Magic Quadrant for Oracle Application Management Service Providers, Worldwide

Gartner evaluates service providers on their Ability to Execute and their Completeness of Vision. Our evaluations are informed by:

• A detailed survey addressing the providers' global Oracle application management capabilities, covering revenue, staffing, geographic capabilities per Oracle application platform, industry and process assets, partnerships, joint initiatives, investments, and other relevant information. This survey provides the numeric and qualitative data needed for us to compare providers and analyze them against the inclusion criteria.
• A detailed vendor briefing per provider addressing the provider's capabilities in a format chosen by the provider and also addressing (at least) the inclusion criteria. Each briefing included material prepared for by the provider and discussed during a telephone conference.
• A detailed list of reference clients for each provider, on which all relevant information was provided regarding services, scope, type of engagement, included services and technologies, project description, executed work, and delivered benefits.
• 158 client references submitted to Gartner, 111 of which provided evaluations of their service providers' application management services for Oracle software. The evaluations included information on the deals' scope, duration, size, selection criteria, vendor strengths and challenges. The references also provided indications of overall satisfaction with the service providers and recommendations for areas of improvement.
• Service providers' representations of their organization through briefings, press releases, annual reports and other publicly available information, other than what they presented during the detailed vendor briefings described above.
• Gartner clients with whom Gartner analysts have had discussions regarding application management services for Oracle applications throughout the year.

We include Oracle application products according to their primary product line:

• Oracle application products (Oracle Applications):
  • Oracle E-Business Suite, PeopleSoft, Siebel, Business Intelligence/Analytics and Mobility offerings.
• All other Oracle solutions are consolidated under "Other," which includes JD Edwards, Hyperion and Fusion.

We evaluate service provider offerings for Oracle Applications that include the ability to provide:

• A comprehensive set of application management services (see below for Gartner's definition of "comprehensive") across the Oracle product line
• Insights across industries for Oracle application service decisions
• Investments in industry-specific offerings
• Insights into and investments in the Oracle application product line

"Comprehensive" in this respect means:

• A distinct offering, consistent from a services component perspective (what is included, roles and responsibilities, service metrics and levels, terms and conditions, pricing model) and a delivery perspective across all industries for general services or specific to certain industries (where applicable), in combination with a consistent internal delivery structure across all countries where such services are provided (through best practice processes, tools, technologies and people).
• A consolidated set of distinct offerings that addresses industry-specific or cross-industry demand and that can be logically recognized as an integrated offering.

Market Definition

Countries per Region

This Magic Quadrant addresses service providers' worldwide capabilities in the following regions: North America, Latin America, Asia/Pacific and Japan, and Europe, the Middle East and Africa (EMEA). Gartner defines these regions as follows:

• North America: United States, Canada
• Latin America: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Panama, Peru, Uruguay, Venezuela
• Asia/Pacific and Japan: Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam
• EMEA: Austria, Algeria, Azerbaijan, Bahrain, Belarus, Belgium, Bulgaria, Cameroon, Cote d'Ivoire, Croatia (Hrvatska), Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Libya, Lithuania, Luxembourg, Morocco, Netherlands, Nigeria, Norway, Oman, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, Yemen

Full-Time Equivalents per Region

This Magic Quadrant includes references to the number of full-time equivalents (FTEs) per provider for Oracle application management services, and to the number of FTEs by region. For some of the providers in this Magic Quadrant, the FTEs are Gartner estimates. The provided numbers represent the FTEs that are located in the respective regions and do not represent the allocated resources to clients per region. Client revenue can be consolidated in multiple ways across regions, dependent on the provider's internal account structure. FTEs can also support multiple clients in multiple regions, so the only consistent factor is the registered base location for the FTEs.

Assets

This Magic Quadrant includes references to assets. "Assets" in this respect refers to industry-specific (for example, retail or automotive), business-process-specific (for example, HR or finance), technology-process-specific or service-specific (for example, implementation framework or operations framework) solutions, tools or processes. Assets are provider-specific and represent a provider's intellectual property (IP) in the respective asset area.

Oracle Application Management Services

• All ongoing Oracle application services provided as part of a multiyear agreement and managed against defined quality metrics.
• Included are:
  • All ongoing activities relating to application development, implementation, integration, testing, maintenance and support (functional and/or technical), and help desk services delivered within the scope of a multiyear application service agreement.
• Excluded are:
  • All activities relating to business process outsourcing (BPO).
  • All project-related activities and assets (unless delivered as part of a multiyear, continuous service application management agreement). These are covered by "Magic Quadrant for Oracle Applications Implementation Services, Worldwide."
  • All middleware and infrastructure activities and assets. These are application operations services.

Source: Gartner (December 2012)

Vendor Strengths and Cautions

Accenture

Gartner estimates that Accenture has approximately 10,000 FTEs providing Oracle application management services (approximately 48% of its resources are in Asia/Pacific and Japan, 24% in EMEA, 20% in North America, and 10% in Latin America). Gartner estimates that 49% of Accenture's Oracle application life cycle services revenue comes from Oracle application implementation services, 36% from Oracle application management services and 15% from other Oracle-related services. Accenture's main Oracle application management services markets are manufacturing, financial services, communications, the public sector, retail and healthcare. Accenture became the first Oracle Diamond Partner in October 2010.

