SAP S/4HANA adoption is high stakes for SAP. Though SAP will tell you that their RISE initiative is about much more than S/4HANA adoption, clearly making S/4HANA migrations easier (and more business-relevant) is a major driver behind RISE as well (the RISE launch has been thoroughly dissected on these pages by my colleague Den Howlett; you can expect more as we go).
Recently, ASUG (Americas' SAP Users' Group) published their fourth annual ASUG Pulse of the SAP Customer 2021 survey.
While these survey results are limited to ASUG's North American members, the approximately 500 respondents present enough of a sample size for an instructive look at the state of SAP (the prior link is to an informational blog post; you can also view the survey highlights as an infographic via a sign-up form).
How has SAP S/4HANA adoption fared during the pandemic?
By the numbers, the results seem relatively favorable to SAP on the core issue of S/4HANA adoption. But I also flagged issues of concern. On a recent video debrief, ASUG CEO Geoff Scott and Communications Director Thomas Wailgum fielded my questions. First up: the raw adoption numbers. When the respondents were asked, "What are your plans, if any, to implement S/4HANA?", the survey respondents said:
- Already live/started to move - 33 percent
- Within the next six months - 2 percent (down from 8 percent last year)
- Within the next 7-24 months - 16 percent (down from 29 percent last year)
- More than two year from now - 25 percent
- No plans to be involved - 6 percent (down from 12 percent last year)
- Plans to move are on hold for now - 18 percent (This question was a pandemic economy addition, and wasn't asked in last year's survey
Obviously, the pandemic disrupted forward plans - especially for big software projects. What does Scott make of this? As he told me:
One of the things that is going to be problematic for us, [from a survey standpoint], is the pandemic reset everything. For many people, it's going to look like a statistical glitch. 22% of the organizations said that they are live on S/4. For those that were implementing, or already on the implementation path in 2020, mostly they continued down that road. Those who hadn't started yet backed up and said, "Let me wait this out a little bit."
But Scott sees other signs of S/4HANA momentum now:
We are seeing some forward momentum. We're doing an S/4HANA event in March, and we're seeing very strong early registration and engagement - far greater than we expected. I don't know exactly what that says. But my hunch is perhaps some of the fog is lifting. And people are starting to lift up again and say, "Okay, let me let me see where this takes us." [Editor's note: this S/4HANA event is a complimentary event open to non-members also, with sessions/replays running through all of March].
As for the 18 percent who put S/4HANA projects on hold, that's not what you'd call good news for SAP, but that's pandemic life. However, I was surprised to see so many projects pushing along - despite the difficulties posed by adapting to remote ERP. I asked Scott what he's heard from ASUG members on that. He responded:
That's no small data point. Those who were on the route to doing S/4 completed it, and they did it remotely. There are some amazing stories about how they pulled it off. One customer I'm thinking of, some of their people lived over in Asia. They were heading home to be with family. Well, they were also doing an Asian implementation.
So just by pure happenstance, they had people in the local timezone - not local presence, but at least local timezone. And they got their implementation done. They actually said, "It worked." I think this big fear that you had to have a war room full of people staffed in a single location to get an implementation done - that fear was not borne out in reality. The reality was you could do all of that remotely.
S/4HANA cloud migrations - hybrid, private or public?
As for the types of S/4HANA cloud installs, various flavors are getting traction. ASUG provided us with this graphic:
Provided by ASUG with express permission, via their Pulse of the SAP Customer survey.
The hybrid mix of private, hybrid and public cloud is not surprising. Simply getting customers to indicate their own cloud environments accurately on such a survey is no simple task (example: they may have a variety of hyperscaler projects underway beyond SAP - and not everyone agrees on what "public cloud" means in an SAP context).
Due to the variety of cloud deployments, and the need for clarity on the pros and cons of different S/4HANA cloud options, more info is needed. ASUG is planning more research and programming in this area. We'll look to dig in also. For now, it's worth noting that the biggest bump in cloud deployments was S/4HANA private cloud, with a year-over-year increase of 15 percent.
I couldn't get away from the integration topic. It's been one of DSAG's main talking points in recent years as well. So did the topic of integration come up in this year's survey? Scott says yes - and with an exclamation point.
Big surprise - integration is still a major sore point with customers. It's a sore point with customers, and a source of frustration for SAP, because SAP has poured a lot into integration - and they've made it a lot better. But customers still say, "Not good enough." I think [SAP CEO] Christian is absolutely committed to it.
Scott pointed out that moving SAP customers from Oracle to HANA is hardly the end of the integration roadmap. "That seems like basic blocking and tackling," he told me. His point to SAP:
How are you really helping customers deploy these solutions in a better, faster way? There is still frustration and pain points around that. It's still part and parcel to their customer dialogue in 2021. I'd like to see their BTP - formerly known as SCP - be a much better gateway to that.
