UK & Ireland SAP User Group - 48% of members have no current S/4 HANA plans

Profile picture for user ddpreez By Derek du Preez November 21, 2016
Summary:
The UK & Ireland SAP User Group this week released figures that highlight how far SAP has to go in convincing its customer base to migrate to S4/ HANA.

S4HANA - logo
The UK & Ireland SAP User Group (UKISUG) kicked off its annual conference in Birmingham this week with some survey results that will could cause some concern for SAP management.

Unsurprisingly, the theme of this year’s conference is focused on SAP’s next generation core platform for digital business, S/4 HANA. My colleagues Dennis Howlett and Jon Reed have covered the platform itself in great detail already - take a look here and here for some detailed guidance on the use case.

However, according to UKISUG, SAP has a long way to go in getting all of its customers on the path to migrating to S/4 HANA, which is its intent. Chairman of the User Group, Philip Adams, took to the stage this morning to reveal that a significant proportion of its members either have no plans to migrate to S/4 HANA - or more worryingly, haven’t even heard of it.

The survey results show that only 5% of users area already using it (perhaps unsurprising, given that the technology is only two years old), whilst 34% have said that they are planning to use it.

On the other hand, almost half (49%) said that they had no plans in place to jump to S/4 HANA and a surprising 12% said that they were “not aware” of the new platform. Adams said:

Although 49% have no plans at the minute, it’s still early days. Probably for me, what was the most surprising number, was that 12% has said they have never heard of it. That confused me and I’m sure has created a certain amount of head scratching among SAP marketing teams.

Most of us are on that path already, we are thinking about how we can make it work in our organisations. But we do recognise that migration to the new product isn’t necessarily easy. If we are running ECC 6 or ERP of some description, we do have time - it’s supported until 2025. So nine years away does seem like a long time and we might not think there is no rush. But we do need to clearly understand how we get there.

What are the steps that we need to make from where we are today to the new product? 30% of you have that worked out, but as you can see, the vast majority still need help. We need help from SAP, we need help from the partner community, and the User Group can be in the forefront of bringing that together.

Migration isn’t easy. And it can be scary and disruptive. But we need to understand - what are the steps that we need to do to get there? In addition to that, we need to figure out how our legacy applications will integrate with the core product. How can we make all these different parts work?

Some other data collected also highlighted that 70% of members don’t believe that SAP has been clear in communicating the migration path to S/4 HANA. The User Group also found that at least 40% of customers are 'very concerned’ or ‘somewhat concerned’ about the legacy and/or new application integration with S/4 HANA.

Adams said that the User Group has spent the last year working with SAP to understand the broader impact of S/4 HANA on its users. He said that one of the main concerns had been around licensing and whether or not S/4 would mean new licenses for customers. The upshot being that if you’ve already investing in HANA, then you’re unlikely to have to pay for new licenses - but there are likely to be some costs associated. He said:

We actively worked with SAP after the event last year to get clarity around what it really meant. And I am pleased to say that that dialogue was healthy and constructive, and SAP clarified the position in early January. And although S/4 was being branded as a new product, it doesn’t necessarily mean a new purchase.

There are some consulting costs, some people costs, there is a conversion fee. And of course if you haven’t moved on to the HANA database, there is an investment to be made there.

However, one area that still concerns Adams, and UKISUG, is the costs associated with indirect usage as companies branch into new ‘connected’ areas of investment - for example, those customers that have IoT projects. He said:

The Internet-of-Things, digitization, automation - this is happening across all economies and industries. ICT systems are becoming increasingly exposed to new and different usage. People within our organisations are designing new applications and business processes without realising the potential impact that has on our use of SAP. And the corresponding impact that that might have on our licensing positions.

I think we really do need clarity in this area. We need to understand and clearly define, what does indirect usage mean in our organisations? Understand the type of scenario where we would fall into that area, and how we could either avoid or mitigate it.

I don’t think it’s an easy fix, but I’m committed to working with SAP to make sure that we can provide that clarity. We all see the benefits of the connected economy, but we all need to understand the implications this might have on our licensing positions.

SAP responds

Cormac Waters
Cormac Waters

Also on stage was Cormac Watters, SAP UK & Ireland MD, who had the chance to respond to the survey results and give some further insight into the S/4 roadmap. He said that it’s “great to see” that 30% of customers are in a position where they feel that they understand the importance of S/4, but he would like to see this number jump to over 50% next year.

To aid this, SAP has released a beta three year roadmap tool to help customers get a handle on what their S/4 journey could be. It is going to be released to all customers early next year. Watters said:

What we think we need to deliver is clear guidance on what the roadmap will be, could be, should be. It needs to be clear and concise. It needs to be ever learning and adding use cases and live information on a regular basis. And it needs to be consumable by non-techies.

I think what’s important to say is that this is a journey, it’s not the end point by any stretch. We’re very much committed towards continuing on the path that we’ve embarked on two or three years ago. Hopefully to be more approachable, to be more open, to be more consultative, to be more involved.

You have to remember that S4/HANA is literally less than two years old. There is a lot of communication, a lot of questions to be answered in that regard. What I have noticed very specifically is in the last 12 months is that digital transformation is no longer just a cool conference topic - it is absolutely very real. It’s very real in the c-suite.

Finally, Watters said that SAP in the UK and Ireland would be rethinking how it managed its customer accounts, with it wanting to pay more individual attention to its users. It is going to do this by reducing the amount of accounts per account manager. He said:

One of the things that we have set about doing is simplifying the way that we connect with the customers. What has been put in place for the past 18 months, and will continue into next year, is that each active account will have a clear, specific account owner from an SAP perspective. Each of those account owners will have on average of only four accounts to own and manage, so we have reduced the number of accounts per account owner.

What we are doing in the latter half of the year, for those accounts that are a little bit more dormant, we are going to put a dedicated team of account managers in place to see if we can rejuvenate or resurrect that relationship to make it better. Rather than them getting lost in the basket of active accounts. That seems to have resonated quite well.

My take

A busy and interesting first day at the User Group conference. The response to the stats from the User Group chiefs and SAP has been surprisingly positive - their view is that given that S/4 is still relatively new, the numbers aren’t any cause for concern. That makes sense when weighed against the recorded adoption rates that SAP has communicated to us in the recent past.

I’ve still got some doubts about the use case for S/4 - particularly for a business that has been attempting digital transformation for a number of years already - but I’ll address that in a later post with some follow up interviews.

However, the message seems to be that clearer roadmaps are needed and customers need some help getting to S/4. And to give SAP credit, it seems to be listening and responding as best it can. More to come over the coming days.