RESEARCH IN ACTION DECISION MATRIX: IT SERVICE MANAGEMENT FOR SAP-CENTRIC ENVIRONMENTS

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1 RESEARCH IN ACTION DECISION MATRIX: IT SERVICE MANAGEMENT FOR SAP-CENTRIC ENVIRONMENTS Scope: Germany 2012 EXECUTIVE SUMMARY The IT service management software market for enterprise IT buyers in Germany remains highly competitive. The emergence and speedy adoption of the cloud phenomenon has only accelerated the need for IT service management tools. This becomes especially evident for those companies that base their business services on SAP s software suite. By their very nature, SAP environments are highly integrated and interconnected. This means that even small outages can be quickly propagated through the system and can lead to non-availability for many users or even whole business processes. Germany has the highest penetration of SAP systems in the enterprise IT market. That s why Research In Action decided to evaluate the leading vendors in the German market place that offer solutions around enterprise IT service management for SAP-centric environments. What did we find out? The winner with the overall most balanced solution is BMC software. The two runner-ups with only a small difference in the overall results are HP and REALTECH. Also very close together are CA Technologies in fourth and IBM in fifth place. We also concluded that in a balance evaluation, focused not exclusively on price, low cost solutions like Solar Winds and open source bundles cannot compete effectively. IT Service Management For SAP-Centric Environments Page 1

2 Table of Contents Executive Summary... 1 Market Overview... 3 Evaluation Criteria... 5 Results... 8 Appendix IT Service Management For SAP-Centric Environments Page 2

3 MARKET OVERVIEW The market for tools, helping internal IT and external IT service providers to manage the increasingly complex production environments, has always been a dynamic one. Ever since the mainframe days, we have seen wave after wave of innovation in the IT management tools space. Most recently (in the last 10 years or so) topics like ITIL 1, application autodiscovery, the CMDB 2 and BSM 3 have re-energized the market. And now the cloud phenomenon has again accelerated the need for management tools. If, only 12 to 18 months ago, it was still a question whether the cloud hype was there to stay, in 2012, cloud has become the number one investment area for IT managers of large enterprises in Northern Europe in general and Germany specifically 4. Consequently, IT service management 5 is again on the forefront of IT managers concerns. Managing mission-critical SAP environments to customers service expectations is of particular importance for many companies. And since the German market has reached the highest penetration of SAP systems in the enterprise market globally, Research In Action decided to evaluate the leading vendors in the German market place offering enterprise solutions for IT service management for SAP-centric environments. Let us add a bit of color here. In Germany, services around SAP, like consulting, implementation, system integration, support and outsourcing/hosting make up roughly 25% of the overall enterprise IT market. And there is more! Roughly 70% of all outsourcing contracts contain some element of SAP hosting. This situation is unique for countries with well-developed IT markets. 1 IT Infrastructure Library, see 2 A Configuration Management Database is a repository of information related to all the components of an information system. It contains the details of the configuration items in the IT infrastructure. Although repositories similar to CMDBs have been used by IT departments for many years, the term CMDB stems from ITIL. See 3 Business Service Management is a strategy, approach and methodology for aligning IT elements to the goals of the business. Business Service Management is about communicating the right message at the right time to the right level within IT and the business in business terms or IT terms as appropriate for each audience. See 4 The Research In Action IT Trends Survey 2012 reveals additional interesting results on budget and spending trends in cloud, virtualization, performance management as well as ITIL and general IT operational benchmarks. 5 IT Service Management is a discipline for managing IT systems, philosophically centered on the customer's perspective of IT's contribution to the business. ITSM stands in deliberate contrast to technology-centered approaches to IT management and business interaction. See IT Service Management For SAP-Centric Environments Page 3

