COVID-19 has accelerated the digital transformation plans of many organisations, in some cases bringing about years of change in just a few months. Whether those companies turn to one of the global systems integrators (GSIs) or enlist an independent system integrator (SI) to help them, they rely on the expertise and support of those firms to help them navigate those changes. Here we take a closer look at the current SI market and examine some of the key characteristics that separate a smaller independent specialist from a global giant. What can they offer an enterprise when faced with the scale and breadth of resources from an Accenture or a Deloitte?
In the new world of evergreen SaaS environments, where system updates happen every 90 days, this methodology is no longer effective – PHIL BURGESS, INOAPPS
For the budget-conscious CIO, the first thing that springs to mind is cost. But it is more than the potentially prohibitive cost of employing a global SI to help deliver their transformation – the real issue is value for money. Ask an independent and they will tell you that GSIs are typically unable to provide the same ratio of higher experienced senior consultants on a project. “Because they carry large, expensive overheads, the typical model deployed by bigger consultancies is based on utilisation rates with on-premise solutions requiring hundreds and often thousands, of man hours to carry out testing, development and migration as part of a systems upgrade,” explains Phil Burgess, MD of Inoapps UK & EMEA. “In the new world of evergreen SaaS environments, where system updates happen every 90 days, this methodology is no longer effective. Many of the independent SIs provide far greater value to clients by using a more relevant business model.”
We’re seeing larger consultancies now competing in our space and bidding on projects I doubt they’d have even sniffed at several years ago – this can be confusing for customers – CHRIS MASON, NAMOS SOLUTIONS
Burgess says that Inoapps uses intelligent automation tools to reduce the update time from 1000 days to 100 days, meaning that it requires a fraction of the consultants and significantly fewer hours to complete the project. “While bigger consultancies may have an upper hand in covering a broader offering, they can rarely provide the same depth of knowledge and business experience compared to an independent that focusses on a number of core sectors,” he says. Burgess is not alone in this view. Chris Mason, CEO of Namos Solutions also believes the main selling point of an independent SI is its level of expertise. “I think the specialised Oracle service can be better from the SIs – the consultants tend to be experts in their field rather than sometimes with the GSIs you can get a mix of experts and general management consultants masquerading as Oracle experts. I’m not saying management consultants are bad and will do a bad job, but they aren’t Oracle experts (or SAP or Microsoft),” he explains. Another weapon in the independent SI’s arsenal is its flexibility – something not often seen in a global giant. “Customers don’t always want the huge transformations – but it feels like that is all they are offered by the GSIs,” says Mason. “It feels like a cliché, but agility is key. The smaller SIs can pivot and change quickly to customer demands and challenges.”
Agility and responsiveness are so much more than buzzwords in 2021 and beyond, and are in fact the currency of strong performance – IAN CASWELL, SAPPHIRE SYSTEMS
We can’t talk about the SI market without looking at the mergers and acquisition (M&A) activity that has marked the landscape in recent years. Most notably, we’ve seen a lot of independent specialists being snapped up by the big players. But to what effect on the market and customer choice? “There are far fewer boutique or independent SIs around in the Oracle marketplace, and even less so that are now accredited by Oracle on their new partner programme,” says Mason. “I would say at least half of the SIs that were around 10 years ago have either closed up or been bought and merged into the big four or five to instantly boost their numbers of consultants. This in turn means customers aren’t seeing the choice they did.” He continues: “We’re seeing larger consultancies now competing in our space and bidding on projects I doubt they’d have even sniffed at several years ago – this can be confusing for customers and we are hearing from customers that have fixed price bids from a couple of SIs and one of the ‘big four’ that have ranged by over £1.5m in price!” Ian Caswell, CEO of Sapphire Systems thinks that when it comes to M&A activity in the SI space, it is very much a game of two halves. “While the big consultancies like Accenture and Capgemini will of course benefit from acquiring more specialist, dedicated expertise in this field, there is a risk that this trend might reduce choice for the customer and potentially impede progress when it comes to the ‘last mile’ nuances of implementing a modern core operating platform,” he says. “We see a huge opportunity for midsize consultancies like Sapphire, where