Strengths

• Accenture shows greater willingness than competitors to put revenue at risk in engagements where it can see opportunities to optimize client environments. To do this, Accenture gets closer to the client's business than its competitors do, as risk-reward models require that Accenture maintains greater control over client environments.
• Clients report satisfaction with Accenture's performance and recognize that it has long and deep experience of Oracle application management services. They also report that Accenture's emphasis on technical knowledge gives it a good basis for problem solving and effective delivery against SLAs.
• Accenture has a strong worldwide presence and is suitable for clients seeking Oracle application management services that span diverse global locations.

Cautions

• Accenture is generally regarded as relatively expensive, the perception being that the total cost of an engagement will be higher than for many of its competitors.
• Functional expertise is sometimes lacking within account teams, where Accenture is viewed as having greater strength in technology and being weaker in terms of business processes.
• Overall, clients continue to look for more flexibility in Accenture's contracting practices, with the goal of incentivizing continuous improvements and driving better cost management.

AT&T

Gartner estimates that AT&T has approximately 1,450 FTEs providing Oracle application management services (approximately 48% of its resources are in North America, 48% in Asia/Pacific and Japan, 3% in EMEA, and less than 1% in Latin America). Gartner estimates that AT&T generates approximately 20% of its Oracle revenue from application implementation services and 80% from Oracle application management services. AT&T's main markets for Oracle application management services are banking, oil and gas, discrete manufacturing, retail, and the service industries. AT&T is an Oracle Platinum Partner.

Strengths

• AT&T has highly skilled Oracle technology experts and well-established delivery and quality frameworks (for example, all operations and professional services employees are Six Sigma certified).
• AT&T demonstrates strong commitment to account management and takes a team-centered approach to problem solving. AT&T's customer-centric management approach often results in higher levels of customer satisfaction.
• AT&T has a long history as an application service provider and has transferred its associated technological experience into Oracle application management services. The strong focus of its solutions is on maximizing the performance and reliability of business-critical enterprise applications, measured at both a technology and a business process level.

Cautions

• AT&T's application management focus is predominantly on deals in which it is delivering the hosting and infrastructure services. This limits its vision for and experience in application management services, relative to its competitors in this Magic Quadrant.
• AT&T needs to decrease its dependency on the U.S. market for its Oracle application management services and invest in expansion into other regions, if it is to improve its competitive position.
• AT&T functional Oracle application skills are less robust, and it is lacking in breadth and scale of consulting capabilities, in comparison to its competitors.
• AT&T's customers tend to be midsize or divisions of larger multinational corporations, as AT&T takes a targeted approach to determining which customers it will support. This could limit AT&T's ability to take on large, global, end-to-end application management deals.

Capgemini

Gartner estimates that Capgemini has approximately 1,800 FTEs providing Oracle application management services (approximately 56% of its resources are in EMEA, 28% in Latin America, 11% in North America, and 6% in Asia/Pacific and Japan). Gartner estimates that 65% of Capgemini's Oracle application life cycle services revenue comes from Oracle application implementation services, and 35% from Oracle application management services. Capgemini's main Oracle application management services markets are manufacturing, the public sector, communications and retail. Capgemini has been an Oracle Diamond Partner since June 2011.

Strengths

• Capgemini has focused on innovation by means of industry solutions, while addressing the market with a full stack of Oracle services, recently expanded with co-developed Oracle cloud hosting and management offerings. Its solution-based approach provides strong end-to-end offerings for distinct industries (the public sector, retail and energy) and technologies (mobile communications and cloud computing).
• Capgemini offers the most even spread of technological coverage across Oracle E-Business Suite, PeopleSoft, Siebel, Business Intelligence, and mobile solutions and services. Its approach is directed at larger enterprises and midmarket clients, where end-to-end offerings have more traction.
• Capgemini's clients indicate that they appreciate the company's people, teams and relationship focus in both small and large engagements. These prompt clients to see Capgemini as highly credible in delivering cost-based services where the clients' goals are to reduce costs over time.
• In combination with its solutions and transparent transition and transformation approach, Capgemini is able to convert the majority of its implementation engagements into ongoing application management deals (mostly in EMEA).

Cautions

• Capgemini's Oracle application service capabilities are predominantly in EMEA, followed by the U.S., and limited capabilities in Latin America and Asia/Pacific and Japan. Its approach to global demand is to leverage reusable assets and replicated technology, which is a strength for implementations, but the lack of local support capabilities leads to less competitive application management.
• In North America and Asia/Pacific and Japan, Capgemini's services are predominantly project-based implementation offerings. In Latin America, Capgemini's exposure has increased with the acquisition of CPM Braxis (market presence only in Brazil), but the integration of services and delivery is still in progress.
• Capgemini's clients are generally satisfied, but some noted inconsistencies in staffing, communications, and business and technology experience.
• Capgemini tends to deliver to the contract requirements for efficiency-based services, but is seen as less proactive in the promotion of application optimization.

Cognizant

Gartner estimates that Cognizant has approximately 3,100 FTEs providing Oracle application management services (with approximately 79% of its resources in Asia/Pacific and Japan, 19% in North America, 2% in EMEA, and less than 1% in Latin America). Gartner estimates that 53% of Cognizant's Oracle application life cycle services revenue comes from Oracle application implementation services, and 47% from Oracle application management services. Cognizant's main Oracle application management services markets are manufacturing, financial services, communications and retail. Cognizant is an Oracle Platinum Partner.

