German software leader transforms its ERP model to adapt to growth in BPO services BOSTON–April 19, 2005–SAP’s entrance into the business process outsourcing (BPO) market has marked a major turning point in the outsourcing industry, according to Yankee Group. SAP’s ERP model of the 1990s is finally transforming to adapt to the growth in outsourced services, with human resources as the centerpiece of the offering. Yankee Group recently announced rampant growth in the HR BPO market, which is expected to reach $4.6 billion this year, with projections pointing to a $14 billion market by 2009. SAP has focused its new program on its vision for a service-oriented architecture (SOA), with loosely-coupled business processes enabling more seamless HR and business transformation. SAP has recognized the ability for BPO suppliers to deliver HR transformation as one of the key differentiators for success in the market, and has clearly outlined its involvement is to help enable integration and business transformation at both the technology and service layers. This also includes introducing the NetWeaver SOA platform as a key enabler to deploying loosely-coupled business processes within the BPO offering, and to move its customers’ non-core business processes outside of the corporate firewall. Yankee Group believes HR BPO suppliers must embrace the business process productivity that platforms from suppliers such as SAP and Oracle (including PeopleSoft) can deliver into the evolving BPO channel. As the first ERP vendor to create a specific program for service delivery in the HR BPO space, SAP has already engaged HR BPO service providers ACS, ADP, EDS and LogicaCMG as the first wave of partners signing up to SAP’s global program. Each partner continues to build out service delivery platforms based on HR BPO value propositions and demonstrate HR outsourcing expertise based on SAP HR Solutions. “BPO Services Powered by SAP” provides service-provider certification and collaboration in the rapidly growing market for HR BPO services and continues the company’s road map for business process outsourcing. “This announcement is also a clear indication that the ERP model that dominated the 1990s is rapidly transforming to meet the needs of the high-growth outsourced services market”, explains Phil Fersht, research vice president and leader of the Multi-Discipline BPO Practice at Yankee Group. “SAP clearly sees market opportunity coalescing around BPO, with the human resources function being the central focal point for new BPO deals. SAP has traditionally lauded the benefits of ERP and its associated business efficiencies. The company now needs to adopt a philosophy which focuses on the business benefits and cost efficiencies associated with outsourcing.” Fersht continues, “The global market for BPO services is heating up. SAP must work on holding the momentum it’s created via its vision for service-orientated architectures and its BPO Services Powered by SAP tagline. The company must work its message, amplifying the company’s BPO credentials and how it can help service providers generate margin and deploy integrated platforms.” Yankee Group predicts that enterprises will increasingly deploy BPO strategy as a means to focus on strategic initiatives and core competencies rather than day-to-day business process. To deliver on that need, BPO service providers must roll together IT, services and business transformation expertise to gain market share. Enterprises adopting BPO must focus on the integrated business offering in addition to the technology solution. Their prime concern–after cost–must be the ability of the supplier to respond to their employees’ and customers’ needs and the ability to offer strong HR and business transformational expertise. NOTE TO EDITORS For interviews contact: — Phil Fersht, Yankee Group, 617-880-0263, pfersht@yankeegroup.com — Thomas Ford, Racepoint Group, 781-487-4607, tford@racepointgroup.com CORPORATE CONTACTS — Elisa Roberts, marketing manager, 617-880-0214, eroberts@yankeegroup.com YANKEE GROUP Multi-Disciplinary BPO Practice The Yankee Group Multi-Disciplinary BPO Practice (MD-BPO) is the global leader in BPO with the only integrated and unbiased suite of decision support services that address all the touchpoints to optimize customer and employee effectiveness in the business transformation process. YANKEE GROUP (
Yankee Group is the global leader in technology, enterprise, media and telecommunications research and consulting. The company helps businesses understand the opportunities, risks and competitive pressures of developing, deploying and consuming products and services that drive communication or information exchange. Now in its fourth decade, Yankee Group is based in Boston with offices throughout North America and Europe.
CONTACT: For interviews contact:
Yankee Group
Phil Fersht, 617-880-0263
or
Racepoint Group
Thomas Ford, 781-487-4607
or
CORPORATE CONTACTS
Elisa Roberts, 617-880-0214
