SAP Application Management Services (AMS) are outsourced services that manage and support a company’s SAP environment. A strong AMS implementation aims for system stability, high performance, cost efficiency, and the agility to innovate.
However, achieving these outcomes depends greatly on the chosen delivery model – i.e., where and how your SAP support team works. Broadly, AMS delivery models fall into onsite (onshore), offshore, or hybrid categories. Each model has its own strengths and challenges and fits different types of projects and business needs.
In this guide, we compare these three models for SAP AMS, outlining their benefits, drawbacks, and typical use cases. We also highlight how each model aligns with key SAP outcomes and provide example scenarios.
What is SAP AMS and Why Delivery Model Matters
SAP AMS providers function as an extension of your IT team, ensuring your SAP systems run smoothly and continuously evolve. They offer everything from day-to-day “lights-on” support to strategic upgrades and optimizations.
By leveraging deep SAP expertise, AMS teams help reduce the time-to-value of changes and free up internal staff for innovation. A good AMS partner will even work with you to define a “right-sized and right-shored” delivery model tailoring the mix of onshore and offshore resources to your needs. In practice, this means building a support team whose location, skills, and costs align with your priorities.
AMS aims to make SAP systems resilient and efficient. As one source notes, AMS providers continuously monitor and optimize systems to minimize downtime and enhance performance. The result is higher system stability and better user experience.
In fact, independent surveys report that about 75% of companies using AMS see improved system speed and user satisfaction. More than half of organizations also leverage AMS to integrate automation and AI into their SAP processes, boosting efficiency and innovation. These outcomes stability, performance, cost control and innovation readiness can all be influenced by the chosen delivery model.
The delivery model essentially defines who works on your SAP systems and where. In an onsite model, support staff are physically located at the client’s premises.
In an offshore model, the team works remotely from another country (often where costs are lower). Each has pros and cons in terms of communication, cost, control, and scalability. The key is to match the model to your project’s requirements, budget and performance targets.
Onsite Delivery Model
In the onsite (or onshore) model, SAP consultants are physically present at the client’s office or data center. They work as part of your in-house team, participating in meetings, daily stand-ups, and even casual corridor conversations. The main advantages of onsite AMS include direct communication and control. With consultants on-site, questions and issues can be addressed immediately without email or call delays.
As one analysis notes, onshore teams are typically more familiar with local business practices, regulations and culture, making communication smoother. Team members share the same language and organizational context, which helps them align closely with your processes and values. Another benefit is security and trust: sensitive data and systems stay in-house, and it’s easier to enforce local security policies and compliance. Stakeholders can oversee work directly, giving them greater confidence in governance and quality.
Benefits of Onsite AMS:
- Direct interaction: Immediate access to consultants drives quick issue resolution.
- Business alignment: Onsite teams live your company culture and processes, improving alignment and feedback loops.
- Control and oversight: You have full visibility and control over tasks, schedules and quality.
Challenges of Onsite AMS:
- Higher cost: Onsite resources typically command higher rates, plus local office infrastructure, travel expenses and benefits increase total cost.
- Geographic coverage: Onsite teams usually operate only in your time zone, limiting off-hours or 24×7 support.
Typical Use Cases:
Onsite delivery makes sense for projects that require close collaboration or have high complexity. For example, a major SAP implementation or upgrade (such as moving to SAP S/4HANA) often demands intensive joint workshops, design sessions and hands-on training on site.
Critical industry projects with strict compliance (e.g. government or healthcare systems) may also favor onsite support for auditability. Additionally, if you have an established IT team in one location and need to integrate external experts into your day-to-day operations, an onsite approach can feel seamless.
Example Scenario:
A U.S. financial services firm is rolling out SAP S/4HANA across multiple divisions. They hire a team of SAP consultants to sit in their New York headquarters. The onsite consultants participate in daily scrums, conduct workshops with business users, and respond immediately to any configuration issues. This tight collaboration leads to fewer miscommunications and faster decision-making. In this case, the bank prioritized control and quality over cost, making onsite support the best fit.
Impact on SAP Outcomes:
Onsite teams excel at ensuring stability and performance during and after go-live, because they can react instantly to incidents and optimize the system in real-time. They tend to identify issues early in development and address them before they escalate.
This model also supports innovation readiness well: onsite consultants become true partners to the business, discussing future enhancements or process improvements proactively. The downside is cost-efficiency: per-unit support cost is highest in onsite models, so this approach is best justified where the business value of close collaboration outweighs the premium price.
Offshore Delivery Model
In the offshore model, your AMS team is in a different country, often across the globe. This could be at a service provider’s delivery centre or through a partner network in an overseas region. Offshore locations are chosen primarily for cost savings and access to skill.
As one provider notes, offshore delivery offers the “advantage of cost arbitrage due to lower overheads” and access to “multiple technologies, skill sets and varying experience levels”.
In practice, this means labor rates are typically lower, and you can tap into a large talent pool of SAP professionals. Another key benefit is round the clock coverage: by leveraging teams in different time zones, you can arrange 24×7 system monitoring and support.
In fact, many offshore models intentionally split shifts so that when one region’s workday ends, another region is starting effectively enabling continuous progress and faster issue response.
Benefits of Offshore AMS:
- Cost efficiency: Lower labor and infrastructure costs offshore can significantly reduce your support spend. This is often the primary driver.
- Global expertise: Offshore centres can specialize deeply and stay current with SAP updates. A broad talent pool means easier ramp-up on specialized skills (e.g. SAP Basis, HANA, industry solutions).
- Scalability and flexibility: Teams can be scaled up or down quickly as needed, since providers maintain a bench of consultants in offshore locations.
- 24×7 support potential: By strategically locating teams across time zones, offshore models can deliver almost continuous service and faster turnaround on requests.
Challenges of Offshore AMS:
- Communication and cultural barriers: Time zone differences, language nuances and cultural norms can lead to misunderstandings. For example, simple clarifications may take hours or require email chains. As one analysis warns, offshore teams “may not speak the same language” or share the same work style, which can hinder collaboration.
- Knowledge transfer: Remote teams may lack detailed knowledge of your business processes or local regulations. This can slow response on complex issues and may require more formal documentation.
- Hidden costs: Although hourly rates are lower, offshore projects can incur extra management overhead, travel for coordination, or revision cycles. An SAP expert cautions that unless specifications are very detailed, “offshore development may be dangerous and will cost you far more than you are led to believe”.
- Control and oversight: You sacrifice some hands-on control. Progress tracking and quality assurance require robust remote governance and communication plans.
By carefully weighing these factors, ERP/SAP stakeholders can choose a delivery model that optimizes their SAP AMS goals. Many organizations ultimately settle on a hybrid approach, defining a “right-shored” strategy that balances cost and agility.
In today’s fast-evolving SAP landscape – with 24×7 global operations and emerging technologies – a flexible delivery model is key to maintaining stability, improving performance, controlling costs, and staying ready for innovation.
