SAP support functions, particularly in the area of Basis administration, is fast becoming a popular candidate for outsourcing as companies face pressure to unearth opportunities to reduce costs and channel resources to core competencies.
Basis, the set of middleware and tools that serves as the heart of SAP administration, requires expertise in a number of technology areas, each complex in its own right. Basis administrators are required to be versed in relational databases, networking technologies, operating systems, not to mention core SAP application functionality. As a result, Basis administrators often command salaries in the six-figure range, and talent can be hard to come by, particularly for companies in less urban areas of the country or across the globe.
By outsourcing SAP Basis support to a qualified third-party provider, companies stand to benefit in two significant ways. They can reduce SAP support costs by capitalizing on the economies of scale that an outsourcer offers, because the investment in core competencies can be leveraged across the outsourcer’s entire customer base. In addition, the decision to outsource Basis support opens up access to a rich pool of highly specialized SAP experts without having to keep top-dollar staffers on payroll and without making ongoing investments in SAP Basis training.
“For many companies, it’s been hard to attract and retain the right SAP talent in a cost-effective manner,” said R. “Ray” Wang, principal analyst and CEO at Constellation Research, a technology research and consulting firm.
An outsourcing relationship delivers access to a deep bench of talent principally focused on SAP skills that is up to speed on the latest changes -- a scenario Wang maintains can provide a critical edge given the complexity of SAP deployments compared with other enterprise platforms.
“Ownership of SAP usually requires 1.5 times more resources to maintain the system than comparable ERP systems,” he said.
A deep talent bench
For small and midsized firms, outsourcing SAP Basis support makes particularly good sense. These companies are typically more resource-constrained than larger SAP shops, thus have more trouble making a case to keep a full-time Basis person on staff when they’re not utilized 100% of the time.
“A lot of times, it’s like the Maytag repair man -- the software is running, there's no need for troubleshooting performance issues and everything is running great,” said Wade Walla, a senior SAP Basis consultant. “When there’s not enough work for a six-figure guy, that person is better served doing something else. “
Conversely, if a company’s SAP implementation is large and complex enough to support a two- or three-member SAP Basis team, the economics of outsourcing no longer make sense.
“If you can maintain the burden of three people taking charge of the care and feeding of your SAP system, there’s no need to outsource at that point,” Walla said.
The drawbacks of outsourcing Basis administration
There are some disadvantages with outsourcing Basis support companies need to consider. The primary outsourcing concern of most IT is loss of control over their implementation and fear that core intellectual property around their SAP system is no longer maintained in-house. Politics is often another roadblock as internal IT groups can be leery of relinquishing core responsibilities to an outside group for fear it will undermine their clout within the organization.
For Seiko Instruments USA Inc., an electronics manufacturer, the need for a deep bench of SAP talent without having to outlay huge capital for internal resources, outweighed any reservations around outsourcing. After a somewhat rocky experience with its SAP implementation partner, the company was wary of consultants, but it also lacked key Basis expertise on staff to maintain and support the SAP system. Rather than bring on one individual, who might have limited experience and breadth of SAP knowledge, Seiko Instruments’ IT group determined the outsourcing route was a more efficient option.
“To get down to brass tacks, the economy wasn’t doing well, the company wasn’t doing well and we needed to get the biggest bang for our buck,” said David Blackford , Seiko Instruments’ director of information systems.
A few years into the Basis support outsourcing relationship, Seiko Instruments doesn’t have any internal Basis specialists on staff, but Blackford couldn’t be happier.
“My network for Basis support isn’t one or two people,” he said. “I have access to 10 or 12 heads and I have no worries about vacation or sick time.”