SAP Nation 2.0 on the Overall SAP Ecosystem Annual Spend

Executive Summary

  • In the book SAP Nation 2.0 Vinnie Mirchandani estimated the total annual spend in the overall SAP ecosystem.
  • Who supported Vinnie in his quest to perform this estimation?


In our TCO calculators which are available for free online, SAP routinely ranks as the highest TCO software. SAP also has the largest consulting partner network with roughly 12,500 consulting firms that focus on SAP. The reason? Because SAP consulting is the most lucrative type of consulting. None of these consulting firms select to focus on SAP for any other reason than it provides the highest profitability. This profitability is good for SAP consulting firms, but bad for customers. However, what is the overall global picture of spending on SAP?

In this article, we will review the global estimate of the SAP spend by SAP customers.

The Estimate from SAP Nation 2.0

In the book SAP Nation 2.0, Vinnie Mirchandani created the only estimate I am aware of as to the total yearly spend on SAP. I have reformatted the table from SAP Nation 2.0 with changes in formatting to make it more readable and added a percentage per cost category. The cost categories are the following.

The total comes to over $309 billion, and the book was published in 2016, which means as of this article’s publication (in 2018) the spend is of course higher. 

How High is this Global Spend?

Numbers this high are difficult to interpret without some frame of reference. In SAP Nation 2.0, Vinnie compares this GDP to that of Ireland. And we include several other countries in the following graphic with similar GDPs.

Ireland’s GDP supports around 5 million people. Norway’s 370 billion USD support around 5 million people.

SAP’s Small Percentage of the Overall Spend

What is illuminating is that SAP’s revenues are only roughly 8% of the total SAP spend. This is quite low, but it also highlights the fact that the cost of purchasing software licenses and support from the vendor is always a small fraction of the overall spend or TCO of any application. SAP’s overall spend it particularly exaggerated because SAP projects are nearly always implemented by SAP partners, and SAP projects are the most expensive in the industry.

Who Supported Vinnie in His Quest?

For his book, Vinnie reached out to the top analyst firms to get their views on the size of the spend. Curiously, these analysts did not seem very interested in supporting Vinnie’s efforts in estimation.

“Firms like Forrester, Gartner and IDC often 10-40 analysts who cover different aspects of a large technology vendor like SAP, but they do not often employ integrative models. I had to reach out to several analysts to help validate small segments of my model of the SAP economy. Other market analysts were more defensive. One question why I was even modeling the SAP economy when I am “not a full time analyst.” Another declined saying it is a “sensitive topic.” Customers should expect analysts to take more of the customer perspective as they cover SAP and the ERP marketplace and to better weaver the research their silos.”

All of these analyst firms receive large amounts of money from SAP. Therefore, as SAP is their client, any analysis which investigates the spend of their client, which may open up the ecosystem to criticism is declared a “sensitive topic.” That is sensitive to their bottom line! This is in line with what we covered in depth in the book Gartner and the Magic Quadrant, that Gartner is not a true research entity but rather a faux research entity that sells faux research to companies that don’t know what research is.

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Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

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Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making

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One aspect of making a software purchasing decision is to compare the Total Cost of Ownership, or TCO, of the applications under consideration: what will the software cost you over its lifespan? But most companies don’t understand what dollar amounts to include in the TCO analysis or where to source these figures, or, if using TCO studies produced by consulting and IT analyst firms, how the TCO amounts were calculated and how to compare TCO across applications.

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