My take - on skills shortfalls, the S/4HANA business case, and RISE
One data point Scott raised about the survey exposed a sore spot with me: skills shortfalls. Scott says that for the customers making their S/4HANA plans:
They're looking for help and guidance, which we're going to do this year. Skills and staffing caught my eye - that popped up high on the list. I wonder how much of this pandemic caused organizations to re-look at their staffing strategies.
If nearshoring and offshoring are getting a rethink, that might lead companies to look at perm hires - especially now that it's easier to rationalize hiring remote, full-time employees. In my view, SAP certification should be playing a key role here, helping customers to identify trusted, project-validated resources. A master-level certification in S/4HANA would be a valuable identifier for customers right now - but they don't have that. A team of community members, including myself, threw in the towel on convincing SAP of this years ago. SAP has long since abandoned exciting plans for a master-level certification - a mistake I remind SAP of every two years or so. Consider this my reminder.
Now you have customers considering a crucially important S/4HANA project, and they're figuring out their own ways of evaluating talent. Wailgum told me when ASUG asked respondents how they find skilled talent for S/4HANA projects, a whopping 57 percent said it was permanent staff, who learned SAP S/4HANA on the job. That concerns me - I'm not a fan of projects heavily-populated by those in learning mode, though my assumption is many of those folks did have prior SAP experience. When Scott told me that SAP indicated that SAP certification is in high demand, my reaction is indifference. Associate-level SAP certification simply has no comparison to project-tested S/4HANA professionals when it comes to ensuring a quality project.
Historically, one limitation with SAP surveys is that ASUG would come out with a survey, DSAG would come out with a survey, and we'd be stuck with the job of reconciling the differences. However, ASUG and DSAG have been doing more cooperative projects. I expect them to continue to collaborate on S/4 adoption numbers, and we'll be tracking it.
As for the integration issue, SAP leadership made bold intentions on their plans for deep product integration in 2021. Once they get RISE fully moving, SAP should return to the integration topic with some clear answers on what was accomplished - and the timeframe for the integrations that lie ahead, including the Signavio BPI integration that will be critically important to RISE.
Getting back to RISE, when you consider numbers like we saw in this survey, such as the 18 percent that put S/4HANA projects on hold, and the 25 percent that say migration plans are two years out, that indicates a big reason for the RISE initiative. SAP needs a more compelling message for those ECC customers than the hyperscalers - or third-party maintenance providers, for that matter. They believe RISE gives them that. But one thing I like about RISE is that it's not simply an S/4HANA migration program. As I see it, RISE reflects SAP leadership's view that all SAP landscapes need continual modernization, process optimization, and access to experienced cloud resources. Whether RISE can succeed in providing that remains to be seen.
I just spent the last two days at ASUG events, fielding customer questions on RISE, along with my fellow analyst and diligent SAP watcher Josh Greenbaum (who promises a fresh post on RISE soon - I'll add a link when it's out. It's live: see SAP RISE: The Good, the Missing, and the GSIs.). There were plenty of good questions, including skepticism about whether a customer should get excited about RISE if they weren't pleased with SAP's prior HEC program. I believe RISE deserves a fresh assessment by customers, but that type of skepticism is what lies ahead for SAP. Another common question? Making the S/4HANA business case. In my view, RISE can potentially help customers with the TCO side of that, but it's not a business case unto itself.
Scott told me that their Pulse of the SAP Customer 2021 survey indicated popularity for SAP inside of IT and Finance, and not so much inside of other lines of business. As he put it to me, "Does that indicate success, or does SAP need to work harder to make sure that they can find and recruit fans in other parts of of the enterprise?"
Certainly to make the S/4HANA business case, SAP needs fans at the corporate board level. During ASUG's Pulse of the SAP customer member webinar for the prior year, Scott was asked about making that business case. His response:
Obviously, anything we can do as technology professionals to position this investment as one that unlocks innovation, one that enables us to get closer to customers, one that folds very neatly into broader organizational strategies, growth of customer, growth of revenue - I think you will find the board highly engaged and interested in those conversations.
To the extent that S/4HANA is viewed as a cost project, it's viewed as a necessary upgrade. It's viewed as something that should be put alongside other maintenance projects, replacing, you know, property, plant and equipment, upgrades to production facilities. It then becomes a project that gets prioritized along with a long list of other needed maintenance items. Candidly, it becomes a little less exciting, and a little bit less interesting to the board.
Coming back to the idea of the split between innovation and execution, if we think about the service execution mindset, we're unlikely to inspire the imaginations and where the board wants to go... My advice and counsel to those of us in the community would be that innovation at a board level is going to be what sells it.
Indeed - though I don't think Scott is downplaying operational efficiency either. It's not an either/or. RISE is explicitly intended to help customers address SAP TCO, but you can't stop there. How much RISE can help with a complete business case will be an important question to flesh out going forward.