SAP AMS Market Overview
Around 355.000 companies are using SAP as a central software to cover their business processes. Each day millions of business's users are working with SAP systems and each day users create routine incidents related to SAP software. Companies are trying to optimize their IT budgets, and application maintenance service is part of this optimization. SAP Application Management Services can be organized in different ways, companies can have an agreement with Service Provider or they can have an in-house team.
According to Gartner Magic Quadrant of SAP Application Management Services we have the next major players on this market: Accenture (market leader), Atos, Capgemini, Cognizant, CSC, Deloitte, Fujitsu, HCL Technology, HP, IBM, Infosys, L&T Infotech, NTT Data, Softtek, TCS, Tech Mahindra, Wipro. All these companies present in all regions — North America, Latin America, Europe the Middle East, Africa and Asia Pacific. There are other thousands of service providers in different local markets.
Opportunity to replace SAP Consultants in SAP AMS by cognitive computing systems
Cognitive computing systems will help companies adopt their IT and business processes according to the new technology (Artificial Intelligence, smart machines etc.) and today this is near 450$ million market, however, it will grow for more than 100% each year and in 2021 the market size will be near 30$ billion according to Gartner.
Cognitive computing technology is still in early stages, but even now all big IT companies are spending millions of dollars on the research and development of AI technology. Worldwide consulting and system integration (implementation) for cognitive computing systems (millions of dollars) according to Gartner:
Automation Potential and Wages for US Jobs
These statistics are for US market, but it can also apply to Europe market, at least these statistics are showing real potentates for automation. Information was published by McKinsey
We have tried to calculate the total amount of SAP consultants working in SAP AMS, this analysis was based on Gartner reports and include statistics only for market leaders: The total number of SAP Consultants working in SAP AMS is around 82.000 people. But there are also people working in smaller companies or in-house teams supporting business users. Overall, the quantity of people in SAP AMS is around 200.000 people.
Analysis of market leaders in SAP AMS and their ability to move forward expert systems (cognitive computing systems, smart machines, etc.)
All major competitors providers have full spectrum of SAP services across all industries with huge experience in service integration. The delivery networks are covering all regions and are able to propose local support (together with nearshore and offshore support). In many years, the market gave them a huge network of existing clients, this is also related to the spectrum of the services and products they have.
Mostly all of the players have differentiated their services and products in technology trends vision and investment in R&D. Some players, have announced this year, partnerships with technology companies to bring new business value to the market, not only in SAP area.
New technology especially cognitive computing is able to reduce huge quantity of workers inside AMS, in this case they should make some kind of transformation for all those workers (give them new skills, knowledge etc.) and give them new roles in the company. When the predominant model is labor-based, it is not in service providers' interests to employ automation that reduce labor hours and hence revenue.
Another concern in organizational management, are the main interests of managers, that bring to the their workers by models like “as much as possible”, because all the activities are connected to their KPI's, in this case companies also should change their management models. One of the biggest power of the cognitive computing is the ability to scale solutions across all companies.
Pricing models should be changed according to the technology and market needs. For the current situation, the price for such kind of solutions is really high, providers are trying to put old pricing models and make big money during implementation processes. Service providers need to change their mindset from maximizing short-term revenue to protecting their installed base by proactively bringing intelligent automation to clients.
Prediction for next 5 years
I think that during the next five years cognitive computing systems will replace at least 30% of SAP Consultants in SAP Application Management services. During the next few years we will build and extend knowledge of cognitive computing systems, and probably we will not be able to replace even 1% of all these people.
But with time, this percentage of replacement will grow significantly, because the scalability of these systems, has an enormous potential, and if we create enough knowledge and skills for the machine to work with SAP, it will be easier to extend the number of companies using those machines. This will also be possible because part of this 200.000 SAP consultants in SAP AMS are doing similar jobs, but in different companies; while smart machines will do the same job at the same time, faster.