Strengths

• Cognizant's vision for Oracle application management addresses clients' current needs for cost optimization, but it also has a solid road map for moving its service offerings and client base away from time and materials and fixed-bid projects toward more outcome-based delivery models.
• Although Oracle Fusion experience was not demonstrated or referenced in this evaluation, Cognizant is co-developing and investing in Fusion frameworks with Oracle, to position itself for possible opportunities in the future.
• While Cognizant's business is currently centered on traditional implementation and outsourcing, and heavily North America-centric, it recognizes the market's shifts and is investing in its service delivery capabilities for platforms, business process optimization and growth in other geographies.
• Cognizant clients consistently rate it strongly for skill-based resources that are highly proficient in Oracle technologies, application support responsiveness, project management and overall cost of services.

Cautions

• Cognizant's Oracle application management business is primarily North America-based. The company has no Oracle application management business in Latin America, and only nominal amounts in Asia/Pacific and Japan. This could impact Cognizant's market growth, and it presents challenges for Cognizant in terms of delivering the full complement of Oracle application management services to meet client needs that are global, multiregional or heavily focused on growth markets.
• Cognizant's heritage in PeopleSoft and Siebel make it a good choice for the management of those applications, but unlike most of its competitors in this evaluation, Cognizant's Oracle E-Business Suite capabilities and experience are emerging and on a smaller scale.
• While Cognizant performs well with efficiency- and cost-based services, many of its reference clients would like to see it do more to innovate and improve service delivery, specifically in terms of its functional knowledge of their business processes and business challenges.

CSC

Gartner estimates that CSC has approximately 2,500 FTEs providing Oracle application management services (with approximately 60% of its resources in Asia/Pacific and Japan, 30% in North America, 10% in EMEA, and less than 1% in Latin America). CSC generates approximately 44% of its Oracle revenue from application implementation services, and 56% from application management services. CSC's main markets for Oracle application management services are the public, energy and utilities sectors, but it derives revenue from 19 industries in total. CSC has been an Oracle Diamond Partner since July 2011.

Strengths

• CSC's entry point into Oracle application management is via a "business solution blueprint framework" focused on Oracle applications and industry and process domain solutions, like those for automotive fleet management, case management in the public sector, and worldwide transformation for the finance and human capital management sectors.
• CSC's Catalyst methodology supports delivery of framework-based solutions using highly technically skilled and reliable service delivery capabilities. This is confirmed by clients.
• CSC has set up a cloud foundation services framework for Oracle that builds on Exadata and has been introduced to the government sector. On Exadata, CSC partners with Oracle for its Petroleum Intelligence solution, which has been well received by clients.
• CSC demonstrates engaged account management and flexible service contracting and service delivery. This is supported by a global resourcing model that has shown marked improvement over the years and is considered highly credible.

Cautions

• While capable and dependable for support and maintenance, CSC is not viewed as innovative or visionary in relation to its Oracle application management services. Having recognized this, CSC is investing heavily in cloud and analytics solutions, but many offerings are still at an early stage.
• Although the blueprint framework allows for reusability of assets across industries, CSC has spread its services across so many industries that it will be challenged to compete in subindustry domains where competition will grow. This finding is supported by clients' indications of weaker functional and business process consulting capabilities, a result of CSC's engineering-focused background.
• CSC's relationships with clients are often with midlevel management and are heavily IT-centric. They often do not extend to supporting business transformation or business change.
• In the global Oracle application management market, CSC generates minimal revenue in Latin America, and it has limited regional capabilities and delivery centers. To improve its position, CSC will need to expand in at least the growing economies.

Deloitte

Gartner estimates that Deloitte has approximately 1,450 FTEs providing Oracle application management services (with approximately 57% of its resources in North America, 18% in EMEA, 14% in Latin America, and 14% in Asia/Pacific and Japan). Gartner estimates that 90% of Deloitte's Oracle application life cycle services revenue comes from Oracle application implementation services, and 10% from Oracle application management services. Deloitte's main Oracle application management services markets are manufacturing, financial services and the public sector. Deloitte has been an Oracle Diamond Partner since September 2011.

Strengths

• Deloitte's geographic footprint and its strength in consulting and implementation services, coupled with increased investments in Latin America, give it a balance of business across all four geographies. This positions Deloitte as a full-service provider of end-to-end Oracle application services for clients looking for end-to-end capabilities, and to deliver enhancement and optimization services to its clients.
• Reference clients appreciate the strong functional and technical skills of Deloitte's resources, which combine effectively with its industry frameworks and industry expertise. Clients value the ability to have a mixture of consulting and support resources available to provide support beyond maintenance and break/fix services.
• Deloitte is able to strike a good balance between senior and junior resources. Many of its clients consider that this ability has resulted in pricing that is consistent with the market or that, in a number of situations, is lower than many of Deloitte's competitors.