4 With that being said, it is no surprise that the enterprise IT service management software market in Germany is a highly competitive one. We see the usual suspects, namely the big four global players 6 (BMC software, CA Technologies, IBM and HP) as well as whole array of smaller global, European-centric and even purely national players 7. With few exceptions, IT service management SaaS 8 solutions have not yet managed to make major inroads. It is important to note that many enterprise customers are evaluating open source solutions, but not many have taken the leap of faith to actually fully migrate. The same is true for other low cost solutions, lots of interest and evaluation, but not many largescale implementations. In the even more specialized market for SAP service Management, we nevertheless see customers following the same trends as in the general IT service management market. The majority of customers are looking for integrated solutions around either centralized or federated CMDBs, in case they run into scalability issues. The rest are still trying to integrate point solutions or are experimenting with open source bundles or low cost solutions. For our evaluation, we decided to use a balanced set of evaluation criteria, reflecting how enterprise IT buyers reach their buying decisions in real life. Let us now look at the evaluation criteria in a bit more detail before we interpret the results of the evaluation. 6 The big four IT Service Management software vendors have a combined global market share of around 40%. 7 The global IT Service Management software market has more than 1,000 players. It is one of the markets with a very long tail of competitors. This is primarily due to the fact that the customer requirements are diverse, large in number, sometimes local and specific and forever changing, as the application landscape progresses. 8 SaaS (Software as a Service) sometimes referred to as "on-demand software", is a software delivery model in which software and associated data are centrally hosted on the cloud. SaaS is typically accessed by users using a thin client via a web browser. See IT Service Management For SAP-Centric Environments Page 4

5 EVALUATION CRITERIA The seven companies Research In Action chose to evaluate, were selected based on market presence and growth, proven innovation capabilities, customer mindshare and customer feedback. The first obvious choices were the big four global players (BMC software, CA Technologies, IBM and HP). REALTECH, as the fifth contender, is a European-centric player with global reach and a particularly strong position in the SAP hosting space in Germany (both for internal as well as external SAP service providers). As mentioned before, there are many other commercial players that could have been included. However, a quick and dirty evaluation revealed that none of them would have been able to come close to the breadth and depth of capabilities of these five. The sixth company we evaluated, Solar Winds, is something of a wildcard. It is not a conventional enterprise IT service management software toolset, but something we prefer to refer to as a low cost solution. Solar Winds main competitive differentiator is price. We nevertheless decided to include the company in the evaluation, primarily because Solar Winds has gained a lot of mindshare lately and is showing up in many customer longlists and we get more and more customer inquiries regarding Solar Winds. The seventh and final contender is not a single product offering, but a bundle of Open source software tools. Why? Because many clients are experimenting with this type of solution primarily due to pressure from the press and system administrators, who often times know these tools from small scale trials and experiments. Again, the main competitive differentiator is cost, in this case free licenses. There are many IT service management open source point solutions available. It is a formidable challenge in and of itself, to combine the right ones to a fully functioning solution. The bundle we decided to go for is: 1. OTRS 9 and RT 10 for Incident and problem management. 9 OTRS (Open Ticket Request System) See 10 RT (Request Tracker) See IT Service Management For SAP-Centric Environments Page 5

6 2. I-Doit 11, OCS Inventory NG 12, OpenQRM 13, RANCID 14, Facter 15, Opsi 16 and Puppet 17 for change, configuration and asset management. 3. Nagios 18 /Icinga 19, EventDB 20, NagVis 21 and Business Process View 22 for availability and performance management. 4. R-Project 23, SE Toolit 24, XE Toolkit 25, Orca 26 and ]Project-Open[ 27 for capacity management. Even a well thought out collection like this one has many overlaps, and one could easily add even more tools to the mix to broaden the scope. As you can see, trying to do IT service management with open source tools presents a huge integration challenge. And of course you also need to add some basic level of support, which you can get from companies like Netways or OTRS AG in the German market. Any sensible evaluation needs to follow a rigorous evaluation methodology. Research In Action uses a two dimensional representation with the two most intuitive dimensions: 1. Strategy 2. Execution We then divide the two dimensions into seven sub-criteria each. For our Decision Matrix IT service management for SAP-centric environments, Research In Action uses the following 11 See 12 OCS inventory NG (Open Computer and Software Inventory Next Generation) See 13 See 14 See See 16 See 17 See 18 See 19 Icinga is an open source network and computer system monitoring application. It was originally created as a fork of the Nagios system monitoring application in See 20 See 21 See 22 See 23 See 24 See 25 See 26 See 27 See IT Service Management For SAP-Centric Environments Page 6

