to insource or outsource. man makes decision

You have made the decision as a company to implement SAP at last! Maybe you’re a Greenfields site or maybe you’re taking the leap to S4 HANA. Whichever the case, you need to make a decision. “Do we build our own project team in house or do we use an integration partner?” In other words, do we insource or outsource?

Both options have their pros and cons, but what will work for your specific business? We have seen hundreds of companies go through large IT transformations over the years, both successful and unsuccessful, and all due to different reasons. It’s hard to pinpoint what works best as there are so many different scenarios, but here are a few observations from us:

Positives

In House Project team

  • You have control over the consultants on the project and who you hire
  • You have total control over the design and the scope of work
  • You have more control over the budget (and more flexibility over total cost)
  • You can utilitse your permanent team as SME’s, upskilling them and keeping them feeling valued
  • You can communicate more effectively across the project and BAU teams as they’re all working for a common entity
  • As long as you have a strong Program Manager, you can manage a tight budget and not worry about managing T&C’s of contracts – so the focus can be on what is the best solution for your business and not the contracted solution
  • You can be more Agile and change decisions if needed
  • You will save money on “partner fees/margins”

An Implementation Partner

  • They have experts immediately at hand to commence the project.
  • You can choose to work on a “fixed cost” or “time and materials”
  • They specialise in implementing SAP and have the proven track record in various clients and industries so will know what works and what doesn’t
  • You can “share the risk”
  • You may be able to get a competitive price on license and services through the tender process and thus will know the cost upfront so you can plan well ahead of the projected kick off date
  • They may assist you in extended post go-live support and even in the planning for BAU moving forward
  • They will drive the project to its timelines as their business model depends on it

yes or no

Negatives

In House Project team

  • Your internal team may not have the capability thus you will have to build a contracting team from scratch – you will need a senior manager who has been through a large SAP transformation in the past so it can be properly planned
  • You do not have the “fixed price option”
  • You may not have the same access to cheaper overseas resources or global expertise in rarer skill sets

An Implementation Partner

  • They often do not have the internal staff capability so have to hire up contractors regardless, meaning they still may not be tried and tested plus you are likely to be paying double margins if they go to market for these resources
  • Unless you have strict rules in place you may have a disconnect between the business and the partner, slowing work down, hence moving deadlines
  • Using a partner can give a “false sense of security” around what work needs to be conducted still from the business perspective thus the business can miss time frames and thus penalties will fall on the company and not the partner
  • You may end up spending too much time managing the clauses of the contract as opposed to what is right for your business – especially in a “fixed price” agreement
  • The expertise and IP lays within the partner and not internally within your organisation – it will role off with the project team

So do you insource or outsource?

You need to consider what is best for your business regarding budgets, the methodology by which you work, the size and structure of the team and the way you communicate. Also, you don’t necessarily need to go with one option. You may choose a hybrid structure whereby you use a partner to look after certain parts of the project; the end to end data activities, for example or the testing, you may use your own business people as SME’s and maybe an agency for functional consultants.

It is, after all, your choice and your budgets you’re working with. The success of the project will depend on your decisions at the very beginning, so do your research.

Feel free to ask your local SAP recruitment agent for introductions to companies who have already been on their project journey so you can talk to people who have been where you are now!

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