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What would an end to outsourcing mean to SAP?

by Scott Priest, Managing Editor

August 20, 2010

My colleague Laura Casasanto at Project Expert recently posted a Q&A with Yosh Eisbart, author of the latest SAP PRESS book on outsourcing. Yosh details all kinds of the latest trends and tips in the Q&A, but I couldn't help reconsider the article after reading this piece in BusinessWeek.

The authors suggest that the "end of outsourcing as we know it" is near. They posit this will begin in 5 years, which seems a little hasty given that there can be some time lag in giant ERP/business software systems operations due to contracts and attempts to achieve ROI.

But their argument -- that technology like cloud computing will allow companies like Google and Amazon to overtake outsourcing agencies -- is interesting and worth looking at. They specifically mention that ERP vendors could actually benefit from this, including SAP:

The Possible Winners: Software giants such as Microsoft, Oracle (ORCL), and SAP (SAP) have knowledge around enterprise platforms and applications that can unlock further efficiencies for clients. They also have robust and captive client portfolios. Their success will depend on the speed at which they build up capabilities they are currently missing in connectivity, infrastructure, and experience in the cloud itself. It will also depend on their appetite for risk. We are talking here about nothing less than reengineering their DNA. For example, even Microsoft has begun to forsake its license-based software to introduce new, cloud-based, office software. At the same time, Salesforce.com (CRM) has aggressively grown by shifting its CRM applications around this cloud-based model.

Read the article and judge for yourself -- is outsourcing going away? And if so, does SAP, especially with its most recent stated emphasis on mobile computing and real-time analytics, stand to gain from it?

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