Hidden SAP Offshore Development Costs

My experience with SAP offshore developers is that no matter how detailed your spec, their lack of experience with standard SAP transactions and functionality prevents them from properly testing their own creations. Their results are more than just full of bugs; oftentimes, the system crashes when attempting to do even basic testing. Repeat testing by expensive functional resources happens so frequently and consumes so much hidden time from parallel project activities that entire project timelines are frequently affected.

Functional resources have to handhold these SAP offshore resources through the whole process because of the language barriers and lack of experience. More functional time, more project management time, more unplanned distractions from functional Realization activities, and your entire project timeline can be wiped out. If that happens, you have to pay even more for a missed development date because you have to move your go-live date. Some of the shell games they play on their supposed efforts completely hide that cost from you. All of that functional time and the risks to the project timeline point to some of the real hidden costs of SAP offshore development. Develop, test, bugs, fix; develop, test, bugs, fix; rinse and repeat at least a dozen times.

A common SAP offshore practice is to keep making excuses when you ask whether the project is done. With all of the crashes and bugs that are so common with offshore development, and especially all of the program crashes, how much testing could they have done? The bigger question is, how much is this really costing you, and how do you find the hidden costs?

SAP Project Timeline and Budget Due Diligence

Because of the nature and pace of SAP project work, whenever the issue of blown budgets and blown timelines comes up, most companies rarely perform root cause analysis or due diligence. Instead, accusations fly in the heat of the moment. Meanwhile, the offshore developers keep saying things such as “We finished x development on y date. The functional teams didn’t support us,” or “The specs were bad and we had to make twenty changes.”

Evaluating Hidden SAP Offshore Development Costs

Because the SAP “functional” consultant time to support the offshore development is hidden from you, it never shows up anywhere in the rates you were quoted. You do not know the actual Total Cost of Ownership (TCO) for that offshore SAP development. The offshore company constantly claims the “specs were not detailed enough,” or every microscopic change and adjustment becomes a “change order.” I have even seen situations where the development and developers completely broke the standard SAP functionality, because they had nothing spelled out in the design spec about allowing standard functionality to continue working a change order.

On new SAP implementations, the functional time premium can easily cost you 50% to 75% (and in some cases even exceed 100%) of the total development hours. Think about that for your next quote as you try to put the pen (or your spreadsheet) to the numbers. Have you really factored in the amount of high-priced functional resource time needed to support those “inexpensive” offshore developers? Between writing “enhanced” specification documents, repeated endless functional testing of buggy SAP development, training of inexperienced developers, language barriers, babysitting the actual development, and facing the lost opportunity to focus on other functional Realization activities, they can kill any supposed savings. You pay just about the same amount (and on many occasions even more) with far more headaches and lower likelihood of making your go-live date.

Even after all of this, one other hidden cost occurs that you may not realize immediately at go-live: the cost of poor coding. You may have significant performance problems, constant bug fixes, and a whole host of other maintenance activities that you never planned or budgeted for. Now this is true of any development, but because of the language translation issues and the modest (at best) quality of coding, you are likely to have incrementally more production maintenance costs with the offshore development.

Some Considerations to Help Reduce The SAP Offshore Development Shell Game

First and foremost, never accept the offshore development group’s code review options. One way you can combat most of this is to budget for at least one local developer, even at premium rates, to serve as a quality checker. They do not have to review all of the code from all of the developers, but they should look for the “tells” of experience over inexperience. Additionally, your SAP statement of work (or SOW) as well as your contract with the offshore developers should include various protections about the quality and expectations of the development work and functional consultant time and contributions. That SAP SOW should also include some definition around what a “change” is and what a “defect” is. Without that, everything will be considered a “change request” and destroy any supposed savings.

Next, we will wrap up our series: Where Does SAP Offshore Development Make Sense? In a few scenarios, offshore development is truly a great cost-saving alternative.