this kind of boutique approach built around education, understanding the very specific profile of a particular business challenge, and maximising value at each stage, is very much engrained in our DNA.” Sapphire itself has been on a shopping spree. In January it announced the acquisition of UK-based ServiceNow partner, ITOM Solution. It then extended its US footprint through the acquisition of Arizona headquartered SAP Business One partner, Pioneer B1. Indeed, Canalys chief analyst, Alastair Edwards thinks it is the midmarket players such as Sapphire that are now thriving in this current market. “I have definitely seen examples of these specialist ERP SIs emerging and thriving. Sapphire Systems is a hungry, well-financed and nimble, digitally-enabled business which is pursuing a pretty aggressive growth path, including acquisitions,” says Edwards. “These midmarket focussed SIs are playing just below where an Accenture would play, so they aren’t having to compete with the global SIs – typically. Their customers in midmarket or low-end of enterprise are often keen to invest in cloud-based ERP systems such as SAP Business One, because it supports their own essential digital transformation.” While there has been M&A activity across the board, it has been particularly noticeable in the SAP space. Laura Atkinson, chief partner officer for SAP UK & Ireland, thinks the acquisitions are broadly a positive thing – “as long as those incredibly cool, agile companies which are being acquired are still allowed to operate in that way by their new parent.” She explains: “We love agility, we love innovation, and sometimes our smaller partners have just got a lot more ability to say, ‘that’s a really good idea, I’m going to do that for you tomorrow’. We don’t want to lose that. As long as that kind of heritage is allowed to flourish in a bigger company and doesn’t get gobbled up by bucket loads of red tape and processes, I think it’s a good thing for the customer, because they get that safe pair of hands.”
Sapphire Systems is a hungry, well-financed and nimble, digitally enabled business which is pursuing a pretty aggressive growth path – ALASTAIR EDWARDS, CANALYS
The next big thing?
Mark Sweeny, CEO and co-founder of de Novo Solutions, was the founder and CEO of Certus Solutions, which was sold to Accenture in 2018. He believes a key trend we’re now seeing is the merging of digital design experience agencies and traditional SIs. “Both Deloitte and Accenture have been the most active in this space over the past five years with numerous acquisitions around the world. This is really the start of the experience economy, which sees the need to digitalise organisations’ business operations from front to back and across an enterprise,” he says. The experience economy, he says, offers personalised experiences over standardised processes. But this time there is a twist for those acquisition-hungry companies. “We are operating in a hybrid multi-cloud environment, so it will be interesting to see how this develops. We are going to see Salesforce, ServiceNow, Microsoft et al penetrate from the front office and across the enterprise integrating with the established back office ERP vendors.”
This is really the start of the experience economy, which sees the need to digitalise organisation’s business operations from front to back and across an enterprise – MARK SWEENY, DE NOVO SOLUTIONS
Agility the biggest weapon in the SI’s arsenal?
Those enterprises pushing the button on their digital transformation plans clearly have choices as to who they choose to partner with. With an independent SI they are paying for access to product – and vertical – specialists and an organisation that is agile and can adapt immediately to changing requirements as and when they arise. “Boutiques want happy customers at all costs, they need customer advocacy to promote their businesses, hence they have an intrinsic understanding and desire for personal ownership of an implementation. Reputation is everything,” says Sweeny. However, he argues that GSIs still have a role in the ecosystem: “If you are undertaking a major global implementation for a large multi-national, then you are going to need the services of a large SI. However, I would still push to ensure they have skilled boutique partners in their supply chain, from which you can leverage over the course of the implementation.” And much like a need for agility is driving many transformation projects, so too is that reflected in the need for an SI partner. “Agility and responsiveness are so much more than buzzwords in 2021 and beyond, and are in fact the currency of strong performance,” says Caswell. “Smaller independent SIs are arguably in a stronger position to deliver this speed and agility when it comes to deployment, as they are less entrenched in the red tape and processes which can constrain their larger counterparts. “The challenge now, is for those SIs to step up and convince the market of the true value of adopting the new breed of core operating systems which will undoubtedly become the foundation of successful business over the next decade.”