Yesterday, in what was a historic live webinar, ASUG and DSAG came together to present cross border experiences with SAP S/4HANA. The results are both illuminating and instructive for anyone on the SAP S/4HANA journey.
Before getting into the meat of the accompanying report, we congratulate both UGs for pulling off this important piece of research. Historically, SAP UGs around the world (and at last count there were 14) have acted independently with only occasional crossover. We have always considered this a significant weakness because:
- It allowed SAP to operate a 'divide and conquer' strategy when handling difficult topics among the UGs, even with SUGEN in place.
- It meant that the shared experiences, especially for international organizations, were much more difficult to parse.
- It didn't allow the UGs to optimize their resource usage when dealing with SAP and
- It made the prioritization of topics difficult for SAP developers.
Our hope is that the work most recently done serves to act as the glue which brings a better shared understanding among customers and, as a result, a better experience for all SAP customers.
As an aside, we saw criticism for the fact that survey respondents were largely drawn from technical representatives of the UGs and that therefore the voice of the business user and decision maker was missing. We don't have an issue with that. It is a fact of SAP life that many of the business issues impacting S/4HANA decisions have a significant technical component. But, it is fair to say that both SAP and the UGs understand the need for cross functional and specifically business communication at a level that has not perhaps been evident in the past.
Also, as you are thinking about the research insights, be aware that the team is following up with qualitative assessments, a glimpse of which we saw in the presentation and remarks by the UG leaders. Finally in this long drawn out intro, we can't touch all the topics raised but we can highlight some. Onwards.
Overall impressions favored S/4HANA in a majority of cases and from that perspective, SAP can draw some comfort. But 35% ASUG and 30% DSAG respondents neither felt positive or negative about S/4. Among ASUG respondents, the majority were in the decision making cycle. Should SAP be concerned? That's a question this survey cannot answer because we have to remember these are respondents who are sufficiently invested in SAP to answer the survey. And as we know from earnings reports, SAP has barely reached a third of its overall R/3-ECC customer base so far.
Of greater concern should be the finding that 42% of ASUG and 39% of DSAG respondents reported no change in their perception of SAP as a result of having gone live or in the process of moving to S/4HANA. Determining underlying causes for these levels of apathy will prove interesting. Even so, it now seems the vast majority of respondents have accepted that a move to S/4HANA is inevitable but there is still room for competitors to attack SAP's market share with between a fifth and quarter of respondents either undecided or having no plans to make the move to S/4HANA.
It should come as no surprise that support and cost are top of mind topics when considering SAP buying decisions but peer recommendations and recommendations from partners don't figure anything like as heavily for DSAG customers as they do for ASUG customers. See below:
There were also significant differences in use and planned product use. The first issue wasn't really addressed but I suspect this is because the German speaking user group is better represented by internal champions and IT staff rather than the greater reliance on external sources seen in other geographies. However, Geoff Scott, CEO ASUG provided a plausible explanation for the use and planned usage deltas:
I think for the North America perspective, products like Ariba, Concur and SuccessFactors really started out with strong customer bases in North America, because that's where they began their their life. Certainly with products such as Concur, they were built with a North American mindset, first
From DSAG's perspective, the integration topic remains top of mind.
SAP integration - pitfalls and progress
SAP is under pressure - some of it self-imposed - to make good on its Sapphire Now 2020 pledge to have "90 percent" integration across SAP products by the end of this year. SAP's "90 percent" commitment is a bold one, but it raises more questions than it answers. We expect SAP to offer specifics on what this integration pledge means. But in the meantime, what did the ASUG-DSAG survey indicate?
No surprise: "Key Suggestions for how SAP Can Improve the SAP Customer Experience" includes "Improve product experience/integration" as a key topic from DSAG members (DSAG has taken on integration as a top talking point with SAP for the last year).
SAP has to be heartened by the slide on "Satisfaction with SAP S/4HANA Integrations." Overall, more than fifty percent of ASUG respondents were either "somewhat well" or "extremely well" on satisfaction levels with SAP S/4HANA integrations. DSAG customers weren't as pleased, with a larger percentage (almost 20 percent) "dissatisfied" with S/4HANA integrations with SAP and non-SAP products. But even DSAG's response had a substantial percentage (more than 50 percent) reporting satisfaction with integration to non-SAP solutions.