Cautions

• Deloitte's consulting and implementation background is an advantage, but its Oracle business remains heavily focused on consulting and implementation engagements. Despite extensive Oracle expertise, Deloitte's application management business still represents only a small percentage of its total Oracle application services business.
• Although reference clients note Deloitte's ability to keep to project timeline commitments, they would like to see deeper project management skills and more reporting transparency in outsourcing engagements.
• Clients would like greater access to Deloitte's senior management, especially when looking for more value-added services and business change management expertise.

Fujitsu

Fujitsu, which is headquartered in Japan, has established a presence worldwide, particularly in North America and Western Europe. The company has established global methodologies that it is able to deliver at a local and in-country level. Gartner estimates that Fujitsu has approximately 800 FTEs providing Oracle application management services (with approximately 41% of its resources in Asia/Pacific and Japan, 35% in EMEA, 24% in North America, and less than 1% in Latin America). Approximately 75% of Fujitsu's Oracle application services revenue comes from management services, and 25% from Oracle application implementation services. Globally, Fujitsu's main Oracle application management services markets are the public sector, energy and utilities, but with its emphasis on North America, its industries are more focused on the private sector than the public sector. Fujitsu has been an Oracle Diamond Partner since October 2011.

Strengths

• Although smaller than the other vendors in this Magic Quadrant, Fujitsu has a dedicated approach to Oracle services, built on a combination of consistent Oracle application expertise (with 44 specializations) and technical and service delivery capabilities (based on its Triole methodology).
• Fujitsu has made good progress during the past two years in repositioning its application management services, with a more visible commitment to satisfying its clients and improving its global delivery capabilities (through its Global Enterprise Management Services [GEMS] model). Part of its success is due to clients' reinvestment of accrued savings in transformation programs.
• Clients appreciate Fujitsu's transparency about its capabilities and limitations. This translates into clarity about the products and services delivered, and a consistent 95% contract renewal rate.
• Fujitsu is drawing on its technology background to partner with Oracle on the infrastructure technology side in developing Oracle-optimized delivery platforms (like SPARC). These can be further exploited through the use of Fujitsu application services.

Cautions

• Fujitsu is limited in the number of clients it can serve on a global scale, due to its size and geographic presence. This has driven it to focus more on technology services than on industry-specific solutions.
• Fujitsu's Oracle revenue comes from a limited number of industries, with the public sector generating 60% of this revenue. Continued budgetary and political pressures in the public sector could make this a risky dependency if budgets are tightened, especially in North America and EMEA.
• Fujitsu is highly dependent on Oracle E-Business Suite services and will need to demonstrate more clear investments in, and focus on, at least its business intelligence investments if it is to gain competitive strength.
• Fujitsu's clients appreciate the clarity it offers, but understanding of its limitations also leads some to see it as restrictive and lacking in flexibility.

HP

Gartner estimates that HP has approximately 2,000 FTEs providing Oracle application management services (with approximately 43% of its resources in North America, 43% in EMEA, 8% in Latin America, and 8% in Asia/Pacific and Japan). HP generates approximately 45% of its Oracle application services revenue from application implementation services, and 55% from application management services. HP's main markets for Oracle application management services are financial services, manufacturing, the public sector and communications.

Strengths

• HP continues to focus on its integrated approach to hardware, software and services (covering infrastructure and application services), as a general message both to the market and more specifically to its existing clients.
• HP positions itself as an end-to-end provider from a technology perspective, with global capabilities for migrations and risk reduction and efficiency improvement initiatives. Global cloud and infrastructure capabilities strengthen its position.
• To improve its competitiveness, HP is developing joint go-to-market solutions with Oracle (in addition to their joint Oracle On Demand services), starting with discrete offerings for the financial industry.
• HP's clients highly appreciate its ability to deliver and to "go the extra mile." Most indicate that they selected HP for its pricing and ability to deliver required efficiencies.

Cautions

• HP's messaging and services are strongly oriented toward the technologies and infrastructure behind Oracle applications — a known area of expertise for HP — and not toward discrete industry solutions. None of HP's reference clients selected it for its vision, business acumen or industry expertise, but found its ability to deliver much more important.
• HP's answer to this perception is its Designed for Run delivery model, in combination with its Next Generation Applications Management services. Although straightforward, this model again focuses on the technological aspect of services.
• HP's clients indicate that it meets its targets, but that it takes time to build up the required team, and that the client needs to manage HP during this process. HP's clients expect more thought leadership and more active sharing of lessons learned at the account level.

IBM

Gartner estimates that IBM has approximately 5,500 FTEs providing Oracle application management services (with approximately 36% of its resources in North America, 27% in EMEA, 27% in Asia/Pacific and Japan, and 9% in Latin America). Gartner estimates that IBM generates approximately 45% of its Oracle revenue from application implementation services, and 55% from application management services. IBM supports Oracle clients in all industries, but its key markets for Oracle application management services are retail, utilities and banking. IBM has been an Oracle Diamond Partner since August 2011.

Strengths

• IBM presents a strong overall strategy and can demonstrate considerable revenue from analytics and mobility services, although many of its application management engagements begin as efficiency-driven outsourcing deals.
• IBM's global delivery model and account management are highly effective at supporting demands with skilled technical specialists. In this regard, IBM has extensive coverage of Oracle applications and technologies, and brings industry solutions and services to market.
• IBM's Oracle revenues are well balanced across implementation and management services. Its client base is spread across geographies, with a strong presence in Asia/Pacific, specifically in Japan.
• IBM's clients appreciate its culture and desire to get the work done. IBM understands the technology and delivers quality globally. It supports its delivery, and enables its support staff to improve service and team performance, with a single knowledge management framework, Catapult, which accelerates ticket resolution.

