Business Solutions with SAP
SAP Return on Investment or ROI

SAP Offshore Development Cost

If you are capable of providing detailed design specs where there is almost no deviation or thought required this is a great option.  The instant your SAP design requires a measure of experience and insight to make judgment calls, or to look for data or processing that is not explicitly spelled out in detail, you are headed for huge hidden costs. 

The level of detailed spec design work by SAP functional consultants merely shifts the development time and costs to the higher priced resources where it is “hidden” from TCO and sales quotes.  If you are capable or writing “functional” specs that are really more like technical specs with specific table and fields spelled out in detail, program pseudo-logic defined, every possible alternative anticipated, and no detail left out then SAP offshore development works well.  If you are not prepared for that level of detail and “perfect specs” then you are likely headed for a much larger invoice in change order costs and hidden functional time than you ever anticipated.

Offshore resources are often smart, industrious, and hardworking but the ugly reality no one talks about are the real rates because these resources do NOT have any significant amount of SAP experience.

This is the final post in this series.

A quick “test” for the SAP outsourcing or SAP offshore fit is the nature of the work.  “Commodity” services are a perfect fit for SAP outsourcing or SAP offshore work. 

If the effort involves any type of innovation, business transformation or needs any level of change management then SAP outsourcing or SAP offshore development may be dangerous and it WILL cost you far more than you are led to believe.

SAP Upgrades Might Support SAP Offshore Development

One area I have seen where SAP offshore development work makes sense is with upgrade projects.  Much of the development work there is re-working existing objects where the requirements from previous projects have been well tested and adjusted.  Or, if there are enhancements the gaps are well-known and understood so that the detailed SAP development requirements can be easily defined.  From this standpoint SAP offshore review and adjustment of existing code makes sense.  There is little in the way of experience needed to use the syntax checker and to do the occasional program adjustment.  And other than poor coding which causes performance problems the risk is lower.

SAP Production Support Might Work With SAP Offshore Development

In a fairly stable production environment, where there are not a lot of enhancement or new functionality requests SAP offshore support might work well.  The “fix” requirements are very specific and limited so that these types of small adjustments or corrections work well in an offshore environment.  Even for some of the smaller and less complicated enhancements or improvements SAP offshore support might work well.  However, for more extensive troubleshooting, or very complex requirements, you are likely better with some sort of local or onsite support. 

For a more details see Outsourcing Your SAP Application Support.  This provides some insight and a little framework for understanding the SAP outsourcing or SAP offshore fit.

Conclusion on SAP Offshore Development

Regardless of the hype and sales pitches SAP Off Shore development has far more Total Cost of Ownership than anyone has been led to believe.  There is a place for it but that is rarely in a new project or an extensive rework of complex processing requirements.  While you may not see the costs, the offshore project model will cost you unless you are fully aware of the requirements and hidden costs that are never defined in any of the sales pitches or materials.  Of course they will never tell you SAP offshore development might cost you far more than higher priced local resources in many situations.  If they had that level of integrity you would never engage with them for those services. 

For more information and insight on this topic see IT Outsourcing, Off Shore Support, Cost Cutting and IT Department Changes.  That post provides some additional insight on helping to understand where SAP internal resources should focus as well as where offshore support might make sense.


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Bill Wood
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