implementation services

■ 42% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
life science
sciences, consumer products, retail, banking, and utilities and energy.

Strengths

■ Investment in service delivery. Cognizant continues to invest to improve service delivery value
through accelerators (e.g., value extraction frameworks and migration toolkits for S/4HANA)
and automation (e.g., EAZAuto cognitive solutions, industry-specific tools) with reported
average reduction in ticket resolution time by 20%.

■ Contractual guarantees on management service delivery. Cognizant reference clients reported


a high percentage of contracts incorporating at-risk amounts for SAP application management
services. These references also reported the highest average at-risk percentage among the
peer group. This indicates a higher confidence level from Cognizant in its service delivery
model.

■ Satisfied reference clients. Reference clients scored Cognizant considerably above the peer
average on total cost, contracting practices, quality of core functionality technical skills, quality
and professionalism of staff, and the desire to go beyond contractual obligations. Several
reference clients stated very positive comments about Cognizant's implementation teams.

Cautions

■ Fewer local capabilities across Latin America and EMEA. Although Cognizant continues to
invest in local capabilities in Latin America (see Note 3) and EMEA (see Note 2), its domestic
resources across those regions are limited. Given EMEA is one of the largest buying markets of
SAP services, this limits Cognizant's ability to deliver on large complex global engagements.
Cognizant still relies on its global delivery capabilities — mostly in India — to support those
clients.

■ Project and program management skills. Several client references reported issues regarding
Cognizant's project and program management capabilities. Buyers should vet proposed project
and program managers for the appropriate skills and experience.

■ Industry expertise. Reference clients scored Cognizant below the group average in the quality
of its industry expertise. This may reflect issues with Cognizant's horizontal service delivery
model. Cognizant has partnered with different business consulting firms around the globe to
augment its industry capabilities.

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Deloitte
Deloitte is in the Leaders quadrant.

The following numbers are Gartner estimates:

■ The company has 18,226 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 33%; Latin America, 10%; EMEA, 22%; and APAC, 35%.

■ Its SAP application service geographic breakdown by revenue is North America, 56%; Latin
America, 5%; EMEA, 27%; and APAC, 12%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 84% from implementation services

■ 16% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
consumer products, utilities and energy, retail, life sciences,
science and high tech.

Strengths
■ Comprehensive global presence. Deloitte has global breadth in its SAP practice across the
entire SAP portfolio. Deloitte uses its 23 global delivery centers and SAP practitioners in 150
countries across multiple geographies to deliver SAP application services to its clients.

■ Industry and business process expertise. Deloitte combines standard implementation models
with strong industry expertise, in combination with value mapping tools to increase the
business benefits of SAP services. Deloitte indicates it has more than 50 preconfigured
industry solutions. Its reference clients scored Deloitte high on industry expertise, with some
reference clients specifically citing their knowledge of their business processes.

■ Staff continuity and relationship management. Reference clients scored Deloitte above the
group average for all 20 categories, with high reference scores for its relationship management,
staff continuity and the quality of its functional expertise. Many reference clients cited the
strength of Deloitte's implementation teams.

Cautions

■ Targeted focused on SAP application management. Although the relative size of its SAP
management services is increasing, Deloitte continues to generate by far the majority of its
revenue through SAP implementation services. Deloitte focuses on specific clients and
industries for SAP application management contracts, typically where it is the implementer of
the solution, as opposed to commodity-based IT application management contracts.

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■ Not suitable for pure commodity services. Deloitte indicates that it commonly combines
business consulting with technology consulting, leading to implementation and management
service deals. Organizations looking for pure commodity, infrastructure-only or cost-focused
SAP management services are not its preferred clients.

■ Need to proactively coach clients. Its reference clients cite the need for Deloitte to proactively
guide and coach less-mature clients in SAP implementation projects.

DXC Technology
DXC Technology (DXC) is in the Niche Players quadrant.

The following numbers are Gartner estimates:

■ The company has 15,228 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 11%; Latin America, 9%; EMEA, 17%; and APAC, 63%.

■ Its SAP application service geographic breakdown by revenue is North America, 44%; Latin
America, 6%; EMEA, 40%; and APAC, 10%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 47% from implementation services

■ 53% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
consumer products, high tech, industrial machinery and components, aerospace and defense,
and automotive.

Note: On 1 April 2017, the merger that CSC and HPE announced on 24 May 2016, for HPE to spin
off its Enterprise Services group and merge it with CSC, was completed. The new brand for the
merged operation is DXC Technology. This analysis is based on the merged SAP application
service operation, which was aggregated and presented as DXC SAP application services.

Strengths
■ Strong global presence and breadth of SAP solutions. DXC has a local SAP presence in more
than 54 countries, including European countries, the Middle East, Latin America countries (see
Note 4), and APAC (see Note 5). Globally, DXC has 39 integrated delivery centers focused on
application services across the entire SAP portfolio.

■ Investment in infrastructure and application SAP solutions. DXC has invested in a platform-
driven, full-stack automation solution called Enterprise Solutions On Demand (ESO) for SAP
and HANA Remote Services (HRS) on "any cloud." This provides flexibility to the client in
choosing which cloud platform or vendor is most appropriate for its needs.

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■ Satisfied global clients. Reference clients scored DXC considerably higher than the peer
average for regional capability, service integration management and relationship management.
Some clients specifically cited positive comments regarding the partnership mentality of DXC.

Cautions
■ Thinly spread across many industries. DXC generates SAP service revenue in almost all
industries, indicating a more opportunistic approach rather than a targeted industry focus. DXC
has recently started to focus and invest in specific industry segments globally. Buyers should
vet the proposed delivery resources for their specific industry knowledge.

■ Low business process maturity. Consistent feedback across DXC reference clients indicates
that it needs to improve in business process understanding and in training its management
staff in client processes and SAP solutions. Since DXC has positioned its broader business
process capabilities in its consulting division, buyers should ensure both SAP and consulting
resources are engaged for the proper business experience where it is required.