Cautions

• Clients in some engagements reported that resources and project teams lack the ability consistently to identify potential application performance issues and problem areas, and to recommend solutions or additional maintenance to prevent problems recurring.
• Some clients indicated that, despite IBM's standardized and global delivery model, the company demonstrates inconsistent execution across geographies. This relates to IBM's worldwide delivery model, which integrates IBM's location-based, nearshore and offshore resources to support any client, anywhere. Some clients noted staffing challenges regarding visas, in combination with staff attrition relating to the acquired services.
• While service delivery experiences are generally strong, some inconsistencies were noted in the Oracle skill levels and proficiency of resources, primarily in functional and business process areas.

Infosys

Gartner estimates that Infosys has approximately 3,800 FTEs providing Oracle application management services (with approximately 74% of its resources in North America, 14% in EMEA, 11% in Asia/Pacific and Japan, and 1% in Latin America). Infosys generates approximately 70% of its Oracle application services revenue from application implementation services, and 30% from application management services. Infosys' main Oracle application management services markets are financial services, communications, high-tech manufacturing and retail. Infosys has been an Oracle Diamond Partner since September 2010.

Strengths

• Infosys enjoys relatively high levels of client satisfaction, due to the quality of its resources, their functional and technical abilities, and their cultural alignment to clients' organizations. In addition, Infosys has been able to monetize its IP by "productizing" it, whereby clients pay for IP use on a one-off or monthly royalty fee basis.
• Infosys demonstrates a strong overall vision for the market, which it translates into aligned strategic investments and solutions. Infosys, among others, is building and expanding on its many joint centers of excellence with Oracle for all Oracle applications, with distinct investments in business intelligence and analytics offerings and solutions for the retail and communications industries.
• Infosys' reference clients gave it the highest scores in this Magic Quadrant for overall performance, strategy, resources and service delivery (aspects supported by its Virtual Ops Center and its Shared Services offerings).
• Infosys is good at starting engagements based primarily on efficiency-based outcomes and then using its account management capabilities to help clients move toward application optimization and eventually transformation-based services.

Cautions

• Infosys' Latin American strategy is in its early stages, and the company currently has limited service capabilities there, though it is setting up delivery and support centers in Mexico and Brazil. Although Infosys has a good strategy for entering the Latin American market, it is still gearing up to meet the expanding opportunities in this region.
• Although Infosys behaves proactively, some clients felt that it should be more aggressive in bringing forward alternatives in service delivery and value-based pricing models. Infosys tends to be too accommodating of clients' demands and changes.
• In its major market, North America, some of Infosys' clients indicate that it encounters staffing issues.

Mahindra Satyam

Note: In this Magic Quadrant, Mahindra Satyam and Tech Mahindra are combined under the Mahindra Satyam brand. Although Mahindra Satyam and Tech Mahindra remain legally separate entities, their operations have been integrated since 1Q11, and this includes their offering of a "single face" to customers.

Gartner estimates that Mahindra Satyam has approximately 4,300 FTEs providing Oracle application management services (with approximately 60% of its resources in EMEA, 30% in North America, 10% in Asia/Pacific and Japan, and less than 1% in Latin America). Gartner estimates that 40% of Mahindra Satyam's Oracle application life cycle services revenue comes from Oracle application implementation services, and 60% from Oracle application management services. Mahindra Satyam's main Oracle application management services markets are communications, manufacturing, financial services and transportation. Mahindra Satyam has been an Oracle Platinum Partner since March 2010.

Strengths

• Mahindra Satyam is able to create a strong consolidated Oracle application management delivery capability amid the integration of Tech Mahindra and Mahindra Satyam into a single business. Mahindra Satyam has extended the Tech Mahindra TechM solution and service model that it created for the communications industry to other industries, and created xPress Solutions for the retail, travel, transport and logistics industries, among others.
• Mahindra Satyam's clients consider it a very cost-effective provider that consistently delivers positive results and strong value for money.
• In contrast with some competitors that struggle to achieve low costs while also providing qualified technical resources, Mahindra Satyam has consistently achieved low costs without having to rely too heavily on a higher percentage of junior-level resources.
• Mahindra Satyam's focus on costs enables it to provide back slightly better cost reduction returns for clients than some of its competitors, making it a good choice for organizations with goals closely tied to efficiency gains. Mahindra Satyam, for example, has a distinct global market focus on technology upgrades from legacy environments, with solutions for upgrades and legacy migrations to an Oracle application platform.

Cautions

• Although Mahindra Satyam has some functional and process expertise, its consulting capabilities lag behind competitors' capabilities to help clients with transformation and business change management initiatives.
• Mahindra Satyam's market focus is on EMEA and North America: It has only a limited presence in Asia/Pacific and Japan and no local Oracle application management presence in Latin America. Although it does exhibit growth across all regions, its growth expectations, as a percentage of its 2011 Oracle application management revenue, lag behind the expected growth rates of traditional India-based service providers, across the major regions.
• Although Tech Mahindra and Mahindra Satyam combined their operations in 1Q11, some Mahindra Satyam clients still refer to the two as separate entities and indicate challenges in the deployment of consistent methodologies, the quality of resources, employee satisfaction and levels of resource training.

