The Three M’s of SAP AMS
By Sam Sliman, President, Optimal Solutions Integration

 

The forces compelling SAP customers to outsource part or all of their SAP application management work are numerous. Topping the list are limited resources, the need for immediate and sustainable cost savings, the desire for predictability in cost and performance, the imperative for realizing greater, long-term value from their SAP solutions, the pressure on IT to step up innovation, and the growing maturation, sophistication and effectiveness of the tools and delivery models AMS providers use to support customers.

 

Meeting the strong demand for application management and support services is an increasingly cluttered marketplace of AMS providers -- each touting deep expertise, comprehensive services, and competitive pricing. While choice is good for SAP customers insofar as competition among AMS providers helps to keep prices down, the escalating volume of offerings makes it increasingly difficult to distinguish one provider’s capabilities and services from another’s.

 

All the while, choosing the right SAP AMS provider and service offering has become more important than ever before. In today’s unrelenting, do-more-with-less business climate, a winning sourcing strategy is a vital component of your company’s immediate competitiveness and long-term viability.

 

In broad strokes, basic AMS components include production support, ongoing technical maintenance, system enhancements and business process improvements. Most AMS providers offer a tiered model with corresponding activity and pricing. But comparing levels -- and what is included in each level -- across multiple AMS providers is not always easy or intuitive. In fact, as technological innovation generates ever-changing possibilities for bundling services, ‘apples-to-apples’ comparisons of this sort are proving to be increasingly vexing, if not downright futile.

 

Weighing the “Three M’s of AMS” as you work through the process of selecting an SAP AMS provider will help ensure that you choose wisely and get the biggest bang for your outsourcing buck:

 

Money

Let’s get right to it. Reducing costs is one of the primary drivers behind a company’s decision to outsource some or all of its application management work.  Aligning their AMS offerings accordingly, most providers claim to deliver cost savings of 20% - 40%. Take them to task on these claims. Experienced AMS providers should be willing and able to assist you in building a business case that clearly demonstrates how much money your business will save over the length of your outsourcing contract. Insist on a well-defined value proposition and a detailed breakout in writing of exactly where these cost savings will be derived.  Look for fixed pricing and transparency in pricing down to the line-item level. Insist on predictability, in terms of both management costs and system performance. Structure an outcome-based AMS agreement with guaranteed cost reductions.

 

Mapping

 

Correctly determining which of your SAP applications can and should be outsourced, and mapping out a strategic, iterative plan for transferring the management of these applications is the foundation upon which a successful outsourcing partnership is built. More than an AMS provider’s capabilities, it is your organizational needs and readiness that determine what level of application management is best for your business.

 

Expect your AMS provider to conduct a thorough assessment of your technology landscape, business processes and people. Specific areas that should be closely addressed include the degree of customization to your SAP applications and the extent of integration with non-SAP applications; internal skill gaps that can be filled via outsourcing; how historical spikes in the demand for application support will be handled moving forward; and how your future plans for software upgrades and business process enhancements will be accommodated.

 

The keys to successful SAP AMS outsourcing are striking a correct balance of services that cut costs and services that add value; orchestrating application management transfer over a time period conducive to your organizational readiness; and mapping out a comprehensive plan with enough flexibility to capitalize on opportunities uncovered during the outsourcing process.

 

Measuring

 

As is the case with all things in the business world, you can’t manage what you can’t measure. In the end, outsourcing the management of your SAP applications should yield measurable value in terms of cost savings and optimized application performance. Defining your outsourcing objectives ahead of time, and then tracking performance against these objectives on an ongoing basis, is paramount. To this end, detailed, timely reporting and issue tracking is a must, and clearly established service level agreements and pre-determined KPIs should be implemented and monitored across all application management services. Solid vendor governance practices, including resources dedicated to managing your applications and reward/penalty incentives connected to specific metrics, help ensure AMS responsibilities are met and your outsourcing objectives are achieved.