■ Lower client satisfaction in technical and functional expertise. Reference clients scored DXC
below the group average in the quality of technical skills for emerging SAP products, quality of
technical skills for core SAP functionality and functional expertise.

Fujitsu
Fujitsu is in the Niche Players quadrant.

The following numbers are Gartner estimates:

■ The company has 2,115 SAP application service FTEs worldwide; the geographic breakdown of
its FTEs is North America, 7%; Latin America, 0%; EMEA, 31%; and APAC, 62%.

■ Its SAP application service geographic breakdown by revenue is North America, 15%; Latin
America, 0%; EMEA, 36%; and APAC, 49%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 34% from implementation services

■ 66% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
industrial machinery and components, consumer products, oil and gas, professional services,
and chemicals.

Strengths
■ Targeted country-specific capabilities. Across the global marketplace, Fujitsu resources are
very selectively targeted in two regions: APAC and Japan (APJ; primarily Japan) and Europe
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(within targeted countries: Germany, the Nordics and, to a lesser extent, the U.K.). In Germany,
Fujitsu has located its SAP center of excellence (COE) and new technology lab close to SAP
itself for joint global solution creation, as well as for creating offerings with Fujitsu IP on top of
SAP solutions.

■ Automation as core to SAP management services. Fujitsu continues to invest in automation


with its Fujitsu Connected Enterprise and Smart Transformational Application Managed
Services (SmarTAMS) for SAP management services, end-to-end solutions supporting the
entire application life cycle. The reported benefit of these automation tools is an average
productivity gain of approximately 20%.

■ Functional and technical expertise. Its reference clients score Fujitsu above average for the
quality of its technical skills for core functionality and emerging SAP products, innovation
realized, and integration management. Several reference clients provided very positive
comments regarding Fujitsu's ability to understand their business requirements.

Cautions
■ Minor presence across Europe and the Americas. Fujitsu's size and concentration in Germany
and the Nordic countries skew its ability to provide local SAP resource support across the
majority of Europe, the Middle East and Africa. Fujitsu has the fewest number of resources of
the peer group in North America (see Note 3) and no SAP resources in Latin America (see Note
4).

■ Limited experience in SAP SaaS solutions. Fujitsu's reference clients reported one of the
lowest percentages of cloud-based SAP solutions among the peer groups. Buyers should vet
Fujitsu delivery resources for the appropriate experience in cloud-based SAP solutions.

■ Lower client satisfaction in most capabilities. Reference clients scored Fujitsu below the group
average in 12 of the 20 capabilities surveyed. The lowest reference scores were for regional
capability, bringing new ideas to clients, innovation proposed, and continuity of staff. Some
reference clients indicated they would like to see more innovation and thought leadership from
Fujitsu.

HCL Technologies
HCL Technologies (HCL) is in the Leaders quadrant.

The following numbers are Gartner estimates:

■ The company has 10,040 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 24%; Latin America, 2%; EMEA, 20%; and APAC, 54%.

■ Its SAP application service geographic breakdown by revenue is North America, 46%; Latin
America, 2%; EMEA, 41%; and APAC, 11%.

■ The revenue breakdown of its worldwide SAP services is as follows:


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■ 65% from implementation services

■ 35% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
aerospace and defense, consumer products, utilities and energy, life sciences,
science and retail.

Strengths
■ Continued investment in automation. HCL continues to invest in its DRYiCE platforms powered
by AI and automation. These platforms include virtual operations management without human
intervention and intelligent development for accelerated software build, test and release in
DevOps. The reported benefits of the DRYiCE platform range from a 32% in cost savings by
reducing the labor required to a 78% improvement in application stability by reducing the
number of high-priority incidents.

■ Fixed-price AMS contracts. HCL reference clients reported a high number of fixed-price
contracts for application managed services versus the peer group. This shows the maturity and
confidence of HCL AMS delivery in meeting client requirements.

■ Satisfied clients. Reference clients scored HCL very high for the quality and professionalism of
its staff, the quality of its functional expertise, and its knowledge management and transfer
capabilities. Several reference clients stated the HCL had exceeded their expectations during
their SAP implementation project.

Cautions
■ Fewer production clients in S/4HANA. Compared with its main competitors, HCL has a limited
number of production clients on S/4HANA. Buyers should vet proposed HCL resources for
adequate experience in S/4HANA implementation and management services.

■ Low fees at risk for nonperformance. HCL's reference clients reported a low percentage of their
contracts with at-risk amounts for nonperformance compared to the peer group. For those
clients with at-risk amounts, the percentage at risk was much lower than the group average.

■ Service integration management. Reference clients scored HCL below the group average in
innovation realized and service integration management. Some reference clients cited the need
for HCL to be better at communicating key resource changes and succession.

IBM
IBM is in the Leaders quadrant.

The following numbers are Gartner estimates:

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■ The company has 37,000 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 12%; Latin America, 6%; EMEA, 18%; and APAC, 64%.

■ Its SAP application service geographic breakdown by revenue is North America, 39%; Latin
America, 6%; EMEA, 36%; and APAC, 19%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 59% from implementation services

■ 41% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
chemicals, consumer products, industrial machinery and components, life science
sciences, and
utilities and energy.

Strengths

■ One-stop shop. IBM has a full-service practice for SAP implementations and AMS across the
entire SAP portfolio, which is supplemented with breadth and depth in infrastructure services. It
continues to have one of the largest SAP practices across the globe, with extensive industry
coverage. IBM has very strong capabilities in Western and Eastern Europe and also has
hundreds of resources in Africa and the Middle East. This provides IBM with the capability to
deliver small to large local or global projects and application management services.

■ Vision on cognitive capabilities and AI. IBM is very active in integrating and embedding its
cognitive capabilities (Watson) into SAP to turn insight into action for clients. IBM utilizes the
"Run SAP Like a Factory" approach and IBM Watson to anticipate and reduce service
disruptions. It has so far resulted in reported benefit examples of 20% reduction in resolution
times. IBM is also developing machine learning tools to drive rapid adoption of SAP
functionality by training self-service bots and to provide guidance to change agents in client
organizations, all focused to reduce barriers to change.