Tata Consultancy Services

Gartner estimates that Tata Consultancy Services (TCS) has approximately 5,400 FTEs providing Oracle application management services (with approximately 54% of its resources in North America, 28% in EMEA, 17% in Asia/Pacific and Japan, and 2% in Latin America). Gartner estimates that 60% of TCS's Oracle application life cycle services revenue comes from Oracle application implementation services, and 40% from Oracle application management services. TCS's main Oracle application management services markets are manufacturing, communications, financial services, public sector, and energy and utilities. TCS has been an Oracle Diamond partner since November 2011.

Strengths

• TCS is demonstrating consistent growth for all Oracle applications, but demonstrates strong traction for its Oracle Business Intelligence, Fusion and Hyperion solutions and customer-specific solution development capabilities. Overall, TCS is able to deploy a very large number of industry and process assets across all Oracle application platforms, and can offer distinct industry and process solutions for all industries it competes in.
• TCS's strategy and delivery model provide complete end-to-end service capabilities (for the "plan," "build" and "run" stages) at the application layer, built on TCS's reusable cuBEST toolset. Its overall project management capabilities and its consulting and delivery staff are viewed as strong. In general, TCS's staff rotation model, whereby staff rotate between technology and industry centers of excellence, ensures its staff have a good understanding of both areas, which improves client interactions and overall delivery quality.
• TCS demonstrates the ability to increase its market share through strong upselling to its existing customers and extending its implementation services into application management, so providing clients with the ability to acquire a full life cycle of services. TCS helps its clients move from traditional delivery models to more per-use and risk-reward-based models.
• Although limited in Latin America, TCS is very balanced in its service offerings and delivery services between implementation and management, as well as geographically.

Cautions

• Some clients indicated that they have experienced inconsistency in resourcing, and that this appears to be a particular problem for smaller engagements and those delivered using a staff augmentation model. TCS performs better when delivering in larger-scale environments with resources committed for the longer term.
• Although TCS is a solid performer for deals intended to improve efficiency and reduce cost, it does not consistently communicate its vision to its clients via thought-leading services. This is despite it having established transformation teams for deals in which transformation is explicitly required.
• Although TCS provides consistent delivery resources and capabilities, it suffers from weakness in its management teams' communications to clients. While recognizing TCS to be cost competitive, TCS's clients want more engagement from its managers at multiple levels, to address account progress, resource performance, and the delivery of continuous improvements and new ideas for optimizing the client experience.

Wipro

Gartner estimates that Wipro has 5,000 FTEs providing Oracle application management services (with approximately 71% of its resources in North America, 19% in EMEA, 9% in Asia/Pacific and Japan, and 1% in Latin America). Gartner estimates that 47% of Wipro's Oracle application life cycle services revenue comes from Oracle application implementation services, and 53% from Oracle application management services. Wipro's main Oracle application management services markets are manufacturing, financial services, utilities and energy, and communications. Wipro has been an Oracle Diamond Partner since October 2011.

Strengths

• Wipro's FlexDelivery model provides a good road map to help clients mature from purely cost removal and labor arbitrage engagements into managed services and optimizations of their Oracle environments. The model's flexibility allows clients to proceed at their own pace, although Wipro, like most of its competitors, is likely to move most customers away from staff augmentation engagements.
• Wipro continues to invest in its Oracle practice by industry, but also draws on innovations applied across a range of applications. Its Easyrun business process monitoring tool is used for Oracle as well as other applications, and provides monitoring of business process health that can lead to enhancements to optimize application and business process performance.
• Wipro has one of the most balanced Oracle application services businesses, with close to a 50/50 split between application management and application implementation. This positions it well to provide end-to-end Oracle application services.
• Wipro's clients are highly satisfied with its global delivery capabilities, resource quality and strong focus on client relationships.

Cautions

• Wipro's strongest presences are in North America and Europe, but this limits its competitive position for global engagements with strong multiregional delivery requirements. Although, like most providers, Wipro's delivery model supports service delivery globally, its localized capabilities for Oracle application management services are limited in Latin America and Asia/Pacific and Japan.
• The majority of Wipro's Oracle application management services are for applications identified as "other," with a relatively large presence in JD Edwards. Although this suits Wipro's strategic approach of drawing on technology platforms in the widest sense, it weakens its competitive position for mainstream Oracle applications.
• Certain clients expressed some dissatisfaction with resource instability and a lack of proactiveness as Wipro consultants were reassigned during their projects. Wipro's approach to building up its life cycle capabilities in its FlexDelivery organization has led to some delivery issues as consulting skills are developed during delivery. Wipro should consider reviewing its FlexDelivery coverage expansion timeline to ensure client retention.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, of changed evaluation criteria, or of a change of focus by that vendor.

Added

Not applicable, as this is a new Magic Quadrant.

Dropped

Not applicable, as this is a new Magic Quadrant.

