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ERP customers and the custom code dilemma – can automation help? The numbers say yes.

Geoff Scott Profile picture for user geoff.scott July 26, 2023
Summary:
Relying heavily on custom code can be a common and expensive pitfall. ASUG CEO Geoff Scott drills into research from ASUG and smartShift, revealing the challenges that keep transformation projects mired in technical debt - and how SAP customers are redesigning processes with automation.

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In recent years, ERP customers have had an awakening to the custom code dilemma. The custom code that once appeared necessary brings technical debt – and makes it harder for companies to migrate.

Custom code can create a blocker for transformation efforts. Connecting older, customized systems to cloud-based ones brings challenges. Developers who created that custom code may be long gone; the service partner who did the work may have moved on.

On the other hand, custom code continues to be a necessary tactic for some projects. Almost all ERP customers have some custom code to manage, or migrate – can automation help? In the case of SAP customers,  ASUG customers are sending us a clear message –organizations need to be aware of the significant pitfalls it creates as they consider migrating to SAP S/4HANA, and build out innovation roadmaps.

Research between ASUG and smartShift reveals that SAP customers that implement automation face less custom code issues than organizations who manually handle custom code projects. In order to better understand all of the implications of custom code, it is helpful to first understand the state of custom code and clean core.

Most SAP customers rely on custom code to run their operations — 67% include it in their systems. In fact, almost half (48%) of the SAP customers use custom code in 26% to 50% of their systems. Why are SAP customers relying so much on custom code? We learned that many are unaware of how to maintain a clean core which results in heavy reliance on custom code. This heavy reliance can create significant disruption as businesses migrate and innovate.

If custom code causes so many challenges, why aren’t more organizations maintaining a clean core? Well, more than two thirds of SAP customers (68%) are unaware or not familiar with the basics of maintaining a clean core at their organization compared to only 32% who are somewhat or extremely familiar with the concept of maintaining a clean core. Organizations are struggling to maintain a clean core for a few reasons:

  • Because of knowledge and skills gaps
  • The fact businesses have begun to migrate or plan their migrations to SAP S/4HANA and don’t want to pivot
  • Time and budget constraints

According to one ASUG member, “The technical aspects are difficult to understand except for our software developers.” Organizations also feel custom code is necessary for various reasons:

  1. To meet industry-specific needs not covered by SAP (56%)
  2. To connect systems (44%)
  3. To comply with regulations (37%)
  4. To receive specific reporting and analytics (35%)

While the use of custom code may be considered necessary to many organizations, those that rely on custom code face considerably more challenges than SAP customers who implement automation, like:

  • It is a barrier to upgrading or migrating to a new SAP offering (58%)
  • Excessive maintenance costs (39%)
  • Difficulty finding expertise to maintain/enhance it (37%)
  • The number of SAP and non-SAP systems that are integrated (37%)

While custom code plays a critical role in SAP migrations and digital transformations for customers with specific business needs, it can also create significant barriers as SAP customers assess their investment in SAP.

SAP customers often treat custom code migrations differently when migrating to SAP S/4HANA or undergoing a digital transformation. They tackle custom code migrations as a separate project, which complicates migrations by extending timelines and increasing costs and causing competency and quality issues.

When migrating, organizations experience competing business priorities (58%), resource and staffing constraints (55%), budget constraints (48%), and a lack of internal skills needed to make the change (41%). SAP customers’ backs are up against a wall as they migrate custom code, which can prevent them from hitting the ground running after a migration or digital transformation.

Though SAP strongly advises reduces custom code during an S/4HANA migration, the custom code dilemma persis for S/4HANA customers. More than a quarter (26%) of SAP customers running SAP S/4HANA on premise have more than 51% custom code in their system. SAP customers running SAP S/4HANA Cloud use less custom code overall with 58% of customers using 25% or less. According to Allan Coulter, an IBM Distinguished Engineer and Global CTO for SAP and IBM Consulting, “The more non-standard the system, the more challenges we have to continuously keep it current.”

Migrating even a small amount of custom code can be a bumpy ride given the staffing and resource shortages organizations face. It also can adversely impact operations after a migration or transformation is complete. Automation can help in several ways. It enhances migrations and digital transformations by reducing manual effort, improving efficiency, and ensuring the accuracy of custom code that is transferred.

In fact, SAP customers using automation face less resource and staffing constraints than those manually migrating custom code. It saves time and reduces the risk of errors that can occur during a manual migration by automatically identifying and extracting custom reports, interfaces, conversions, enhancements, and forms from existing systems and converting them to the appropriate format for new systems.

Is automation essential to fully reap the benefits of migrations and digital transformation? It eliminates manual work, empowering employees to innovate. Automation also plays a role in innovation for SAP customers by enhancing their operations and emboldening their capabilities. It enables SAP customers to improve efficiency (73%), reduce manual/low-tier work (64%), eliminate manual/low-tier work (51%), provide cost savings (49%), and accelerate digital transformations (47%).

These benefits automation provides to SAP customers strongly aligns with their top innovation focus areas according to our Annual Pulse of the SAP Customer research: standardizing or redesigning business processes (60%), changing, enhancing, or standardizing business processes (56%), automating business processes (54%), and adding new technologies, systems, or tools (46%). Automation also allows customers to reduce the complexity of custom code by automating the analysis, testing, and correction of it.

Despite the obvious benefits, only one quarter of SAP customers use automation to manage custom code. Most SAP customers use automation for testing (64%), data (47%), and business process transformation (42%). Although automation can pack a punch when it comes to enhancing and extending organizations, SAP customers need help implementing it. Customers struggle to integrate automation with existing business processes (47%), the time required to build and maintain systems (47%) and identifying the right areas eligible for automation (47%). Customers automating their custom code maintenance also need more support for code modernization and standardization (67%), code performance (60%), and code remediation (47%).

How should customers move forward? At times, custom code remains important for specific operations. But SAP’s own best development practice is extending SAP software using the Business Technology Platform (BTP), rather than overcustomizing the code base. Often, SAP’s implementation partners play a crucial role in customization projects, for better or for worse. Therefore, aligning with a services partner with the skills and expertise to advise on when to customize - and when to extend with SAP BTP - is an important step.

The importance of BTP in SAP’s forward roadmap points back to the data on skills development. That’s where user groups can also play an important role – creating peer-to-peer discussions on how to move forward. Our members have used ASUG to advance their automation projects, connecting customers with other member organizations that have migrated and/or used automation to share best practices, what worked and what didn’t. Our members also look to us to help them locate qualified partners with SAP automation expertise.

Automation reduces the complexity of custom code, enables effective management of custom code changes, and limits the cost and risk of custom code maintenance. But the data shows that SAP customers will do better on the automation journey if they tap into the expertise of their peers.

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