■ Satisfied clients. IBM's reference clients score it above the group average in 16 of the 20
capabilities surveyed. IBM received good scores for total cost of contracted services, quality of
industry expertise, continuity of staff, and the quality of technical skills for core functionality.
IBM's reference clients also reported a high percentage of their contracts with at-risk amounts
compared to the peer group, which shows IBM's high confidence in its service delivery models
for SAP application services. Some reference clients provided positive comments regarding
IBM's innovative solutions for their business requirements.

Cautions

■ Siloed client delivery. Several reference clients who have procured large, complex global deals
from IBM report that, at times, they find the broad IBM teams to work in silos (multiple delivery

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organizations). This makes it difficult to achieve the synergies and benefits of selecting one of
the largest SAP service providers in the world.

■ Inconsistency in service delivery model. Although IBM's reference clients scored it above the
group average in 16 of the 20 capabilities surveyed, the average scoring on the overall
satisfaction and "rehire" question were below the peer group average. This scoring difference
indicates that clients are satisfied with specific capabilities of IBM, but not satisfied with IBM's
service delivery as a whole.

■ Need for improved new solution planning. Reference clients scored IBM below the group
average for regional capability, quality of technical skills for emerging SAP products, service
integration management and bringing ideas to the client. The "below average" score for
regional capability shows a disconnect between the strength of IBM's global and regional
capabilities and the client's satisfaction with them. Several reference clients indicated the need
for improved planning and communication on the changeover to the new solution.

Infosys
Infosys is in the Challengers quadrant.

The following numbers are Gartner estimates:

■ The company has 14,875 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 13%; Latin America, 4%; EMEA, 20%; and APAC, 63%.

■ Its SAP application service geographic breakdown by revenue is North America, 38%; Latin
America, 4%; EMEA, 50%; and APAC, 8%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 64% from implementation services

■ 36% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
life science
sciences, consumer products, agriculture, automotive and high tech.

Strengths
■ Strong presence in Western and Central Europe. Infosys has the largest local presence in
Europe of all the Indian heritage vendors included in this Magic Quadrant. It is well-represented
in the U.K., the DACH region (Germany, Austria and Switzerland) and the Benelux countries,
supported through a strong Eastern European presence for nearshore support.

■ Continued investment in AI and automation toolsets. Nia is Infosys' flagship intelligent


automation product suite of solutions, which it includes in its SAP AMS delivery framework in
the form of ValuePLUS. Reported benefits of ValuePLUS include a 50% reduction in incidents.
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■ Client-friendly contracts. Reference clients scored Infosys above the group average for total
cost of contracted services, contracting practices, regional capability and quality of its
functional expertise. Several reference clients provided positive comments regarding the
knowledge of their Infosys implementation resources.

Cautions
■ Low fees at risk for nonperformance. The percentage of Infosys' reference clients reporting
their contracts contained at-risk amounts for nonperformance was in line with the peer group.
For those clients with at-risk amounts, the percentage at risk was lower than the group average.
Lower fees at risk by a service provider may indicate a lower confidence level in its service
delivery model.

■ Fewer references on SAP SaaS solutions. Reference clients provided by Infosys reported a
lower percentage of SAP SaaS solutions than the peer group average. Buyers should vet
proposed Infosys delivery resources for the appropriate experience in SAP SaaS solutions.

■ Lower skill sets for new SAP solutions. Reference clients scored Infosys below the group
average in 16 of the 20 capabilities surveyed. Its lower scores compared to peers were for the
quality of technical skills for emerging SAP products, SAP vision and thought leadership,
service integration management, and proposing innovation. Some reference clients indicated
the need for Infosys to improve its cost and resource estimates for implementing the newer
SAP solutions.

NEORIS
NEORIS is in the Niche Players quadrant.

The following numbers are Gartner estimates:

■ The company has 3,097 SAP application service FTEs worldwide; the geographic breakdown of
its FTEs is North America, 6%; Latin America, 78%; EMEA, 15%; and APAC, 1%.

■ Its SAP application service geographic breakdown by revenue is North America, 18%; Latin
America, 64%; EMEA, 18%; and APAC, 0%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 84% from implementation services

■ 16% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
mill products, healthcare (providers), banking, agriculture, and utilities and energy.

Strengths

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■ Strong Latin American coverage. NEORIS has the largest number of SAP resources in the Latin
American (see Note 4) region compared to the peer group. This is certainly a plus for buyers
who need significant Spanish and Portuguese speaking and writing skills and for clients in
North America seeking nearshore options.

■ Breadth of SAP solution implementation capabilities. NEORIS has broad implementation


across the entire SAP portfolio, including on-premises and cloud-based solutions. This breadth
would be a plus to clients looking to implement a hybrid SAP environment.

■ Client-friendly contracts. Reference clients scored NEORIS high for its ability to manage
expectations, contracting practices, SAP vision and thought leadership, and the quality of
industry expertise. Several reference clients provided very positive comments regarding
NEORIS' flexibility and partnership mentality.

Cautions
■ Fewer SAP resources outside of Latin America. Outside of a large number of resources in
Spain, NEORIS has a lower number of SAP resources in EMEA than most of its peers. It also
has a lower number of SAP resources in North America (see Note 3). The lower number of SAP
resources in India (and APAC) can impact the cost of application service delivery.

■ Limited process and functional depth. A relatively large portion of NEORIS deals focus on more
technical elements of SAP implementation. Clients seeking process and functional expertise in
a particular industry should proactively vet NEORIS resources to ensure a good fit.

■ Not the low-cost provider. Reference clients scored NEORIS below the group average for the
total cost of contracted services, the quality and professionalism of the staff, and knowledge
management and transfer capabilities. Some reference clients stated that NEORIS' delivery
methodology is an area needing improvement.

NTT DATA
NTT DATA is in the Challengers quadrant.

The following numbers are Gartner estimates:

■ The company has 10,087 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 9%; Latin America, 3%; EMEA, 51%; and APAC, 37%.