Quantitative Criteria

• A minimum of $100 million of external revenue (estimated for the fiscal year 2011) per application suite in Oracle and Oracle application management services worldwide.
• Demonstrated Oracle application management services revenue from clients in at least three of the following four regions, with at least five separate clients per region: North America, Latin America, EMEA, and Asia/Pacific and Japan. Such clients can be global clients with subsidiaries or local or regional clients.
• A minimum amount of revenue per region. Providers must be able to demonstrate at least three of four regional revenue numbers. Independent of the minimum worldwide revenue figure, providers must confirm they generate at least the following percentages of their global revenue from the respective regions:
  • North America: 20%
  • EMEA: 20%
  • Asia/Pacific and Japan: 10%
  • Latin America: 5%
• A minimum of 10 client references, with at least two per region.

Qualitative Criteria

• Overall market interest in, and visibility of, the provider, as determined by serious consideration for selection by enterprise clients.
• Gartner analysts' interactions with enterprise buyers, which reveal interest in specific Oracle application management service providers.
• Vendors are assessed for their breadth of capability and technical/package expertise, and the depth of their domain and process knowledge for the management of Oracle applications, as defined above.

Specifically excluded are services for Oracle infrastructure support or hosting.

Explicitly excluded are services related to software as a service, BPO, and independent service provider-offered maintenance and software support.

Evaluation Criteria

Ability to Execute

Product/Service: Core services offered by the provider that compete in and serve the Oracle services market. This includes current service offerings, as defined in the market definition and expressed by growth, capacity, market penetration, skills availability, breadth and depth of offering, and so on.

Subcategories include:

• Vendor's use of partnerships and alliances
• Vendor's end-to-end capabilities
• Comprehensiveness of vendor's industry offerings
• Vendor's ability to meet business-outcome-based objectives and metrics

Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit continuing to invest in the service, continuing to offer the service, and advancing the state of the art within the organization's portfolio of services.

Subcategories include the vendor's ability to expand across regions.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support and the overall effectiveness of the sales channel.

Market Responsiveness and Track Record: Ability to respond and adapt to changing competitive forces as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the provider's history of responsiveness, and the ability to address changing requirements quickly.

Customer Experience: This criterion considers:

• Feedback from clients on their experience of working with Oracle application services vendors
• Vendor's demonstrated ability to deliver on key metrics that influence the overall client experience

Operations: The organization's ability to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

Subcategories include:

• Organizational model and business model
• Applied use of methodologies, industry standards and control frameworks
• Global delivery model capabilities

Source: Gartner (December 2012)

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' needs and translate that understanding into products and services. Vendors with the most vision listen to and understand buyers' wants and needs, and can shape or enhance those wants and needs with their added vision.

Subcategories include:

• Vendor's knowledge and articulation of key market direction and trends
• Analysis of the vendor's executive leadership (including thought leadership, continuity and operational capabilities)

Marketing Strategy: A clear Oracle services marketing strategy, with a differentiated set of messages, consistently communicated throughout the vendor's internal organization, and externalized through appropriate channels, emphasizing differentiated positioning statements.

Sales Strategy: The strategy for selling Oracle application services that uses an appropriate network of direct and indirect sales, partner networks and alliance relationships that extend market reach to both prospective and established customers.

Offering (Product) Strategy: A vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements.

Subcategories include:

• Vendor's strategies for partnerships and alliances
• Vendor's vision for creating new or additional Oracle services business
• Vendor's focus on end-to-end capabilities

Vertical/Industry Strategy: The vendor's strategy for directing resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

Subcategories include:

• Vendor's strategies for partnerships and alliances
• Comprehensiveness of vendor's industry offerings

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside its "home" geography, either directly or through partners, channels and subsidiaries, as appropriate for those geographies and markets.

Source: Gartner (December 2012)

Quadrant Descriptions

Leaders

Leaders are performing well today, and gaining traction and mind share. They have a clear vision of the market's direction and are building competencies to sustain their leadership position.

The Leaders are Accenture, IBM, Infosys and TCS.

Challengers

Challengers execute well at present for the portfolio of work they select, but they have a less well-defined view of the market's direction. They may be "upcoming" vendors, but they might not be aggressive and proactive enough in preparing for the future.

The Challengers are Capgemini, Cognizant, CSC, Deloitte, HP and Mahindra Satyam.

Visionaries

Visionaries articulate important market trends and the market's direction. However, they may not be in a position to deliver fully and to execute consistently. They may need to improve their optimization of service delivery.

The only Visionary is Wipro.

Niche Players

Niche Players focus on one segment of the market, such as a particular industry, size of client, functional area (for example, human capital management and order management) or degree of project complexity. Their Ability to Execute is limited to their focus areas and assessed accordingly. Their ability to innovate may be affected by this narrow focus.

The Niche Players are AT&T and Fujitsu.

This Magic Quadrant evaluates providers of Oracle application management services globally. It evaluates 13 providers across the four major regions of North America, Latin America, Asia/Pacific and Japan, and EMEA.

Gartner estimates that end-user spending on application outsourcing worldwide will be worth $40 billion in 2012 (see "Forecast: IT Services, 2010-2016, 3Q12 Update"). This forecast indicates growth of 0.25% in 2012, with a further rise of 3.6% in 2013. On the other hand, Gartner's "IT Key Metrics Data 2012: Key Outsourcing Measures: Outsourcing Profiles: Multiyear" indicates that the outsourcing of application support declined from 41% in 2010 to 38% in 2011, and that only application development saw growth, from 41% to 42%, during the same period. It should be noted that, in this Magic Quadrant, application development can be included in application management when development activities are embedded in multiyear engagements, and that it is always followed by maintenance of the developed deliverables.

