Application Management Sees Uptake in the UK

While the SAP consulting services market is facing significant challenges with projects being delayed and sales cycle getting longer, the outsourcing segment in the UK is seeing some more positive developments. In 2008, several deals were signed with those most notably taking place in the public, manufacturing and services sectors. Deals secured in 2008 include:

- Wiltshire County Council awarded Logica a 7-year contract to implement and host a new SAP ERP solution to better manage and improve the delivery of the Council’s applications and processes for finance, procurement, HR, payroll services and performance management.

- EDS' contract win to host and manage Meggitt Plc’s new SAP system, with the aim to help Meggitt transform its ERP system. Services include hosting Meggitt’s SAP system in the UK and in the United States.

- Atos Origin was awarded a 3-year contract with Britvic Soft Drinks to manage the SAP, Siebel and associated systems for all back office functions. Atos Origin takes over management of the systems applications and will provide support from both the UK and its Indian delivery centres in India.

Application management (AM) in particular is seeing rising activity as it is increasingly perceived as a quick and simple way to achieve cost benefits. The ability to use offshore resources as part of the deals have further helped attract customers to handing over the less critical applications to third-party suppliers.

In the UK, Steria is a strong AM player on the whole, as well as specifically in the SAP area. The acquisition of UK-based Xansa has further strengthened its local presence in the market, as well as significantly building Steria's offshore resources in India. Other leading AM players include Accenture, IBM and Axon and other IT services providers such as Fujitsu are strategically positioning themselves to take advantage of the growing opportunities in this space, as well as applications outsourcing.

The market downturn has made offshoring ever more attractive, and Indian providers are more determined to expand in the outsourcing business. Satyam and Infosys are key players that have made some good progress in the SAP AM space.

As part of PAC's SAP Services Research practice, we have launched additional services that include SAP AM market figures for the U.S., Western Europe, Germany, UK and France; in addition to top 10 rankings in all countries.