■ Its SAP application service geographic breakdown by revenue is North America, 28%; Latin
America, 1%; EMEA, 47%; and APAC, 24%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 70% from implementation services

■ 30% from AMS

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■ The top five industries from which the company derives its SAP application service revenue are
industrial machinery and components, automotive, consumer products, utilities and energy, and
high tech.

Strengths
■ Targeted European-driven geographic strategy. NTT DATA has grown through multiple
acquisitions in Europe, focusing on increasing its SAP capabilities, which resulted in broad
Western European coverage (see Note 2). It has Pan-European coverage, including a strong
presence in Germany, the Nordics and Spain. Additional support is provided by an Eastern
European capability.

■ Higher percentage of fees at risk for implementation. The percentage of NTT DATA's reference
clients reporting their implementation contracts contained at-risk amounts for nonperformance
was in line with the peer group. For those clients with at-risk amounts, the percentage at risk
was higher than the group average. Higher fees at risk demonstrate the service provider's
service delivery strength and confidence that it will earn 100% of its fees.

■ Good client feedback on capabilities. NTT DATA's reference clients gave it high scores for
going beyond contractual obligations, its ability to manage expectations, SAP vision and
thought leadership, and regional capabilities. Several reference clients provided positive
comments regarding the executive commitment and sponsorship from NTT DATA.

Cautions
■ Limited collaboration among acquired and owned companies. NTT DATA's approach to
acquisitions is a federated model where collaboration is expected with acquired and owned
companies. Unfortunately, this has led to a domestic focus by each subsidiary and an
opportunistic approach to cross-country or regional deals. This limited collaboration makes it
confusing for buyers to understand which NTT DATA company to work with on their
opportunity. Clients have expressed the need for better collaboration (deliver services as one
entity) from the NTT DATA-acquired and -owned companies.

■ Lower SAP resources in Latin America. NTT DATA has fewer SAP resources in Latin America
(see Note 4) than most of the peer group. It does, however, leverage its significant resources in
Spain in providing services to Latin America.

■ Satisfaction issues with industry knowledge. Reference clients scored NTT DATA below the
group average on the quality of its industry expertise. Several reference clients stated that NTT
DATA needed to improve its project management methodology.

PwC
PwC is in the Visionaries quadrant.

The following numbers are Gartner estimates:

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■ The company has 8,331 SAP application service FTEs worldwide; the geographic breakdown of
its FTEs is North America, 31%; Latin America, 10%; EMEA, 27%; and APAC, 32%.

■ Its SAP application service geographic breakdown by revenue is North America, 39%; Latin
America, 10%; EMEA, 29%; and APAC, 22%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 97% from implementation services

■ 3% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
industrial machinery and components, utilities and energy, consumer products, oil and gas, and
chemicals.

Strengths
■ Vision of business-led transformationand benefits. PwC takes a business approach to its SAP
engagements and is able to bring strategy, industry, process, tax and software expertise to bear
on a program. It emphasizes aligning business with IT and focuses on adding value in
differentiated processes.

■ Investments in implementation of newer SAP solutions. PwC has invested in developing its
implementation practice to focus on the newer SAP technologies and SaaS solutions such as
S/4HANA, Ariba, Hybris and SuccessFactors.

■ Quality of new SAP solutions. PwC's reference clients gave it high scores for the quality of
technical skills for emerging SAP products, the quality and professionalism of assigned staff,
and bringing ideas to the client. Several reference clients provided very positive comments
regarding PwC industry and business process knowledge.

Cautions
■ Limited focus on SAP application management services. Ninety-seven percent of PwC's
revenue base is derived from SAP implementation services. PwC may not always be the best fit
for SAP AMS deals. Typically, PwC will not bid on AMS deals for clients unless it implemented
the SAP solution.

■ Not focused on older or purely technical SAP solutions. PwC is not focused on implementing
or managing older SAP solutions such as ECC or where the focus of the engagement is on
technology only.

■ Not the low-cost or risk-taking provider. Reference clients scored PwC below the group
average on its regional capability, innovation realized and total cost of contracted services.
PwC reference clients reported a lower number of contracts with at-risk amounts and a lower

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at-risk percentage for those contracts with an at-risk provision. Several reference clients
reported issues with resource management and resource stability.

SAP
SAP is in the Visionaries quadrant.

The following numbers are Gartner estimates:

■ The company has 14,862 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 18%; Latin America, 7%; EMEA, 46%; and APAC, 29%.

■ Its SAP application service geographic breakdown by revenue is North America, 35%; Latin
America, 7%; EMEA, 45%; and APAC, 13%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 73% from implementation services

■ 27% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
retail, consumer products, public sector, oil and gas, and banking.

Strengths
■ Technical depth. SAP's service practice is heavily focused on implementation projects and
sharing the vision of its product roadmap with clients. SAP services teams are sought after for
technical depth, where SAP is leading projects or supplementing resources (e.g., for assurance
purposes) to other service providers or directly to clients.

■ Broad reach and presence globally. SAP has built up local capabilities in every country that
Gartner tracks except Vietnam. Besides overall European and North American coverage, SAP
has invested in local SAP resources in the Middle East, Africa and Latin America (see Note 4).

■ Consistent technical skills. Reference clients scored SAP above the group average for quality
of technical skills for core functionality, innovation realized and continuity of staff. Several
reference clients provided very positive comments regarding the depth and breadth of the
technical knowledge of SAP's resources.

Cautions
■ Siloed client delivery. Several reference clients who have procured implementation services
from SAP report that, at times, they find there are different SAP teams assigned and each
delivers in a siloed approach (multiple divisions not acting as one), causing communication
and integration problems. These clients would like to see more cohesiveness among the
different SAP teams for service delivery.
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■ Focused on SAP solutions only. The SAP service practice has a defined scope and range that
are limited to the SAP product base. Its application management service delivery model is not
as strong or mature as its implementation delivery model. Those clients with an application
portfolio that goes beyond the SAP product set typically do not seek out SAP's service
organization.