7 detailed list of evaluation criteria (See Figure 1). Apparently, price is only one element in the balanced mix of evaluation criteria. This is exactly how enterprise IT buyers reach their decisions in real life it is a mix of many different factors and facets, all of them important. Research In Action Decision Matrix IT Service Management For SAP-Centric Environments By Dr. Thomas Mendel Ph.D. Scope: Germany 2012 Strategy Vision Does the company have a coherent vision in line with the most probable future market scenarios? Innovation How innovative is the company? Market Understanding Is there sufficient understanding of the target markets? Product Strategy Is the product strategy in line with current and future market trends? Go-To-Market And Sales Strategy Does the go-to-market and sales strategy fit the target markets and customers? Viability To Execute Does the company have the necessary resources to execute the strategy? Partner Ecosystem How is the partner ecosystem organized and how effective is the partner management? Execution Differentiated Features And Functions Does the product have a Unique Selling Proposition (USP) and clear differentiators? Product Architecture How is the product architected? Does the architecture fit the needs of the customers? Product Quality How do customers rate the quality of the product? Product Scalability Can the solution scale to the needs of very large enterprises? Market Presence And Growth How big is the market share and is it growing above market rate? Pricing How is the solution priced and is the pricing in line with customer expectations? Support Quality How well does the support structure deal with customer requests? 2012, Research In Action GmbH Reproduction Prohibited Figure 1: Evaluation Criteria One criterion, however, requires some further explanation. For the Differentiated Features And Functions criterion, we decided to use a set of functionality, loosely based on the ITIL processes: 1. Customer: Incident and problem management, also including a service desk and catalogue. 2. Infrastructure: Change, configuration and asset management, also including autodiscovery and application mapping technologies as well as a CMDB. 3. Delivery: Availability, performance, business service and service level management, also including root cause analysis and end-user response time monitoring. 4. Cost: Capacity planning and management, also including IT financial management. This diverse set of requirements represents the complex nature of enterprise IT management today. It is also important to note that despite the fact that we are dealing IT Service Management For SAP-Centric Environments Page 7

8 STRATEGY DECISION MATRIX with SAP-centric environments, the solution needs to include all platforms, namely networks, server, clients, databases and applications. RESULTS What did we find out? The winner with the overall most balanced solution is BMC software (See Figure 2). Research In Action Decision Matrix IT Service Management For SAP-Centric Environments By Dr. Thomas Mendel Ph.D. Scope: Germany ,00 FUTURE MARKET LEADER IBM CA BMC REALTECH 3,00 Open Source Bundle Solar Winds HP PAST PRESENT 1,00 1,00 3,00 5,00 EXECUTION BMC HP REALTECH CA IBM Solar Winds Open Source Strategy 3,88 3,39 3,53 3,70 3,70 2,61 2,38 Execution 3,85 4,10 3,90 3,45 3,30 2,75 2,70 Total 7,73 7,49 7,43 7,15 7,00 5,36 5, , Research In Action GmbH Reproduction Prohibited Figure 2: Evaluation Results IT Service Management For SAP-Centric Environments Page 8

9 We have two runner-ups that are very close together, namely HP and REALTECH. There is also little difference between the fourth and fifth place, which go to CA Technologies and IBM. All five contenders are positioned in the market leader quadrant. Finally, Research In Action concluded that if your only differentiator is price, you cannot compete effectively in the enterprise IT software market for IT service management solutions for SAP-centric environments, where customer requirements are much more demanding and multi-faceted compared to straight-forward infrastructure or system availability deployments. This means that Solar Winds finished in sixth place, still slightly ahead of out open source Bundle which came in last. Assessments of the vendors in detail: 1. Transformation from BSM to cloud management: BMC software. BMC software came out first in our evaluation. One of the original innovators of BSM, BMC software was a thought and market leader around CMDBs and IT service management over the last decade. However, in the past, the SAP management market in general and the one in Germany was never a particular focus area for the company. Over the last two years, this has started to change. Furthermore, after BSM has become mainstream, the company needed a number of years to re-energize and focus on new goals. BMC software is now going after SAP management opportunities much more aggressively than before. Consequently, BMC software has started to gain considerable mind and market share in Germany. Today, BMC software is one of the most important vendors when it comes to hybrid cloud management, combining end-to-end views across private, hosted and public cloud environments, a topic high on the agenda of IT managers for Consequently, the outlook for BMC software is positive. 2. Riding the hardware wave: HP. HP reached second place in our evaluation, helped by the strong market presence of HP hardware in the SAP hosting space in Germany. Here, HP is the undisputed number one hardware vendor for both internal as well as outsourced SAP systems. The breadth and depth of the HP software portfolio is also still impressive, especially for distributed systems. Unfortunately, management IT Service Management For SAP-Centric Environments Page 9

