SAP Watch

May 19 2008   9:21AM GMT

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

JackDanahy Jack Danahy Profile: JackDanahy

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

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