■ Contractual issues. Reference clients scored SAP below the group average in 17 of the 20
capabilities surveyed. Its lower scores compared to peers were for contracting practices, total
cost of contracted services, bringing ideas for improvement, and going beyond the contractual
obligations.

TCS
Tata Consultancy Services (TCS) is in the Leaders quadrant.

The following numbers are Gartner estimates:

■ The company has 17,400 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 9%; Latin America, 2%; EMEA, 9%; and APAC, 80%.

■ Its SAP application service geographic breakdown by revenue is North America, 36%; Latin
America, 2%; EMEA, 45%; and APAC, 17%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 60% from implementation services

■ 40% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
high tech, life science
sciences, retail, automotive, and industrial machinery and components.

Strengths
■ Continued investment in automation. TCS continues to invest and improve the capabilities of
ignio, a neural automation system. ignio for SAP integrates with SAP enterprise systems and
tools, takes responsibility for work and sends items to humans only when it needs help.
Reported benefits from ignio range from a 30% to 70% reduction in labor for specific tasks.
Additionally, TCS' SAP services portfolio has great global depth and breadth.

■ Fixed pricing in contracts. Reference clients reported a much higher percentage of fixed-price
contracts from TCS for both implementation and AMS services. This indicates a high level of
confidence by TCS in its service delivery.

■ Good client feedback on capabilities. TCS's reference clients score it above the group average
in 16 of 20 capabilities surveyed. Its higher scores were for the quality of technical skills for
core functionality, quality and professionalism of assigned staff, regional capability, total cost
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of contracted services, and service integration management. Some reference clients provided
positive comments regarding the scale and breadth of TCS's resources.

Cautions
■ Project management. Several reference clients reported issues with TCS project management
capabilities. Buyers should vet proposed TCS project managers for the appropriate experience.

■ Inconsistency in resource capabilities. Even though TCS's reference clients scored it above the
group average in 16 of the 20 capabilities surveyed, several reference clients cited issues with
resources with inadequate skill sets. Client should vet proposed key resources from TCS for the
appropriate skill set and experience.

■ Lower functional expertise. Reference clients scored TCS below the group average in quality of
functional expertise, client reference checks, innovation proposed, and knowledge
management and transfer. Several reference clients reported issues with TCS's project and
planning management skills.

Tech Mahindra
Tech Mahindra is in the Niche Players quadrant.

The following numbers are Gartner estimates:

■ The company has 8,321 SAP application service FTEs worldwide; the geographic breakdown of
its FTEs is North America, 7%; Latin America, 7%; EMEA, 9%; and APAC, 77%.

■ Its SAP application service geographic breakdown by revenue is North America, 33%; Latin
America, 13%; EMEA, 35%; and APAC, 19%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 57% from implementation services

■ 43% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
consumer products, industrial machinery and components, life science
sciences, automotive, and high
tech.

Strengths
■ Local presence in European countries, the Middle East and Africa. Tech Mahindra has good
local capabilities in the EMEA countries analyzed (see Note 2). Its main presence is in the U.K.,
followed by Germany and the Middle East.

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■ Strong manufacturing industry experience. Many manufacturing reference clients cited Tech
Mahindra as an invaluable strategic partner for their business based on its commitment to and
investments in its manufacturing industry practice, in line with the DNA of its parent company.

■ Cost-effective provider. Reference clients scored Tech Mahindra above the group average for
total cost of contracted services. Several reference clients stated positive comments regarding
the commitment level of Tech Mahindra's delivery team.

Cautions
■ Staffing challenges and management. Qualitative feedback from Tech Mahindra reference
clients indicated that it needs to improve some aspects of resourcing its staff in terms of
onshore-offshore coordination. It also needs to develop bench strength for niche SAP technical
skills and implement an accelerated candidate screening process to speed up staffing.

■ Lower fees at risk for nonperformance. The percentage of Tech Mahindra's reference clients
reporting their contracts contained at-risk amounts for nonperformance was higher than the
peer group. However, for those clients with at-risk amounts, the percentage at risk was much
lower than the group average. Lower at-risk amounts can indicate that the service provider may
have a lower confidence level in its delivery model.

■ Lower innovation. Reference clients scored Tech Mahindra below the group average in 19 of
the 20 capabilities surveyed. Its lower scores compared to other Magic Quadrant peers were
for innovation proposed, bringing ideas to the client, quality of technical skills for core
functionality, vision and thought leadership, and regional capability.

Wipro
Wipro is in the Challengers quadrant.

The following numbers are Gartner estimates:

■ The company has 11,013 SAP application service FTEs worldwide; the geographic breakdown
of its FTEs is North America, 12%; Latin America, 2%; EMEA, 14%; and APAC, 72%.

■ Its SAP application service geographic breakdown by revenue is North America, 42%; Latin
America, 3%; EMEA, 41%; and APAC, 14%.

■ The revenue breakdown of its worldwide SAP services is as follows:

■ 53% from implementation services

■ 47% from AMS

■ The top five industries from which the company derives its SAP application service revenue are
high tech, utilities and energy, consumer products, life sciences,
science and industrial machinery and
components.
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Strengths

■ Local presence EMEA-wide. Wipro has local SAP service resources in the Benelux countries,
France, Germany, the U.K., Austria and Switzerland. Outside of these countries, Wipro also has
local resources in the other European countries, a strong presence in the Middle East and local
resources in Africa (see Note 2).

■ Higher fees at risk for nonperformance. The percentage of Wipro's reference clients reporting
their contracts contained at-risk amounts for nonperformance was higher than the peer group.
For those clients with at-risk amounts, the percentage at risk was much higher than the group
average.

■ Cost-effective provider. Reference clients scored Wipro above the group average for total cost
of contracted services, quality of technical skills for emerging SAP products, and service
integration management. Some reference clients commented on the strength of Wipro as a
partner.

Cautions
■ More prominent leadership role demanded. Several reference clients expressed a desire for
Wipro to push back where it makes sense and take the lead in projects and service delivery
versus acquiescing to the client's wishes.

