Patni's managed application services for SAP business software enables leading forest products company to experience pricing predictability; avail on-demand access to the latest SAP skill sets; mitigate risks through improved disaster recovery capabilities; and considerably reduce fixed costs.

The Client
The client is a forest products company with its operations spread across 13 countries and diverse lines of business, which include timberlands, wood products, building materials, cellulose fibers, and real estate. Client has recently divested some of its businesses to focus on core forest based business.

The Challenge
Spurred by the business goal to seek leadership advantage, the senior management in the client organization was looking for ways to drive revenue growth, improve working capital management, boost operating margins and redirect the savings for business differentiation. Hence, it introduced a slew of measures, which included divestitures and business consolidation. As a fall-out of this business restructuring, the client wanted to create operationally efficient software environments, while transforming the service delivery and cost structures of its existing model of application management.

The client's wanted that its IT department should focus on developing internal capabilities in areas of strategic importance and team with trusted managed services provider (MSP), who could efficiently manage non-core business areas. The client approached the an offshore advisory firm to seek its services to formulate a sourcing strategy for application services and also identify a partner, who help improve service quality, provide access to a flexible workforce, and lower overall service delivery costs. Accordingly, the clients IT department decided to focus only on the 'build' phase of the application management and outsource all the activities under "operate and optimise" phase.

The Solution
The client selected Patni because of its integrated service delivery approach, cultural compatibility, effective governance model, robust transition plan with limited risks, and an innovative pricing model that addressed the defined business case requirements. The client was also impressed with Patni's willingness to invest in improvement initiatives and standardized tools and systems.

The scope of managed application services included 24X7 global support for SAP business software, which included issue investigation, production break-fix and minor application enhancements through a dedicated production support team at client location and India development centers.

A custom transition model based on principles of reverse engineering provided a thrust to the speed of service deployment and reduced the transition costs. Unlike the traditional transition management methodologies, Patni support engineers devised a mechanism to simultaneously start knowledge transfer, work transition and service delivery in order to ensure gradual and consistent ramp up of services. The team did face some challenges during transition planning and execution as the client's IT team was occupied with the implementation of SAP SCM. However, the work package induction program helped speedier transition of new rollouts into managed services model.

Patni set up a specialized SAP service desk which was integrated tightly with Level 2 application services. Patni team believed that support should not be limited to "keeping the light on" activity. Hence it provided application sustenance services beyond the reactive break-fix support to proactively modify or enhance functionalities and business processes. It redesigned existing service operations processes as per the ITIL v3.0. Patni also implemented a framework to deliver significant cost savings through continuous productivity improvements over the life of the contract. Since, cost containment was the focus, Patni proposed a pricing structure to be based on the number of concurrent users, rather than the conventional pricing structure which is either based on number of person days or tickets resolved. Change management was a critical component of Patni's managed application services.

The Benefits
The company is set to experience pricing predictability, flexibility and scalability; improved access to high demand, current SAP skill sets as and when needed, reduction in risks through improved disaster recovery capabilities and reduction in "fixed" costs.

• Cost reduction of 30% due to innovative pricing, offshore leverage, resource rationalization, and process improvements.
• Redefined roles and optimized processes as per ITIL framework, to "integrate" technology delivery with service demand from business customers.
• SAP aware Level 1 support ensured a very effective handoff resulting in reduced MTTR and high customer satisfaction
• Flexible onshore/offshore staff deployments to address support for golive of new rollouts and their transition to managed services environment.
• Leverage Managed Services knowledge and skill platform for addressing business events such as divestitures

The Technology

• SAP ERP
• SAP SCM