ASUG/DSAG member surveys find contrasting views on S/4 HANA in the cloud

Geoff Scott Profile picture for user geoff.scott October 27, 2021
What's behind the choice to run S/4 HANA in the cloud - or not? ASUG chair Geoff Scott presents findings from recent surveys of ASUG and DSAG members.

Businessman scratches head looking at cloud network © Production Perig - shutterstock
(© Production Perig - shutterstock)

For many in the ERP ecosystem, cloud solutions and services are top of mind. ASUG conducted several research studies throughout 2021 to better understand cloud needs of SAP customers, as well as innovation plans related to cloud technologies, including one study that was fielded in cooperation with Deutschsprachige SAP-Anwendergruppe (DSAG), the SAP user group that represents German-speaking countries.

We uncovered many similarities and differences across North American SAP users and SAP users in German-speaking countries. One of these differences is in the use of cloud technologies when running SAP S/4HANA. Among ASUG members, only 27% are running/planning to run SAP S/4HANA on-premises while more than half (57%) of DSAG members are running/planning to run SAP S/4HANA on-premises. SAP users in North America are more likely to use all cloud platforms, but the difference in market is especially large among those who run/are planning to run SAP S/4HANA on hybrid cloud solutions (22% ASUG vs. 2% DSAG).

The burning question in this variance in cloud adoption is: why?

The reasons that organizations adopt Cloud technologies are as varied as the definitions of ‘cloud' itself. What I hear over and over again from ASUG members is that Cloud adoption simplifies processes and technology which enables faster innovation cycles. This results in a better customer experience at a reduced organizational cost.

What's behind these cloud choices?

To better understand reasoning for the environment chosen, we asked: why organizations are running/planning to run SAP S/4HANA on each environment. For those choosing to run SAP S/4HANA on-premises, the reasons include:

  • Data protection and information security requirements
  • The ability to control hardware, and
  • Significant investments that have already been made into existing infrastructure.

Those choosing to run SAP S/4HANA on the cloud are doing so because of the ability to integrate with applications that are only available on the cloud, the scalability of the environment, and because less resources are needed to maintain the system. Cost effectiveness was mentioned as a reason for choosing the SAP S/4HANA environment used for all environments (not including hybrid cloud). Additional information on why organizations choose on-premises or cloud are discussed in a joint ASUG and DSAG webcast.

However, both ASUG and DSAG members indicated that cloud is "the technology of the future", and where technology is headed. When asked about their organization's stance on cloud, one ASUG member shared: 

Our corporate office is in Paris and we're in 39 countries with 39 different departments. Corporately, our mandate and strong belief of the management team there and here, is that the cloud is our future.

There are many benefits to using the cloud, including accessibility, scalability, no longer needing to focus on space requirements, and the speed that cloud offers by accelerating innovation and project timelines within organizations. Both DSAG and ASUG members specifically called out how cloud solutions shorten timeframes for technology projects and implementations and that less internal resources are needed to maintain cloud environments. One DSAG member shared: 

The advantage of the cloud is that you get a system that you can use fairly quickly and that is operated by someone else.

North American SAP users are embracing the cloud more positively than SAP users in German speaking countries; 74% of ASUG members feel extremely/somewhat positive about the cloud (compared to only 46% of DSAG members). Not everyone agrees that cloud is the technology of the future. Some individuals are more critical of the cloud — 27% of DSAG members and 3% of ASUG members express extremely/somewhat negative attitudes toward the cloud. As one DSAG member put it: 

Cloud is simply an option, and you look at what makes sense, and what doesn't make sense. Cloud is not an end in itself.

Understanding cloud use, challenges and innovation

We conducted additional research at ASUG in collaboration with Syntax to understand cloud use, challenges with cloud services, and innovation in the cloud (among other objectives). We learned that among ASUG members, cloud use is growing. 79% of organizations are currently using cloud services, and among those not currently using cloud services 73% have plans to consider cloud services in the future. Investments in cloud is also on the rise, with nearly half (46%) of organizations that use cloud services spending $1M or more per year on cloud services.

Along with more cloud use, and increased investments in cloud, we are also seeing more organizations innovating on the cloud. One respondent shared that: 

We value innovation although it does not always come naturally. We look for opportunities to improve existing practices in new and different ways. Innovation could be small or big, but a culture of innovation (at my organization) drives continuous value.

Among innovations, business analytics rises to the top as the most common innovation in the cloud, followed by automation. Another third of cloud users are planning to have automation, AI and/or ML in place in the cloud within the next year. Driving innovations of all types is the reduction of costs and shortened timeframes for technology projects/implementations at organizations. One respondent shared: 

Cloud helps you shorten time frames from a business standpoint and get ROI with much less up-front resources required.

Not surprising, when asked why organizations are innovating on the cloud, the reasons come back to taking full advantage of benefits the cloud offers: scalability, cost savings/pricing model, reduced workload for IT, better integration with other systems, and easier data management. One ASUG member summarized these benefits well: 

There is so much value. It's easy to spin up additional space and capacity. Ease of use, accessibility, and minimal in-house maintenance makes the cloud a great place to run analytics.

A grey colored placeholder image