Apart from the generally healthy business environment that driving a lot of consulting work recently, there are a few other factors contributing specifically to demand for SAP services, according to David Sieber, Ciber’s senior vice president of enterprise solutions.
The ERP market, especially with SAP’s 6.0 system, is going through a fairly big upgrade cycle, Siebert said. This generally spurs work across the enterprise. There’s a lot of adding application that haven’t been implemented , maybe going all the way back to [SAP version] R/3, he said. And SAP’s recent acquisitions have given it certain tools and software that it’s integrating into its suite, so there’s some integration in this area, too.
Siebert said that the recruiting market for SAP skills is tight right now, which is perhaps contributing to the current wave of consolidation. Ciber’s SAP focus in the midmarket, and particularly the public sector and retail industry, Siebert said. With the Metamor acquisition, it gets another 100 or so employees in the SAP area as well as entry into another subvertical, the apparel and footwear industry. Metamor’s has a preconfigured product for these companies – Quickware, which has a quick implementation time, much like Ciber’s similarly preconfigured Rapid Retail product, also focused on the midmarket.
Overall, Metamor expects 2007 sales of more than $20m. Ciber said the deal should be neutral to its 2007 operating results, and slightly accretive to 2008 results.
As SAP moves further into the midmarket, the services available to midmarket firms are expanding, Siebert said. Ciber can now provide implementation work, including all the technical integration and the functional/business process components. There’s also support services that can tacked on to an implementation, as well as broader outsourcing deals. A lot of CIber’s IT outsourcing work, stems from these engagements; Siebert said its ITO business was exclusively in the midmarket now, with lots of three-to-five year deals on top of systems integration work.
Metamor also adds some offshore capabilities to Ciber’s growing offshore presence. Seibert sadi Iber was currently handling a good amount of technical support work offshore, as well as some custom work, which mainly includes repeatable processes such as quality assurance, testing, and writing. Metamor, meanwhile, has been doing some of its functional application work and implementation offshore.
With its exclusive midmarket focus, Ciber doesn’t come up against the enormous consulting practices of IBM or Accenture, Siebert said. But it will run into some of the second-tier consultancies as well as some of the slightly smaller top firms. This means competition with Deloitte, Wipro, Hitachi, and Capgemini.
Siebert added that while he expects consolidation in the SAP services market to continue, there aren’t too many midrange SAP shops out there, most of whom are very vertically oriented. And a lot of the small shops are content to ride out the current market boom and have little need to sell themselves. But regardless, the bigger players should continue to make purchases as long as demand stays hot and SAP skills are hard to come by.