Contracts for Oracle application management services are on average five years long for the included vendors (across the reference clients), with an average yearly value of $1.2 million and average total value of $6.0 million.

In terms of market drivers, 2012 differs little from 2011. There is a continued focus on cost. Other reasons for end-user organizations to consider outsourcing Oracle application management services include new implementations, legacy modernization, consolidation, rationalization and optimization of a business application landscape. In many cases, buyers favor a "vanilla" implementation as much as possible, and redefine processes to minimize customization.

Buyers and providers recognize the need to support the day-to-day operation of Oracle environments, while extending their deals to include optimization and potentially transformational services. It is the ability to provide buyers with life cycle services for Oracle applications that is the basis of this Magic Quadrant.

Buyers of Oracle application life cycle services are increasingly demanding services based on business outcomes. They often ask for industry capabilities and the ability to meet business-outcome-based objectives, yet in practice most still focus on operational efficiency metrics. Nonetheless, given the increased pressure on IT departments to meet business targets, we expect buyers to strengthen their ability to manage providers against business value targets.

Oracle's enterprise application solutions are the second-most often deployed globally, after SAP. Consequently, many large service providers have invested in developing an Oracle services business. For many, Oracle business remains smaller than SAP business, but there are also a few large service providers that support only Oracle enterprise applications. The choice for organizations seeking an Oracle service provider with global capabilities is somewhat limited, compared with SAP. The fact that there are fewer service providers in this Magic Quadrant than in the corresponding "Magic Quadrant for SAP Application Management Service Providers, Worldwide" reflects this situation.

The information Gartner received from the providers included in this Magic Quadrant offers good insights into the global market for Oracle application management services. The following conclusions derive from this information and are therefore limited to the providers included in this document:

• Most of the work in the field of Oracle application management focuses on traditional break/fix support and corrective maintenance services. While innovation may be highlighted as a Caution in our analysis of some providers, it was typically considered one of the least important requirements when selecting a service provider.
• Access to cost-effective and high-quality technical resources remains a key expectation of providers of Oracle management services. Extension of services to more optimization-focused and transformational outcomes was evident in some deals, but it remains a relatively minor area of focus for enterprises.
• Many of the suppliers employ a "two in the box" approach to their Oracle application management teams. This puts development and implementation resources in the teams and enables transfers of knowledge, as well as the ability to use resources more efficiently to handle dynamic requirements and priorities.
• All the included providers have multiple global partnerships with Oracle and have won multiple awards over the years for their services, capabilities, projects, specific client engagements or achievements.
• On average, the split of revenue (actual and estimated) by geographic region is 55% for North America, 33% for EMEA, 9% for Asia/Pacific and Japan, and 3% for Latin America. Few vendors met our minimum requirements in all four regions, but all the vendors were able to meet the minimum revenue figure across at least three of the four regions.
• The largest revenue stream derives from Oracle E-Business Suite, with, on average, a 34% share. Siebel, on average, represents 14%, PeopleSoft 12%, Business Intelligence 7%, Mobility 1% and Fusion applications a nominal percentage. The "other" category accounts for nearly 34%: It includes JD Edwards, Hyperion and Oracle platform-based applications and not specific brands and modules.
• In terms of industries, the biggest for the included providers are banking, financial services and insurance, manufacturing, the public sector, and communications. Oracle application services are delivered to many industries: For example, the retail and transportation industries account for a decent portion of the overall Oracle application management services market, though the actual revenue is relatively small.
• Good insights into the providers' worldwide capabilities came from the reference customers they identified. These customers select providers primarily by price, and then by service delivery capabilities, technical and integration-related expertise, and their prior relationship with the company.
• Overall, clients were unimpressed by the organizational change management capabilities and business acumen of the providers when executing services, but they also indicated that they hardly ever used these capabilities as selection criteria when awarding contracts. This suggests that end users focus on technical matters and price at the beginning, but later recognize that it is the service provider's organizational and business capabilities that decide to what extent the deal succeeds or fails.

The 13 providers in this Magic Quadrant are only a small fraction of the number of providers who provide the full range of Oracle Applications services. The 13 providers are included because they met the inclusion criteria. As a result, many potentially capable providers are not included in this study — for example, providers that specialize in hosting and application management primarily for the midmarket, and/or for a single geographic region. These providers include:

• Global/multiregional providers:
  • Dell
  • CGI-Logica
  • Oracle Consulting
  • Oracle On Demand
  • PwC
• Regional providers:
  • BearingPoint
  • Ciber
  • Croc
  • Indra
  • IT Convergence
  • IBS Group
  • Ordina
  • Secure-24
  • Sopra Group
  • Steria
  • Tieto
• Offshore heritage providers:
  • HCL Axon
  • Hexaware
  • Syntel
  • Zensar Technologies
• Specialist providers:
  • OneNeck IT Services
  • Quistor
  • Redfaire
  • Titan

These providers are not included in the Magic Quadrant either because they did not meet the minimum revenue criteria or because they did not meet the required minimum revenue distribution by region.