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Sustainability, S/4HANA adoption and low-code - hitting the hot topics with UKISUG, the UK & Ireland SAP user group

Jon Reed Profile picture for user jreed November 30, 2022
With UKISUG's annual user conference in full swing, it's time to catch up with UKISUG Chair Paul Cooper. Cooper shares fresh data and customer views on everything from SAP BTP to IT spending. S/4HANA adoption sits on the front burner - but is end of maintenance the best project driver?

Paul Cooper -  Vice Chairman, UKISUG
(Paul Cooper of UKISUG )

Enterprise software companies are just like you and me: they need health checks. If I made a list of essential health checks for vendors, "active and vocal user groups" are near the top of that list.

For the last couple of years, I've made a point of catching up with UKISUG on the verge of their annual user event. Hot topics always seem to surface.

Last year during our video chat, UKISUG, the independent UK & Ireland SAP User Group, provided context for their controversial RISE with SAP survey. This year, that theme continues. My diginomica colleague, Derek du Preez, has been on the ground in Birmingham. He's already filed a revealing use case with Inchcape, an early RISE customer, with more on the way.

As I prepped for my talk with Paul Cooper, UKISUG Chair, the biggest thing on my mind was customer sentiment. In a year's time, we've shifted from pandemic era concerns to a Vaccine Economy pressure cooker, where economic shifts and (lack of) consumer confidence is evident. How does this impact SAP customers, and their investments? I also wanted to get Cooper's take on SAP's low-code push, a surprisingly volatile topic in my recent SAP TechEd coverage.

What is the IT spending mentality right now for SAP customers?

Despite the economic uncertainties, there is a persistent sense that companies are going to keep investing in enterprise tech; they feel an imperative there to progress on their digital projects. That doesn't necessarily mean good news for SAP per se, because companies may want to spend some of that digital investment elsewhere. What is Cooper's take, based on UKISUG's year-round sessions with tech leaders? As he told me:

At our board meeting about six weeks ago, the IT and business directors, in all cases I can think of, they were investing to grow, or investing to make change, or to cope with, the kind-of strange economic environment and logistics/supply chain environments that we live in at the moment.

One big change, which I've seen throughout the fall event season: projects are subject to more scrutiny, and the business case better be rock solid, not just tech for tech's sake - and not just based on IT cost savings alone. Cooper explained:

Clearly, business cases are becoming much more of a requirement to be extremely robust, and probably looked at through more than one dimension. It's not necessarily just going to be about saving money. It's going to be, 'How's it going to help us with ESG? How's it going to help us with driving, you know, supply chain,' and so on.

Certainly one of them was using SAP Signavio for some business process work. So it didn't have that everyone sat around the table, consoling each other on canceled projects [vibe]. So, it definitely felt positive in that sense.

Has S/4HANA reached "critical mass?"

Which brings us to S/4HANA upgrade projects - the biggest SAP projects across SAP's portfolio, and arguably the hardest to green light in the current environment, where quicker cloud projects are typically more appetizing. But Cooper says that S/4HANA is reaching a "critical mass," evidenced by this year's UKISUG customer presentations:

The interesting thing for us this time is that we have actually got entirely customer-driven S/4HANA streams. Rather than partners talking about S/4,  we've actually got a full stream of customers talking about their experiences, their stresses and strains. For me, we finally get to that panacea, where there's a critical mass in the market, and a critical mass of people willing to talk, which is always the key thing for a user group.

Cooper says this signals a turning point, from low uptake, to broad awareness, to a substantial level of adoption:

If we think back five or six years, when we talked about S/4 for our conference, we had very low awareness or uptake. We're now seeing that is changing, and people are coming to talk. [Author's note: UKISUG's 114 member survey, released on day one of the show, indicated that 25% of respondents are running S/4HANA currently].

However, other heavily-marketed SAP products are not at the same point. SAP BTP being a prime example:

If we reflect on the European Sapphire, which was in The Hague, SAP was pushing really hard on BTP. That push has come from a very low base and very low understanding. One particular customer said they didn't realize it was for people on S/4; they thought it was on older versions, and someone else was thinking, 'I thought it was only for S/4HANA.'  [Author's note: SAP customers can access BTP regardless of core ERP release, though of course some of the integration scenarios and feature options will be different].

UKISUG found similar confusion on SAP BTP in its recent member survey. For Cooper, that's where the user group mission comes to the fore: time to shift into education mode.

We're starting that education journey this year. We've supported an SAP BTP event. We've got sessions at the conference on that as well. The whole BTP piece seems to suddenly have grown in stature within SAP. I won't be surprised if it's not rebranded at some point, but you know, that will come in time, no doubt.

On low-code, talent shortfalls, and the surge in ESG pursuits

As long as it doesn't go back to SAP Cloud Platform, that's all I ask. Snark aside, SAP has vowed to reduce its penchant for renaming - BTP will be a another test of that resolve, which faltered with the renaming in the SAP Build offering. Speaking of which, what is Cooper's early take on SAP's recent low-code announcements?

I find the low-code area quite interesting, because it's kind of a prerequisite. The business users want to be able to do this themselves, rather than outsource it to an IT department.