■ Project budgeting and timing issues. Wipro's implementation reference clients reported a
higher incident of their implementation projects being over budget (by more than 50%) and over
schedule (by more than six months) versus the Magic Quadrant peer group.

■ SAP vision and thought leadership. Wipro scored below the group average in 15 of the 20
capabilities surveyed. Its lower scores compared to peers were for SAP application vision and
thought leadership, quality of technical skills for core functionality, and (worldwide) regional
capability.

Vendors Added and Dropped


We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of
these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's
appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we
have changed our opinion of that vendor. It may be a reflection of a change in the market and,
therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added
This is a new Magic Quadrant, so no companies were added.

Dropped
This is a new Magic Quadrant, so no companies were dropped.

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Inclusion and Exclusion Criteria


The criteria for inclusion of service providers for the Magic Quadrant are based on a combination
of quantitative and qualitative measures.

Quantitative Criteria

Service providers included in this Magic Quadrant must satisfy all four of the following
quantitative criteria:

■ A minimum of $15 million in external revenue worldwide for implementations

■ A minimum of $15 million in external revenue worldwide for application management services

■ A minimum of $300 million in external revenue worldwide for implementations and application
management combined

■ Geographic breakdown of worldwide revenue must adhere to a minimum level from specific
regions as follows:

■ Application service revenue from three of the four regions

■ No more than 90% of the application service revenue from one region

Revenue was estimated for the period April 2016 through March 2017.

Qualitative Criteria

■ Overall market interest in and visibility of the service provider as determined by serious
consideration for selection from enterprise clients

■ Gartner analysts' interactions with enterprise buyers, which reveal interest in specific SAP
Application service providers

■ Broad capability and technical/package expertise in combination with domain and process
knowledge of the SAP application suites

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
to capitalize on their vision.

Product or Service: This criterion involves core services offered by the vendor for the defined
market. This includes current service offerings, as defined in the market definition and expressed

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by growth, capacity, market penetration, skills availability, breadth and depth of offering. The
subcriteria for the Magic Quadrant are:

■ Capability to address the entire product SAP product suite

■ End-to-end capabilities, including program management, design, implementation,


organizational change management and managed services

■ Scale and complexity of the SAP engagements

Overall Viability: Financial 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 and continue to offer the service. It also includes
advancing the state of the art within the organization's portfolio of services, especially new
emerging solutions.

The subcriteria for the Magic Quadrant are:

■ SAP practice area profile (e.g., financial strength, organic revenue and FTE growth, acquisitions,
utilization, and attrition)

■ Investments in newer SAP solutions and resources (e.g., IP, assets, tools, people)

Sales Execution/Pricing: This criterion assesses 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.

The subcriteria for the Magic Quadrant are:

■ Pricing strategy and use of alternative pricing models

■ Understanding of the issues that are driving the adoption (or lack thereof) of alternative pricing

■ Demographic profile that drives win ratio

Market Responsiveness/Record: This is the ability to respond, change direction, be flexible and
achieve competitive success as opportunities develop, competitors act, client's needs evolve, and
market dynamics change. This criterion also considers the vendor's history of responsiveness
and ability to quickly address changing requirements.

The subcriteria for the Magic Quadrant are:

■ Experience and investments in newer SAP technologies and solutions (e.g., cloud, IoT and AI)
and the use of appropriate strategies (e.g., automation, analytics, process improvement) to
improve service levels or reduce costs

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■ Vendor's market assessment of the common questions clients are asking and those areas
where clients are struggling within their SAP environment

■ Delivery against business-outcome-based objectives and metrics

Customer Experience: This criterion considers specific client feedback on the experience working
with the vendor and its capabilities.

Operations: This is the vendor's ability to achieve its goals and meet its commitments. Factors
include the quality of the organizational structure, including skills, experiences, programs,
systems and other aspects that enable the organization to operate effectively and efficiently.

The subcriteria for the Magic Quadrants are:

■ Organizational and business models specific to SAP execution

■ Applied use of methodologies, industry standards and control frameworks, including project
and organizational change management

■ Global and regional delivery model capabilities

Table 1: Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product or Service High

Overall Viability Medium

Sales Execution/Pricing Low

Market Responsiveness/Record High

Marketing Execution Not Rated

Customer Experience High

Operations High

Source: Gartner (February 2018)

Completeness of Vision
Gartner analysts evaluate vendors on their ability to convincingly articulate logical statements
about current and future market direction, innovation, client needs, and competitive forces and

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how well they map to the Gartner position. Ultimately, vendors are evaluated on their
understanding of how market forces can be exploited to create opportunity for the vendor.

Market Understanding: This is the vendor's ability to understand buyers' needs and to translate
that understanding 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.

The subcriteria for the Magic Quadrant are:

■ Knowledge and articulation of key SAP market directions and trends and your offerings to
address them

■ Targeted investments toward the top three SAP market trends facing clients

■ Thought leadership and vision, and how vendors are investing to stay out in front of challenges

Marketing Strategy: A clear, differentiated set of messages consistently communicated


throughout the organization and externalized through the website, advertising, client programs
and positioning statements.

The subcriterion for the Magic Quadrant is:

■ Marketing strategy for SAP application services across different industries, geographic markets
and client demographics (client size and scope)

Sales Strategy: This criterion assesses the strategy for selling services, which uses the
appropriate network of direct and indirect sales, marketing, service, and communications
affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services
and client base.

The subcriteria for the Magic Quadrant are:

■ Strategies for selling services, including incentive plans, for adding new clients and growing
existing clients

■ Account management and vision for creating new and/or additional SAP application service
business

Offering Strategy: This is the vendor's approach to solutions offering development and delivery,
with an emphasis on differentiation, functionality, methodology and features in relation to current
and future requirements.

The subcriteria for the Magic Quadrant are:

■ Approach to solution development and delivery across SAP application services

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■ Vision for developing current and future SAP application service offerings and targeted
investments made based on vision

■ Specific examples of application service tools, processes and branded IP

Vertical/Industry Strategy: This is the vendor's strategy to direct resources, skills and offerings to
meet the specific needs of individual market segments, including targeted vertical markets.

