Outsourcing

‘Rightshoring’ SAP? Capgemini tips for prospective SAP end users

A recent book entitled Rightshore!: Successfully Industrialize SAP Projects Offshore by Capgemini consultants Anja Handel, Wolfgang Messner, and Frank Thun can serve as a helpful read for soon-to-be SAP end users deciding how to calibrate an implementation strategy.

Given that system integrators can execute an SAP implementation from anywhere in the world, SAP end users will be called upon to decide how they want their partners to deliver service. Rightshore! offers a helpful discussion of the various options in this regard, and their respective benefits. For example, the book explains that there are five basic implementation delivery models:

• External Offshore: External execution by offshore partners.
• External Distributed Delivery: External execution by nearshore partners, who subcontract work out to offshore partners.
• External Nearshore: External execution by nearshore partners.
• Internal Centralized: Internal execution by a single party.
• Internal Decentralized: Internal execution by several parties.

The fastest-growing model is external offshore, which went from being involved in 1% of IT delivery projects in 2006 to an estimated 5% by 2010. Rightshore! points out that external offshore promises 15-20% savings over internal delivery. This is why many systems integrators, Capgemini included, have hired tens of thousands of Indian workers; the resulting wage arbitrage allows integrators to deliver cheaper implementations to customers via the distributed delivery model.

Of course, this raises an interesting question — why not bypass nearshore partners and go directly to an Indian integrator, such as Wipro? This didn’t get talked about much at this year’s Sapphire, but could be a big issue by next year. Given that almost all of the major SAP failures over the past year involved nearshore partners, there’s no knee-jerk reason to dismiss offshore partners for any SAP project.

Rightshore! makes the argument that a blended approach to delivery models is the key to a successful IT project implementation, but naturally this owes something to the fact that Capgemini owns the trademark to the world ‘rightshore’ and has a vested interest in promoting this model. However, moving past the marketing fluff, rightshoring is a concept that should be taken seriously in the SAP context. An SAP project is complex enough to benefit from the ability to farm out certain kinds of tedious technical work offshore while retaining certain functions, such as training, from near-shore providers. Vendors understand the soundness of this approach as well, and Indian systems integrators have long invested in dedicated U.S. and European resources in order to be able to tell the ‘rightshoring’ story to customers.

For some enterprises, buying SAP is a relatively easy decision, but implementing SAP raises many anxieties. To begin with, there are the horror stories of implementations gone wrong, resulting in millions of dollars of cost-overruns and long delays to go-live; consider the LAUSD fiasco, Waste Management’s $100 million lawsuit against SAP, and problems in Burnaby and Portland. But even in the best of cases, SAP implementation is a major challenge. ‘Rightshoring’ your implementation is one way to mitigate the inevitable risks.

Demir Barlas, Site Editor

H-1b season is here

The most heated and partisan debate in technology is about to begin… again. Yes, we are firmly in H-1B season. On April 1, 2008, the U.S. will begin accepting petitions for temporary foreign worker visas and, if history is any guide, will be overrun by applicants within mere hours. It’s a time of mixed feelings in IT, as American workers are reminded of their job insecurity while foreign IT workers clamor for a chance to monetize their skills in the United States.

As if H-1B season needed even more drama, Microsoft’s Bill Gates is set to go before the House of Representatives next week to make what is becoming a perennial plea for the U.S. to allow in more H-1B workers. Microsoft employs thousands of such workers, so there is plenty of self-interest in play, but Gates will claim — once more — that there is a shortage of IT workers in America, and that raising the H-1B cap (over and above the current regular limit of 65,000) will allow this country to keep the tech lights on.

Last year, we heard anecdotes about American SAP specialists being locked out of work in favor of H-1B counterparts from India. This year, we’ll be keeping a close eye on H-1B developments and how they impact both American and foreign SAP specialists.

A good way to begin this discussion is to look over Bill Gates’ December 2007 article, “America’s Brain Gain.” These are some of the claims Gates made:

• “Today, the nation’s need for graduates in science and engineering far exceeds the supply.”
• “America’s immigration policies are increasingly driving away the world’s top talent and consequently forcing U.S. companies to expand overseas. This is having an adverse impact on U.S. competitiveness and on domestic growth in the technology industry.”
• “Congress can…focus on comprehensive immigration reform, and on redoubling efforts to improve education and expand U.S. output of scientists and engineers, so that Microsoft and other U.S. companies can hire even more Americans.”
• “Meanwhile, Congressional action is needed now to prevent the current shortage of highly skilled workers from resolving itself - through a job-killing economic slowdown caused by a loss of U.S. competitiveness.”

What do you SAP people think? Is Gates right or wrong? What are your perspectives?

Demir Barlas, Site Editor

India’s SAP Integration Capacity Grows

Good news for aspiring SAP professionals in India: Wipro, the Indian IT and business process outsourcing company, plans on raising its overall resources in China. On Tuesday, A. L. Rao, Chief Operating Officer of Wipro, told the media that his company hopes to increase the number of its employees working in China from 200 to 2,000 in the next two years.

Forrester Research Inc referred to Wipro as “a leader in SAP Implementation services” in the December 2007 report titled, “The Forrester Wave: SAP Implementation Providers, Q4 2007.”

These SAP implementation services are increasingly in demand in China. Keeping true to the words of Forrester Research, Wipro is on the scene ready to aid with IT resources; and I can’t help but imagine that this news is lit kindling underneath a prepared bonfire of SAP resources. This is a big step for SAP India, as we will surely see the emergence of more and more SAP careers opening up in China.

What does this mean for SAP professionals? Here is what Jon Reed, of JonERP.com, had to say:

“If there is any doubt that the SAP market is global in nature, look no further than Wipro’s planned expansion into China. The fact that the SAP labor pool will soon be truly global is either good news or not so good news, depending on whether you are in a country where the hiring growth is expanding or contracting. All SAP professionals need to take this kind of globalization into account as they plot their careers. I recommend placing an emphasis on cutting edge skills that are crucial to have on site and therefore cannot be easily outsourced.”

I would go further and say that aspiring SAP professionals in India should keep an eye on this news as it develops. The SAP job market in India is a competitive one right now, and this could be the opportunity that many have been waiting for.

Eric Samuels
Assistant Editor