Frankly, these numbers surprised us. Our conversations with SAP customers have indicated higher levels of integration dissatisfaction. One frequently cited frustration: sluggish progress on integration between SAP ERP and its numerous cloud offerings. Still, these survey numbers indicate SAP has made progress on a crucial pain point - one that must be solved if SAP wants to be considered an intelligent enterprise, and not a collection of modernized data silos. On the webinar, Mario Günter, CEO, DSAG provided context:
I think we have to bear in mind where the customers are coming from. They have a longstanding working relationship with SAP; they're using SAP systems over decades... SAP always provided highly integrated systems. The customers became used to the enormous advantage of SAP integration throughout the decades... It was really an advantage for SAP and its customers.
And now from this experience, arises the expectations with SAP products at present. Maybe that's the reason why we see differences, and maybe this is also the reason why we see criticism at the moment, why integration is being observed as not being as positive as it as it should be.
The new acquisitions, they still need to [meet] these customer expectations. As we all know, customers want highly integrated systems for their end-to-end processes.
However, as Günter says, the user groups' mission to push SAP on integration has borne fruit:
There is not only criticism out there; there is good news. SAP is listening and SAP is acting. Two examples: we have really good news coming from SAP about the HCM integration from version 22 on. One of our latest successes was the integration of travel management back in S/4 system, also from from 22 on. So I'm really, really positive that SAP is taking the right steps, and is moving in the right direction.
The integration topic gets plenty of attention, but ASUG CEO Geoff Scott brought up a sneaky big pain point for S/4HANA customers: the challenges SAP's partners face providing certified solutions for the range of S/4 releases. There is no point in smooth integration if your product is not even certifiable for customer use. SAP needs to get creative about easing the friction and prohibitive expenses partners incur with certfications across SAP releases. Yes, certification should validate quality, but it should not be a profit center for SAP. In the alternative, customers and partners will find true love elsewhere.
There are no surprises in the business areas prioritized as S/4HANA is introduced with finance and supply chain being top of mind. HR only figured in between a fifth and quarter of cases although we suspect that will have changed in recent times. But we were shocked to discover that among ASUG respondents 59% said the implementation had no impact on business processes compared with 13% of DSAG respondents. Where there are impacts, it is mostly around standardization or streamlining of processes and change management: (see below)
What's happening here? The answer is not entirely clear although DSAG said that the approach in German speaking countries is much more collegiate than the approach taken by American customers where decision making is much more a top down affair. We believe this is, in part, because SAP has (at least in Germany) successfully sold the 'adopt the standard' message combined with the effect of having the need to consult and gain agreement from works councils. That necessarily drives greenfield style implementations which, in turn, requires significant investments in change management. In America, we have long heard about SAP failure coming out of a lack of adequate change management but we also hear about implementation fatigue and we wonder then whether that combination is driving companies to think more about how to implement with the least possible impact.
On the other hand, it may be that customers are happy they have stable processes and are reluctant to disturb hard won outcomes. That in turn might explain why, when considering benefits to adoption, 41% of DSAG respondents cited the removal of unnecessary code compared to just 19% of ASUG respondents with 63% DSAG and 38% ASUG respondents citing business process optimization. Unsurprisingly, cleaning up custom code was by far the top adoption pain point.
The ongoing angst around whether customers will move to S/4HANA seems to be over.
Interestingly, the vast majority of respondents have a relatively short timeline in mind before those projects commence. COVID-19 has not had a significant impact on projects that are in flight but it has certainly put decisions on the back burner where the project is not regarded as strategic.
As Geoff Scott pointed out during the call, experience varies depending on a multiplicity of factors and the degree to which an S/4HANA implementation is regarded as having layers of complexity - examples being international operations or diverse business divisions. In Germany, the majority of SAP customers are private local businesses with long histories. So the extent to which they control their own destinies may also play a significant part in how they view SAP implementations as long term investments that are complemented by purposeful change management.
Concerns about losing perceived as needed customizations remains top of mind for ASUG respondents but we have to ask the question - why? Whenever this topic comes up, our starting point is 'What makes your debits and credits so special?' as a way of opening up that debate. DSAG on the other hand is concerned about budget cost overruns. Given the scope of any SAP implementation and past experience we are surprised this remains the case. It begs the question - why, after nearly 50 years, is it still so hard to keep SAP implementation costs under control? The DSAG demand that SAP makes it easier and simpler must surely be acted upon.
As we said at the top of this story, there is a lot to learn and this survey represents a credible effort at understanding the SAP landscape in the two largest markets. There's more to come but in the meantime, what do you think?