The subcriteria for the Magic Quadrant are:

■ Articulation of the disruptive forces in targeted industries

■ Industry investments demonstrating completeness of vision (showcasing specific IP, COEs or


industry-specific assets)

■ Factors that will drive success in SAP application services in targeted industries

Innovation: This criterion assesses direct, related, complementary and synergistic layouts of
resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

The subcriteria for the Magic Quadrant are:

■ Investments in tools, automation, analytics, methods, prebuilt assets and industry/process


maps to assist in improving speed and/or quality of implementation, reducing the TCO or
accelerating the ROI of the solution

■ Innovations of new services/offerings related to SAP application services, including SAP


Leonardo

Geographic Strategy: This criterion assesses the vendor's strategy to direct resources, skills and
offerings to meet the specific needs of geographies outside the "home" or native geography. This
may be done either directly or through partners, channels and subsidiaries, as appropriate for that
geography and market.

The subcriteria for the Magic Quadrant are:

■ Investment in global and regional programs

■ Strategy and methodology for implementing global and regional programs

Table 2: Completeness of Vision Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding High

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Evaluation Criteria Weighting

Marketing Strategy Low

Sales Strategy Low

Offering (Product) Strategy High

Business Model Not Rated

Vertical/Industry Strategy High

Innovation High

Geographic Strategy Medium

Source: Gartner (February 2018)

Quadrant Descriptions
Leaders
Leaders are performing well today, 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.

Challengers
Challengers execute well today for the portfolio of work selected, but they have a less well-defined
view of the market's direction than Leaders do. Consequently, they may be tomorrow's Leaders, or
they may not be aggressive and proactive enough in preparing for the future.

Visionaries
Visionaries articulate important market trends and directions. However, they may not be in a
position to fully deliver and consistently execute on that vision. They may need to improve their
service delivery.

Niche Players
Niche Players are strong in particular segments of the market, such as project services versus
AMS, a particular industry, size of client, functional area or geography. Their Ability to Execute is
limited to those areas of strengths. Their ability to innovate may likewise be affected. Many of the
providers in this segment were evaluated highly for customer satisfaction, and many can be
considered to be leading players within their niche markets. Niche Players need to increase their
implementation or AMS breadth and depth, as well as overall breadth and depth of capabilities,
innovation, and bench strength across the spectrum of services.

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Context
This Magic Quadrant addresses the worldwide SAP application service capabilities of providers
that meet our criteria for inclusion. The positioning of providers in this Magic Quadrant is based
on factors determined by Gartner as being relevant to this market for SAP application services.
This Magic Quadrant is a point-in-time analysis, with all of the provider profiles reflecting the
status as of January 2018. Quantitative data collected was for a 12-month period ending 31
March 2017.

When considering implementation partners for a request for information or a request for
proposal, clients are advised to not simply select service providers in the Leaders quadrant. A
provider may appear in a particular quadrant based on Gartner's extensive analysis across the full-
service life cycle in many industries and other criteria. However, for any given deal, a client
company's selection criteria will be narrower and more specific. Consequently, vendors in the
Challengers, Visionaries or Niche Players quadrants may prove to be more appropriate for the
engagement.

Additionally, because the inclusion criteria in the Magic Quadrant result in the analysis of the
largest providers in the SAP application service market, clients should not disqualify any potential
competitor simply because it does not appear in this Magic Quadrant. Other IT service providers
not evaluated in this Magic Quadrant — for example, ABeam Consulting, BackOffice Associates,
BearingPoint, Bristlecone, Collabera, EPAM Systems, EPI-USE, EY, Freudenberg IT, GROM, Illumiti,
LTI, Mindtree, Quinnox, Rizing, Rocket Consulting, SNP, smartShift Technologies, Softtek, Stefanini,
Tieto, T-Systems, UST Global, Utegration, Virtusa, YASH Technologies — may present better
alternatives for your business requirements. A Gartner analyst can help with a shortlist of the
most suitable candidates based on client requirements.

Use the Magic Quadrant as a tool to help inform your shortlist and evaluation of providers for your
global SAP programs. However, do not discount a provider simply because of its quadrant
placement, or because it does not appear in this Magic Quadrant. For example, consider using a
deal "sweet spot" analysis to ensure you have an optimum basis and evaluation criteria to down-
select the most suitable vendors (see "Deal 'Sweet Spot' Analysis Accelerates Service Provider
Evaluation and Selection").

Market Overview
The demand for SAP application services is characterized by three trends: modernizing core
systems, experimenting with new digital solutions and intelligent automation.

Modernizing Core Systems


Central to modernizing the core ERP backbone is the adoption of S/4HANA. While nearly all net-
new clients implement S/4HANA, the existing installed base of SAP customers is more cautious.
However, even within the installed base, the pickup in adoption is increasing. Demand for services
for assessment, business case and roadmap is increasing as clients see the looming 2025
deadline, when SAP will discontinue mainstream maintenance on its Business Suite applications.

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A few successful implementations of S/4HANA by large clients create confidence. Gartner


1
research postulates a strong double-digit growth in adoption in 2018 and beyond.

Service providers are responding to this trend by investing heavily in talent and assets. Many have
trained hundreds of consultants in S/4HANA and the associated agile-based Activate
methodology, ahead of demand. They are also investing in implementation accelerators and
migrating their existing tools and assets to work in the S/4HANA environment. Accelerators
include preconfigured industry instances, migration and remediation tools, assessment
frameworks, automated testing, and connectors between S/4HANA and Ariba or Hybris, to
increase speed and reduce costs and risks.

In line with modernizing core systems is the strong adoption of cloud solutions like SAP
SuccessFactors, Hybris and Ariba. Clients recognize the benefits of a cloud model in a
modernized IT environment, but many have limited internal capabilities to implement such
solutions. They look to service providers to help with implementation and ongoing management
services that may include upgrade support, configuration changes, and ongoing testing and
integration services. These services may also include post-go-live, ad hoc discrete services, such
as health checks, value analysis and maximization, new report creation, analytics, and ongoing
alignment with human capital management (HCM) strategy and systems.