As Cooper points out, that ideal can prove tricky in reality. He shared a customer situation where a so-called "citizen developer" built a bunch of reports and dashboards. After that individual left the organization, it came down to IT to make sense of it - and document it. Therefore, Cooper wants to see that SAP Build has a robust, industrialized design, including deep documentation of workflow changes. But as for SAP's argument that IT talent shortfalls is a big reason for investing in low-code, Cooper agrees:

But I think the right skills is a massive issue we're seeing over here. It's come out in our surveys the last few years, and it's not getting any better... You only have to talk to a few IT directors that are trying to recruit. They're struggling - and we're all competing against each other.

Certainly in the UK, there's a sense that a lot of the sorts of experienced 50-somethings seem to have disappeared from the workforce in the post-COVID era, that decided to step back or go and do different things. [Author's note: the talent shortages don't stop there. As per this year's UKISUG member survey, of those customers yet to move to S/4HANA, 92% were concerned that a lack of available skills will slow their migration - an increase from 71% in 2021.]

The biggest change in customer priorities from my talk with Cooper last year? It just might be the surge in ESG, which was already notable last year. Cooper:

ESG became quite a significant part of the conversation we had at the exec forum at last year's conference... Organizations are trying to change of their ways of working, and there is a need for insight and data analytics in that space. And, you know, where could SAP assist in that? We had 20 or so CIOs and IT directors around the table at last year's event. It wasn't necessarily number one for everyone, but it was up there in their top two or three -  you know, what are we gonna do?

Economic pressures have added to ESG urgency:

Energy pricing in the last 12 months is going to be a key driver on that, purely from a cost perspective, as opposed to some kind of green halo for  doing things in this space.

Time to take action:

For the first time this year, we've started a sustainability special interest group. They've had that first virtual meeting. We've got elements of that running through presentations at the conference, because we've actually felt the pull from the membership, rather than us having to push this one. There has been a pull from the membership in terms of what they can do, and how they can do it. And you know, what pressure we can put through the SAP space.

I think it's quite easy for software companies to talk about ESG. There are a lot of products out there, but number one, are they living and breathing it themselves? How many corporate jets are these guys flying around? And that's the kind-of frivolous end of it. But actually, how much tangible value-add is in the ESG solutions that they're putting out there? Is there thought going into it, rather than, it's another piece of software that we can sell?

My take - let's talk S/4HANA business cases, not end of maintenance

Will the UKISUG's sustainability interest group bring that type of feedback to SAP - and work to ensure that SAP's sustainability roadmap lines up with their needs? "I think they'll get there," Cooper told me, but step one is to establish the community. UKISUG members are already doing notable things with solar power and wind turbines, so comparing notes is part of the process. Then, the question will shift to "How do I bring it all together?"

I have mixed feelings about SAP's approach to sustainability. Sustainability is clearly a sincere/core value of today's SAP, but I would argue it should have been embedded into the core of SAP's products much earlier, back when sustainability was a key feature of Jim Snabe's keynotes in the 2013 timeframe. Now it seems SAP is on a track to take sustainability far beyond reporting, into active resource monitoring, supplier ESG screening, product traceability and much more. That's a lot to keep track of; vocal user groups can only help. As Cooper told me:

Some of the people around the room last year were doing some quite smart things with something like Concur, in terms of how they were encouraging people to choose their travel. It's one of those areas where multiple small actions build up to something quite big. So you're right, it's easy to put dashboards out there, but actual action in this space is going to be key for organizations.

SAP clearly has a ways to go getting RISE to the right point with customers, in particular getting clarity on who is responsible for which aspects of SAP hyperscaler workloads (Derek's coverage on-the-ground brings this out). Still, SAP has to be encouraged by the S/4HANA numbers in the latest UKISUG survey, with almost 9 in 10 (89%) or organizations either using or planning to use S/4HANA. However, I get discouraged when I see end-of-maintenance being too much of a factor in any migration decision, for any vendor.

That is a factor here, with 70% of those planning to move to S/4HANA in the next 36 months citing end of maintenance for Business Suite 7/SAP ECC 6 as the deciding factor. Substantially less cited new functionality (49%), and being part of a wider business transformation (47%), as the main drivers. SAP certainly shouldn't relax into that 89% number. Bolstering the S/4HANA business case again stands out as a top priority. Software that doesn't drive business results is simply not impactful enough to ensure longevity, or prove value.

Here, SAP's user groups can help. Cooper told me that helping members build their S/4HANA business case remains a priority:

We're about trying to encourage people to find the value from these things, rather than be pushed into something. Because, you know, the vendors say, you've got to do it, but you need to find your reasons for doing it. That is a theme that we push frequently with SAP, that there is still work to do for them. And for us as a user group, helping people drive value, and think of it through a lens other than there's a deadline in 2027.

I started this piece by saying that vocal user groups are a key ingredient in a vendor's health. Despite my criticisms, this is an area where SAP generally gets high marks. Granted, the vendor must take in the feedback and apply it, otherwise it's just howls in wind. I'm sure some inside SAP don't look forward to articles like these, where user groups have their say, but that's not important in the long run, as long as the feedback is acted upon. What does matter is the relationships on the ground. And here, Cooper has good things to report, via their liasons with SAP in the UK:

When we were talking about SAP's 50th anniversary, one of the things for me that is is great to see with SAP is that they will engage,and listen to a user community. At their size and scale, they could quite easily dismiss that, but they are very willing to listen... We encourage members to get involved in some of that work that goes on. So at the moment, it's working well.

Let's see what else we learn from this week's event - Derek has another story coming shortly.

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