When the economy is moving towards a recession and the financial markets are in this much turmoil, it's easy for SAP consultants to fall into "career panic mode." Panic mode thinking goes something like this: "There are no projects being greenlighted, and even if I manage to find a new opening, it won't offer a good enough rate to get by." Or so the mental "worst case scenarios" go.
It's true that the market has changed, but that doesn't mean SAP consultants are looking at extended bench time. For the best chances of success, the SAP professional does need to be aware of the "new rules" that apply to down markets. To define those new rules, there is no one better to ask than Ray Kelly, vice president, B2B Workforce.
Consulting Economics 101: How the slowdown impacts SAP spending
I asked Kelly to explain how the credit crisis impacts project spending. "If you look back, over the last 12 months, you've seen a change in the market due to many companies deferring capital projects in anticipation of obtaining credit to support their business," Kelly said. "For example, at B2B Workforce, we have seen the impact in the amount of open jobs coming in each day. Over the last eight months, we have seen a drop in our year-over-year numbers of open jobs. The issues that are coming to a head now have actually been in the newspaper for the last 12 months - they just haven't been emphasized as much as they have been in the last two weeks."
So how does the credit crunch find its way back to SAP professionals? If you roll off a project now, you find yourself in a very different hiring market. "When you look back 10 or 12 months ago, consultants might have received a false hope, for lack of a better word," Kelly said. "Yes, they got engagements extended, but no new engagements were started at the level of 2006 and the first half of 2007, which in turn has created an additional supply of available consultants which is now putting some pressure on rates."
Additionally, hiring freezes can have a bit of a silver lining for independent consultants. When SAP customers put a freeze on "perm employee" hires, which is a common response to this type of economic climate, this in turn favors the use of outside contractors. So if you're working as an external consultant, you may want to be on the lookout for opportunities to contract back in to companies that were previously reluctant to engage outside SAP talent.
Staying marketable in a down market, Tip #1: Update your SAP skill set
Rolling off a project now means competing with a bigger supply of consultants and a smaller amount of openings. This highlights another problem: skill-set relevancy. According to Kelly, those SAP consultants who have spent the last year on a project may have an additional challenge: out-of-date skills.
"When you roll off a project now, it might hit you a lot harder, because what's happening is there's not a lot of new projects starting," Kelly said. "We have clear statistics that show a drop in the amount of jobs that have been coming in. Eventually, in the next quarter or the quarter after that, you'll see license sales going down, or not growing as much as they have in the past, which also means, that four or five months out, you can expect to see a lack of jobs as well." (Since I interviewed Kelly, SAP did indeed announce a reduction in license sales for the third quarter of 2008).
But the news is not all grim. Just because fewer projects are ramping up, doesn't mean SAP customers don't have skills needs.
"Regardless of what SAP packages customers are on, they are all trying to do the same thing," Kelly said. "They are trying to optimize their current system, which typically means no new projects. They are not looking to implement to a new division. Instead, they are much more likely to be saying, 'How can I increase the investment I already have, without incurring a huge project cost and more license fees?'"
Based on Kelly's analysis, it's clear that the hottest skills are the ones that help SAP customers enhance and build on their core functionality.
SAP skills tips
"Of course, we're talking about the NetWeaver stack and all the eSOA stuff that comes with it, including what SAP now calls PI - the SAP integration layer - and some of the newer products that SAP has picked up, including Business Objects, OutlookSoft, and two new pricing and incentive commission tools that sit inside or alongside SAP's SD module (Visiprise and Vendavo). If you're not adept with some of these new tools, or at least have some experience with them, it may take you a while to get back on the roll that got you repeatedly extended before these market changes came along."
According to Kelly, no matter what the package is, the needs are the same: value-added enhancements to the SAP core. Whether those enhancements involve analytics, SOA-based product extensions, or supply chain optimization, the common skills needs are the same: exposure to the latest versions of the core SAP releases, and, ideally, skills in a hot new tool or add-on product.
Tip #2: Rate flexibility means knowing the market rate for your role
You might not need to lower your rate at all, but you do need to understand the tradeoffs of each position you are applying for and what the appropriate rate is for each.
The key to accomplishing this comes down to an honest working relationship with the third parties that work to place you on a project. "Both parties have to be honest," Kelly said. "If I'm submitting you to a job that's looking for a functional configurator, maybe to do some small enhancements or support work, well, there's a certain rate for that market - regardless of what skill the consultant brings to the table. So the first thing you need to understand is: are you lining yourself up with the right job? Because it's hard to negotiate a high rate for a commoditized, low paying job, regardless of how good your skills are. People will only pay so much of a premium for post-implementation support. If you're not, because there's other reasons we hear a lot, such as, 'I like it for the location,' or, 'They're giving me 10 or 11 months,' then I think you need to strongly look at whether you need to lower your rate to get yourself in that position."
"Consider all the factors before you set your rate. Don't think of it like you are cheapening yourself. Be realistic and say to yourself, 'OK, this is not a job I've typically done before because I'm used to leading a project,' or, alternately, 'I'm used to working on new implementations, and this is really just a support role. But it's giving me longevity through the downturn or keeping me closer to home.'
Kelly does see one scenario where lowering your rate can make a lot of sense: when the project will enable you to update your SAP skills. "If you don't have a new skill set, and you think you can gain a newer skill on that project, then most certainly be flexible," Kelly advised. "Say to yourself, 'OK, if I had to take a week off of consulting to get training, and I'm an independent consultant, making an average $3,500-$5,000 a week, plus kick in another $2,500 or $3,000 for the week's training, be realistic - that's $8,000 to go get new training. If someone's going to expose you to those skills on a new project, take that $8000, divide it by 1,000 hours on a new project, well, that's $8 an hour right there, so be realistic on the context when you're going into a new project."
On the other hand, if you already have the skills that are now in demand under your belt, you might not have to lower your rate at all - as long as you are willing to wait for the right opening. "If you truly do have that sought-after skill set, there is no need to discount your rate - as long as you're comfortable with waiting, because you just might have to wait a little longer in the current market if you want top dollar," Kelly said.
Rate negotiations are tricky in any market. The key comes down to the consultant- recruiter relationship. "When both sides of the equation, the candidate and the recruiter, are talking honestly," Kelly said, "they can agree on which projects require a lowering of rate for resume submittal and which you can go into at a higher rate."
Conclusion: Smart project choices pay off
There's no getting around it: big picture economics impact SAP project spending. The end result is a different kind of consulting market. That doesn't mean good openings aren't out there. But in order to be in contention for these openings, a new approach, one that takes into account the "new rules of SAP consulting," should be adopted. Yes, the supply of consultants has increased, but with the right skills and smart project and rate choices, the SAP consultant can still find success.
Jon Reed is an independent SAP analyst and SAP Mentor who writes on SAP consulting trends. Jon is the president of JonERP.com, an interactive website that features his take on SAP career trends. Jon is also the author of The SAP Consultant Handbook, and he serves as the career expert for SearchSAP's "Ask the Expert" panel.