Application management (AM) is seeing rising activity, as it is increasingly perceived as a quick and simple way to achieve cost benefits. PAC estimates that stand-alone SAP AM expenditure grew by 8.6% in 2008, and forecasts a CAGR of 8.4% between 2008 and 2012.

Consolidation and standardisation of disparate, heterogeneous application landscapes has been a key driving force for offloading AM to external providers. Increased M&A activity will give way to increased need for integration and standardisation.

The downturn of the economy will further encourage organisations to more seriously consider AM as they are under intense pressure to cut costs and utilize scarce resources. This will in turn drive the use of offshore resources, as customers are attracted to the significant potential savings from handing over the less critical applications to third-party suppliers that have established presence in low cost countries.

In 2008, several deals were signed with those most notably taking place in the public, manufacturing and services sectors. Major deals secured in 2008 include:

• Wiltshire County Council – 7-year contract with Logica to implement and host a new SAP ERP solution.
• Meggitt Plc – EDS is hosting and managing Meggitt’s new SAP system in the UK and the US.
• Britvic Soft Drinks – 3-year deal with Atos Origin to manage the SAP, Siebel and associated systems for all back office functions.

The UK SAP AM supplier marketplace is highly competitive. Steria’s acquisition of Xansa has strengthened its local presence in the market, as well as significantly building its offshore resources in India. Other leading AM players include Accenture, IBM and Axon. Meanwhile, other IT services providers such as Fujitsu are strategically positioning themselves to take advantage of the opportunities in the AM space.

In addition, Indian providers are more determined to expand in the outsourcing business as market opportunities become available during poor economic conditions. Infosys and Satyam are key players that have made some good progress in the SAP AM space, although the latter faces some major challenges in light of its recent financial problems.

About Pierre Audoin Consultants (PAC):

PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology, financial and operational issues.

Our 30+-year heritage in Europe – combined with our US presence and worldwide resources – forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies – undertaking thousands of annual face-to-face interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach – to leverage our research effectively.

PAC publishes a wide range of off-the-shelf and customized market reports –including our best-selling SITSI® program – in addition to our suite of strategic consulting and market planning services. Over 160 professionals in 16 offices –across all continents – are delivering the insight that can make a difference to your business.

For more information, please visit our website at www.pac-online.com

For information on the article, please contact:

Author:
Rajeena Brar
Consultant
Tel: +44 (0) 20 7553 3963
r.brar@pac-online.com

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Shelly Wills
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s.wills@pac-online.com