Verizon, Accenture Tap SAP App Gap

Verizon Enterprise Solutions is teaming with Accenture to offer enterprises a service that manages their SAP applications end-to-end, along with the networks that carry those apps. The new offering has SAP certification.

Verizon is not the first telecom service provider to jump into the business of managing SAP applications. AT&T Inc. (NYSE: T) has been in the SAP applications hosting market since reaching a marketing alliance with SAP AG (NYSE/Frankfurt: SAP) and has even teamed with Accenture on SAP migration work.

But Verizon’s Anthony Kessel, senior product manager for IT Solutions, says Verizon’s global partnership with Accenture, announced a year ago, will enable Verizon to bring greater global depth to its offer. And unlike IBM Global Services and others that also offer SAP application management, Verizon can leverage its carrier assets to offer an end-to-end service, Kessel asserts.

"There are a lot of good companies offering this and Verizon is new to this, but they seem to have a tighter relationship with Accenture," said Amy Larsen DeCarlo, principal analyst for Managed IT Services with Current Analysis. "It's more of a true teaming, and they will work consistently together, as opposed to Accenture being brought in on a deal by deal basis. Accenture will give Verizon credibility."

The appeal to enterprises is to enable them to capitalize on the benefits of SAP -- enterprise resource management, alignment of IT resources with business strategies and business intelligence -- without the complexity of implementing SAP themselves.

The prime targets are not the largest enterprises or the smallest, but the large group in the middle, which need SAP applications but are less likely to have the in-house expertise to manage them, says Kessel.

“In terms of company size, revenues around $150 million a year to $2 billion is where we are targeting. They may not have the expertise to get all the benefits from SAP applications, either because they haven’t implemented all the features or they haven’t done it correctly.”

Managing both the SAP applications and the underlying infrastructure, such as connections to data centers in which applications are housed, can become a big enough burden that the value of the SAP applications is lost, Kessel says.

Verizon and Accenture are offering a service that will design, build, and run SAP applications based on the specific goals and needs of the business customer. More importantly, Kessel notes, Verizon will offer service-level agreements built around business processes, not individual components of an application.

"The network can be up, the server can have space, but if the transaction isn’t working, then the business isn’t getting the value of that application."

Customers will be able to monitor what is happening, at the business process level, through a customer portal, which also shows performance metrics. Through key performance indicators, and business process SLA reports, Verizon and Accenture also offer continuous improvement of the SAP application performance.

The selling process for this kind of service is long and detailed, Kessel concedes, and includes a TCO (total cost of ownership) report that shows businesses what they can be saving through use of this managed service.

Verizon and Accenture are able to keep the businesses’ costs down while making their own profits by sharing infrastructure and resources, and by automating processes in a way that guarantees the most efficient use of resources, according to Kessel.

The SAP applications management service is the latest in an ongoing series of managed services from Verizon Business at the application level. (See Verizon Offers Cloud Lessons.)

"What we have been hearing from them and other carriers is that they are trying to produce more IT service offerings," analyst DeCarlo said. "There is pent up demand, so there will be spending, maybe not in 2010, but in 2011, so they want to have a foundation. One of their better areas for long-term revenue prospects is IT services."

— Carol Wilson, Chief Editor, Events, Light Reading

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