SAP and Accenture strengthen their partnership

On January 10, 2016, SAP and Accenture announced that they would join forces in core and industry platform development and in the go to market for SAP S/4HANA. SAP and Accenture say that the aim of this non-exclusive partnership is to accelerate the development of SAP S/4HANA as well as of industry and line-of-business solutions.

PAC's point of view:
The partnership clearly offers some good opportunities for SAP, Accenture and their customers.

  1. SAP is the market leader for enterprise application software. Accenture is the market leader for SAP-related services. Both companies have to defend their position in the market. SAP is being attacked by cloud players such as Salesforce.com and Workday. Accenture has to counter growing competition from India, but also from consultancies like Deloitte and E&Y. Both have developed strong SAP expertise over the last few years, amongst other IT capabilities. Joining forces will help both SAP and Accenture to strengthen their position. SAP will benefit from Accenture's industry and line-of-business competencies. Accenture will benefit from its closeness to SAP, which is a highly ranked criterion for buying SAP-related services, as PAC found in its recent research. Furthermore, Accenture will gain a competitive advantage concerning the newest SAP technology.
  2. SAP's customers will also benefit from this development partnership. The development of SAP S/4HANA as well as of industry solutions will be much faster, allowing customers to benefit from new functionalities earlier. We also expect the partnership to increase the quality of SAP software's industry-specific functionality thanks to Accenture’s industry expertise. And Accenture is much closer to its customers' business departments, which will help promote the business value of the new solutions.

On the other hand, some questions arise regarding this announced development partnership. The partnership will tighten relations between two very close partners even more.

  1. How will other SAP partners react? Will they also form a co-development partnership with SAP, or will they support their own SAP-independent solutions? The SAP/Accenture partnership seems to focus more on the back-end in order to enhance the traditional ERP technology. Thus, there seems to be room in the fast growing front-end area or in the attractive IoT space.
  2. How will Accenture’s customers react? Will Accenture lose its vendor-agnostic positioning, its independence? Today, Accenture's SAP-related revenue share is quite high, although the company has heavily invested in non-SAP technology partnerships or its own solutions. Consequently, in the past, Accenture’s internal competition between its different practices dealt with this potential threat. It will thus be interesting to observe Accenture’s upcoming initiatives with other technology providers in order to drive its internal competition. PAC believes that Accenture will handle this issue with due care, making sure not to lose its strong customer intimacy.
  3. “Accenture developers and industry experts are now working side by side with SAP, providing us with unique input, insight and development opportunities with SAP S/4HANA,“ said Paul Daugherty, Accenture’s CTO. Is SAP selling its software development core competence to a partnership with a partner that also does business with SAP’s key competitors?
  4. What will become of SAP Services, SAP’s internal C&SI practice that contributes approximately 17% to SAP’s overall revenue? By announcing the new partnership with Accenture, SAP's executive management stole SAP Services' last silver bullet in the competition with Accenture: the closeness to SAP's software development. Furthermore, the partnership with Accenture shows that the SAP management doesn’t believe that SAP Services has good access to the lines of business. Consequently, there is a lot of work to do for Michael Kleinemeier, who is responsible for SAP Services on the SAP board, in order to give SAP Services a new sustainable identity. One solution may be, for example, to position SAP Services in the IoT space, since most of SAP’s global partners have their own IoT platform solutions.