S/4HANA Cloud, however, is still early in its adoption life cycle. Gartner research has shown that
finance is moving to the cloud much faster than expected. 2 Service providers that target the
midmarket and subsidiaries of large companies are investing ahead of demand, trying to gain
experience and credential for when demand for an S/4HANA public cloud version gains stronger
traction.

Experimenting With New Digital Solutions


SAP recently packaged its new digital portfolio under the SAP Leonardo brand. Some elements of
this portfolio are not new. For example, some service providers have experience implementing IoT
for manufacturing clients. Others such as the machine learning and blockchain solutions are less
mature.

Service providers are helping clients experiment and evaluate SAP Leonardo by creating
innovation labs that allow colocation of a multidisciplinary team of consultants and clients to
brainstorm ideas and build proof-of-concept to demonstrate business value in a rapid manner.

Clients, however, tend to demand best-of-breed solutions in new digital solutions. They look to
service providers to help them stitch pieces together into a coherent solution that solves their
business problem, often in a multivendor fashion.

Intelligent Automation
Many of the service providers are reporting that some of their most significant investments in
SAP practice relate to intelligent automation. And on the demand side, a large percentage of
clients are asking about it. However, the number of concrete examples in production where

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intelligent automation technologies are embedded is very limited. The typical examples are that
clients are:

■ Augmenting certain tasks and workflows outside the main SAP product with third-party RPA
tools

■ Leveraging tools to reduce mean time to resolution for AMS trouble tickets

■ Leveraging machine learning within the SAP application stack to proactively identify issues,
more reliably determine and prioritize action items and garner insights for improvements into
the SAP environment (functional and technical landscape)

■ Significantly improving the approach to analytics across a broad spectrum (descriptive,


diagnostic, predictive and foresight)

Evidence
Evaluation in this Magic Quadrant is informed by:

■ Primary research — Gartner inquiries with user organization clients. Services and sourcing
analysts collectively took more than 400 inquiries with end-user clients on service providers
relating to SAP services over 12 months (October 2016 through September 2017).

■ Primary research — Feedback from 286 SAP service client references worldwide, submitted by
the participating service providers, using online surveys.

■ Primary research — A 90-minute vendor briefing from each participating service provider
addressing capability proof points of each evaluation criterion in the Magic Quadrant.

■ Primary research — A detailed vendor survey covering revenue, staffing, geographic


capabilities, investments and other relevant information, totaling more than 1,000 data points.

■ Secondary research — Press releases and publicly available information, including company
websites and financial reports.

■ Other Gartner analysts — Peer review of this document by 12 other Gartner analysts. Their
views and comments were taken into account. In addition, this document was presented and
defended at the November 2017 Gartner Application Services Research Community session.

1
See Figure 1 (S/4HANA Implementation Service Market Opportunity) in "Competitive
Landscape: SAP S/4HANA Service Providers."

2
"Survey Analysis: Once in the Cloud, Where Does Finance IT Go?"

Note 1
Industries

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This Magic Quadrant addresses the capabilities of the included vendors in the following 27
industries:

■ Aerospace and Defense

■ Agriculture

■ Automotive

■ Banking

■ Chemicals

■ Consumer Products

■ Defense and Security

■ Engineering, Construction and Operations

■ Healthcare (Providers)

■ High Tech

■ Higher Education and Research

■ Industrial Machinery and Components

■ Insurance

■ Life Science
Sciences

■ Media

■ Mill Products

■ Mining

■ Not-for-Profit

■ Oil and Gas

■ Professional Services

■ Public Sector

■ Retail

■ Sports and Entertainment

■ Telecommunications

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■ Travel and Transportation

■ Utilities and Energy

■ Wholesale Distribution

Note 2
SAP Resources in EMEA Countries or Subregions
In the process of collecting data from the included vendors, Gartner has requested detailed
numbers for SAP service resources in the following EMEA countries or subregions:

■ Western Europe:

■ Benelux — Combining Netherlands, Belgium and Luxembourg

■ France

■ Germany

■ Italy

■ Nordics — Combining Denmark, Norway, Sweden, Finland and Iceland

■ Spain

■ United Kingdom

■ Rest of Western Europe — Combining Austria, Greece, Ireland, Israel, Portugal and
Switzerland

■ Eastern Europe:

■ Poland

■ Romania

■ Rest of Eastern Europe — Combining Algeria, Azerbaijan, Belarus, Bulgaria, Croatia


(Hrvatska), Czech Republic, Greece, Hungary, Kazakhstan, Lithuania, Russia, Serbia, Slovakia,
Slovenia and Ukraine

■ Middle East:

■ Middle East — Combining Bahrain, Jordan, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi
Arabia, Syria, Turkey, United Arab Emirates and Yemen

■ Africa:

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■ South Africa

■ Rest of Africa — Combining Cameroon, Cote d'Ivoire, Egypt, Kenya, Morocco, Nigeria and
Tunisia

Note 3
SAP Resources in North America Countries
In the process of collecting data from the included vendors, Gartner has requested detailed
numbers for SAP service resources in the following North America countries:

■ United States

■ Canada

Note 4
SAP Resources in Latin America Countries
In the process of collecting data from the included vendors, Gartner has requested detailed
numbers for SAP service resources in the following Latin America countries:

■ Argentina

■ Brazil

■ Chile

■ Colombia

■ Costa Rica

■ Mexico

■ Rest of Latin America

Note 5
SAP Resources in APAC Countries
In the process of collecting data from the included vendors, Gartner has requested detailed
numbers for SAP service resources in the following APAC countries:

■ Australia

■ China

■ India

■ Philippines
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■ Singapore

■ Vietnam

■ Rest of APAC

Evaluation Criteria Definitions


Ability to Execute
Product/Service: Core goods and services offered by the vendor for 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: 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/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 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
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to 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.

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