SAP Targets BPO

SAP's entrance into the business process outsourcing market has marked a turning point in the outsourcing industry, according to a release from Yankee Group Research. The company's ERP model of the 1990s is transforming to adapt to the growth in outsourced services, with human resources (HR) as the centerpiece of the offering. "This is really SAP recognizing the HR BPO space is absolutely crucial for them if they want to displace PeopleSoft and push SAP HR systems into enterprises in the years to come," says Philip Fersht, research vice president and leader of the multidiscipline BPO practice at Yankee Group Research. "For them, this is an open recognition that the ERP model needs to change at the enterprise level." Fersht says that with many companies outsourcing their HR to "transfer the headache of managing it, in addition to having it done cheaper and more effectively," SAP has identified this growth in the market and developed an "aggressive strategy" to ensure BPO companies, such as ACS, EDS, and IBM, will want to deliver their solutions on an SAP platform, from an outsourcing perspective. SAP has focused its new program for a service-oriented architecture (SOA), with loosely coupled business processes enabling more seamless HR and business transformation. According to Fersht, SAP has recognized the ability for BPO suppliers to deliver HR transformation as one of the key differentiators for success in the market. "What we're really seeing is the merging of the software industry and the services industry. SAP has seen the opportunity to encourage the BPO providers to adopt the NetWeaver platform, which is actually an SOA platform that can facilitate HR transformation through the BPO platform." SAP has already engaged BPO service providers ACS, ADP, EDS, and LogicaCMG as the first wave of partners signing up to SAP's global program. Fersht says that each partner will continue to build out service delivery platforms based on HR BPO value propositions. Yankee Group Research 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 providers must roll together IT, services, and business transformation expertise to gain market share. Enterprises adopting BPO must focus on integrated business offerings in addition to the technology solutions. 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. Related articles: Midsize BPO Deals Are Stronger Than Ever BPO: Cost Takes a Back Seat Consumer Purchasing Decisions: Outsourcing Is Not a Factor