10 turmoil and ongoing confusion over the corporate strategy continuously confuses clients. Research In Action, however, believes that once this is over, HP will be back on a successful trajectory. But this may take some time. Therefore, the outlook is neutral. 3. Being focused pays off: REALTECH. Hot on the heels of HP, REALTECH reaches third place in our evaluation. The company offers a highly integrated and modular IT service management solution lowering administrative overhead and configuration efforts. One of the major differentiators from the big four is REALTECH s centralized CMDB that enables customers to easily access all relevant data related to a configuration item. The CMDB contains asset details about every hardware and software component within a company and private clouds as well as information about performance metrics, events and configuration status. A solution for mobile management and public cloud management is on the two year roadmap. SAP itself has licensed REALTECH s technology to broaden the scope of their Solution Manager 28 software. This promises significant market traction in 2013 and beyond. Overall, REALTECH offers the most innovative and complete solution at a highly competitive price. Why then, did they not win? There are two main reasons: (1) The scalability to the very largest and diverse environments for multi-national firms is unproven and (2) with roughly 40 million in revenue and approximately 350 employees, the market visibility is still relatively small. With all signs set on growth, however, the outlook for REALTECH is positive. 4. Gaining momentum: CA Technologies. CA Technologies finished in fourth place. The growth of CA Technologies in recent years has been impressive. Still, the company focuses heavily on acquisitions to innovate and without a doubt has the broadest overall portfolio of all management players. But because of the broad portfolio, the company is also faced with the biggest integration challenges in the market. On the positive side, the reinforced partnership with SAP is starting to catch on. CA 28 SAP Solution Manager is a centralized support and system management suite. The core functionality is free of charge for SAP enterprise support customers. See IT Service Management For SAP-Centric Environments Page 10

11 Technologies is very strong in the service provider market and also as a private cloud enabler. Hence, the outlook is positive. 5. More than financial services? IBM. We see IBM in fifth place, closely behind CA Technologies but still in the market leader quadrant. In Germany, the strong presence in the financial services industry leads to a disadvantage when it comes to SAP-centric management. Financial services is one of the industries which are least penetrated by SAP. Another challenge is the very holistic and future oriented strategy of the smarter planet which doesn t resonate well with many hands-on German customers in the enterprise space. Until IBM can deliver on this promise, the situation will not change. Therefore, the outlook is neutral. 6. Not quite good enough: Solar Winds. Solar Winds comes in on sixth place. The solution may be cheap, but it cannot compete across the full range of decision criteria important to customers. The company appears on many longlists and shortlists, gets a lot of press and makes a lot of noise on the internet. Some customers will eventually go for it and inevitably fail in trying to match the capabilities of the other players, resulting in harsh and negative feedback. Consequently, the outlook for Solar Winds is negative. 7. The Nerd s choice: Open source Bundle. Open source solutions are free-of-charge in licenses. Though, there are a lot of hidden costs associated since own IT experts need to develop, configure and control the system very frequently. Therefore, in the enterprise environment, the times for these kinds of trial and error solutions are over. The integration challenges are simple too big to handle. There might be a place for this in the cloud service provider space, where dozens of system administrators can learn from each other, but an enterprise should not rely on lone riders in the IT department for business-critical apps support. And keep in mind, these types of open source tools are almost always five years behind the leading edge of technology, the average time vendors can take economic advantage of technology innovation in the IT service management space. Nevertheless, the overall outlook is neutral. IT Service Management For SAP-Centric Environments Page 11

