It’s traditional that on day one of the annual UK and Ireland SAP User Group (UKISUG) conference, a survey of member attitudes is released, This year it focuses on the challenges of adopting innovation – or rather, the challenges customers face in keeping up with the innovation pace set by SAP.
According to the study of 117 SAP customers in the UK and Ireland, 74% of respondents feel SAP is bringing innovations to market that they would like to adopt, but there are some difficult barriers to overcome in order to keep up.
The top barriers to adopting innovation were cited as:
- lack of business case (71%)
- licensing/subscription costs (69%),
- migration and implementation costs (54%)
- a need to get more value from existing SAP investments (40%)
Philip Adams, UKISUG chairman, told the keynote audience at the International Convention Centre in Birmingham, England that the user group sees speed of adoption – or perhaps lack of speed? – as a key issue to be tracked:
We as users face challenges in adopting the new innovations that SAP is bringing to market. SAP has been prolific in acquiring and developing new technology in recent years, but can we as customers keep up?
A wider issue
Now clearly this isn’t just an issue faced by SAP, but by all enterprise software vendors. Getting the user base upgrading and moving on is a key challenge for all of them. But there is one differentiator for the SAP installed base according to Adams:
The main difference was that licensing and subscription costs were cited as a barrier by an additional 15% of organisations when it came to SAP. This did surprise me, considering the moves SAP made in the summer of 2013 to make it more commercially attractive to adopt innovations through its cloud and on-premise extension policies – which in theory, enable you to leverage existing investments to pay for new innovations.
Unfortunately however well-intentioned those extension policies are, they don’t appear to have made a great impact to date. Adams said:
Only 23% of people said they made it more attractive to adopt SAP innovations, and only 10% of organisations have actually used these policies to take advantage of SAP innovations. These stats may look like depressing reading, but some uptake is better than no uptake.
One factor here may well be ignorance on the part of the customers about what’s on offer. Certainly the study does suggest that there’s some messaging and communications work to be done, with a significant number of users unaware of the pre-requisites (e.g. the version of SAP they need to be on) required for adopting key offerings.
- 46% were unaware of the pre-requisites for SAP Screen Personas
- 44% for SAP HANA
- 41% for SAP Fiori.
Adams called on SAP to do more to educate customers to understand how these policies can help them, particularly when it comes to shaping a business case:
As customers we need help. We need to be able to justify investments and make the business case. We want to adopt these innovations, but there is a big difference between wanting to do something and having the business case to do it. In many cases our teams have been stripped right back, and we are lacking the time, resource and often the expertise to build the business case.
Faced with this, it’s to the provider that the customers will turn. Unfortunately at this point, the study suggests there’s another ignorance issue and this time it’s on the sell side, not the buy-side.
To put it bluntly, over half of the study respondents reckon that their SAP account exec doesn’t know enough about the customer’s business to be able to help them.
This isn’t good enough, said Adams, who argued that there were the right people inside SAP who could assist, but that getting to those people is a big ask as account managers at SAP don’t always guide customers in the direction of these experts.
Adams pointed out that there are existing services that SAP provides under support and maintenance which would help with developing the business case for adopting innovation. He rallied his audience:
I urge you all to challenge your account managers to tell you more about these services. You are already paying for them, and from those that have used them they are certainly bringing benefits in terms of planning for the future.
To SAP, why don’t you incentivise your account mangers based on the take up of such services? It’s these services and the people behind them that differentiate you in the market. Make sure we use them, and as a result you’ll be helping us to build the business case to adopt your new solutions.
SAP’s new managing director for UK and Ireland Cormac Watters assured the audience that as a former SAP customer with 9 implementations under his belt, he appreciated the nature of the problems.
He added that he used to see his account exec “around this time of year…the fourth quarter deal”. If no such deal was forthcoming, then that would be the last he’d see of his SAP exec until the following year.
Watters also touched on the comms issue around key corporate initiatives, revealing that:
On my first day at SAP I was tolld that there was the cloud extension policy. I felt naive. That’s not my fault, that’s SAP’s fault for not telling me.
But in case this sounds like one-way traffic, Adams concluded that it isn’t enough for customers to sit back and wait to be “spoon-fed” answers from the vendor and had to take responsibility on as well:
Adopting innovation is never going to be a simple task, but we believe it can be made easier. Clearly, migration and implementation costs are a barrier. Cloud can help with this, but it won’t be miracle solution. In fact, 82% of respondents told us that adopting innovations from any software vendor creates disruption, and this disruption slows their pace of adoption.
This might sound obvious, but if our organisations are to become more agile and responsive, we need to find ways to ease this disruption. Users across our organisations get worn down by change, but their support is vital to successfully extracting value from technology innovation.
These are the challenges we must address if both us as user organisations, and vendors such as SAP, are going to be successful in the coming years.
A timely reminder that the pace set by the providers is seldom the pace managed by the customers – or at least, not customers who have made earlier investment in those same providers.
Clearly the automatic upgrade capabilities of the cloud model address some of this, but that only goes part of the way. In a hybrid landscape, the challenges of keeping up to date with versions of operating systems has proved difficult enough for many organizations in the private sector. And as for the public sector, a glance cast in the direction of Microsoft products tells its own sorry tale.
The ‘I feel your pain’ declaration from Watters was a good opening gambit for the new MD in what was understandably little more than a cameo appearance on stage at this year’s user gathering. Assuming he’s still in situ this time next year, it will be interesting to see how he’s acted on this shared pain.
The point made by Adams about needing assistance in shaping the business case for investment is clearly both opportunity and threat for SAP. Opportunity if the challenge is met; threat if the ‘fourth quarter deal visit’ remains the modus operandi that Watters argued that it was for him and his account manager.
Disclosure: at time of writing, SAP is a premier partner of diginomica.