12 The market for IT management software can support many competitors. This is true globally as well as for Germany. Innovation in the market will continue and the rate of change will even accelerate. The next few years will see a broader adoption of IT service management SaaS, hybrid clouds, billing and back charging as well as more advanced use of IT financial management and the adoption of big data concepts for real-time performance and analytics. APPENDIX Research In Action uses an adjusted weighting scheme across 14 criteria. While clearly not every criterion is equally important, the individual technology user company performing their own evaluation may have other priorities. We therefore encourage you to adjust the weightings to your own needs. For the detailed evaluation results see Figure 3. Research In Action Decision Matrix IT Service Management For SAP-Centric Environments By Dr. Thomas Mendel Ph.D. Scope: Germany 2012 Weighting BMC CA HP IBM Open Source REALTECH Solar Winds Strategy Vision 15% 4 0,6 4 0,6 2 0,3 5 0,75 1 0,15 4 0,6 2 0,3 Innovation 10% 5 0,5 4 0,4 3 0,3 3 0,3 2 0,2 4 0,4 2 0,2 Market Understanding 10% 3 0,3 3 0,3 4 0,4 4 0,4 4 0,4 4 0,4 2 0,2 Product Strategy 18% 4 0,72 4 0,72 3 0,54 3 0,54 2 0,36 4 0,72 3 0,54 Go-To-Market And Sales Strategy 20% 4 0,8 3 0,6 4 0,8 3 0,6 2 0,4 3 0,6 4 0,8 Viability To Execute 15% 4 0,6 4 0,6 3 0,45 5 0,75 5 0,75 3 0,45 3 0,45 Partner Ecosystem 12% 3 0,36 4 0,48 5 0,6 3 0,36 1 0,12 3 0,36 1 0,12 100% 3,88 3,7 3,39 3,7 2,38 3,53 2,61 Execution Differentiated Features And Functions 20% 4 0,8 4 0,8 4 0,8 3 0,6 1 0, ,4 Product Architecture 15% 4 0,6 3 0,45 4 0,6 3 0,45 3 0,45 4 0,6 2 0,3 Product Quality 15% 4 0,6 3 0,45 4 0,6 3 0,45 3 0,45 4 0,6 3 0,45 Product Scalability 10% 4 0,4 4 0,4 4 0,4 5 0,5 2 0,2 3 0,3 2 0,2 Market Presence And Growth 15% 4 0,6 4 0,6 5 0,75 3 0,45 3 0,45 2 0,3 3 0,45 Pricing 15% 3 0,45 3 0,45 3 0,45 3 0,45 5 0,75 4 0,6 5 0,75 Support Quality 10% 4 0,4 3 0,3 5 0,5 4 0,4 2 0,2 5 0,5 2 0,2 100% 3,85 3,45 4,1 3,3 2,7 3,9 2,75 Scale Explanation: 1 (Low) To 5 (High) 2012, Research In Action GmbH Reproduction Prohibited Figure 3: Detailed Scores And Weightings IT Service Management For SAP-Centric Environments Page 12

13 The Research In Action GmbH Decision Matrix Methodology: The Research In Action Decision Matrix does not evaluate every single vendor in a given market. Rather, the model examines the most important competitors for a given set of challenges. We conduct primary research to develop a list of most important vendors in a given market. The final list of companies to be evaluated is then created based on market presence and growth, proven innovation capabilities, customer mindshare and customer feedback. We disregard startups with no or few referenceable customers and vendors that do not fit the solution requirements. The set of evaluation criteria are then reviewed and if necessary adjusted. The same is done for the weightings. We then score the vendors on a scale from 1 to 5. We finally provide future guidance through a positive, neutral or negative overall outlook score. Decision Matrix Disclaimer: Research In Action GmbH does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings. The information contained in this research has been obtained from both enterprise as well as vendor sources believed to be reliable. Research In Action GmbH s research publications consist of the analysts opinions and should not be considered as statements of fact. The opinions expressed are subject to change without further notice. Research In Action GmbH disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Author: Dr. Thomas Mendel Ph.D., Managing Director Research In Action GmbH Research In Action GmbH is a leading independent information and communications technology research and consulting company. The company provides both forward-looking as well as practical advice to enterprise and vendor clients. 2012, Research In Action GmbH reproduction prohibited. IT Service Management For SAP-Centric Environments Page 13