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Where do SAP customers stand on AI, RISE, and the transformations ahead? DSAG shares its position on the SAP innovation debate

Jon Reed Profile picture for user jreed May 14, 2024
Summary:
SAP Sapphire season is almost upon us - and the stakes are high. SAP customers are facing crucial decisions on cloud migrations, RISE assessments, and how SAP fits into transformation and AI strategies. To set the stage from the customer side, here are highlights from DSAG's positions - and my discussions with DSAG Chairman Jens Hungershausen.

Jens Hungershausen, via DSAG.de
(Jens Hungershausen, via DSAG.de)

Vendors like to talk about customer success. Fine by me, but I'm going to press the issue. As I see it, the circumstances for true customer success require vocal/active user groups. 

This is an area where SAP excels - though there are probably times where SAP wishes their user groups were as quiet publicly as some of their competitors' user groups are. 

But in the big picture, vocal user groups are a strength, and DSAG certainly fits that bill. DSAG is well known for putting out strongly worded releases; they certainly don't fear the PR spotlight. Their recent investment report sets the stage for a fresh round of dialogue during the SAP Sapphire conference season (DSAG investment report: S/4HANA cloud strategy put to the test). 

SAP customers face transformation, AI, and migration choices - DSAG shares findings

Since diginomica launched, I've been in touch with DSAG to get their gut check on customer issues, but this year is like no other. Why? With AI in full swing, and a crucial 2027 end of maintenance deadline looming for a number of SAP customers, this is a high stakes time

DSAG, the German-speaking SAP User Group, has also changed. I used to pick up on resistance from DSAG leadership around transformation concepts, and the inevitability of cloud applications. DSAG doesn't like being sold to via "game-changing" technologies; I can't blame them. Now, I see DSAG recognizing the potential value of SaaS/cloud applications - but DSAG is still resolute about defending customer choice, including on-premise systems. That's the basis for spirited discussions. 

At November's first-ever ASUG Tech Connect, Josh Greenbaum and I had that type of discussion with Jens Hungershausen, DSAG Chairman of the Board. Since that time, much has happened - I have new feedback from DSAG on SAP's innovation strategy. So, with SAP Sapphire season closing in, here are some of DSAG's takes on issues SAP will surely be talking about, on stage and off.

Let's cut to the chase, shall we? Is AI hot air to DSAG members, or a pressing concern? Hungershausen's response? AI is a significant technology, but: success with AI can't be separated from S/4HANA concerns, AI system readiness, and process modernization:  

AI is one huge technology which is coming up, but I'm not so sure that everybody has the right view on when and how this technology will really impact anything. I think the speed of development is really, really fast. But as I've said before, customers are are looking at their own transformations just to get the basis of their system landscape to make use of AI. So there are probably a lot of small use cases regarding AI, which are used by companies, where they are going to have some some features and some use cases. 

But I'm really waiting for the big change inside an S/4HANA system to get improvement in the processes and things like that. So it's a Co-Pilot like Joule we're hearing and seeing right now, but that's a Co-Pilot. So we have to see how this going to evolve over time.

So for DSAG members, it's about making sense of S/4HANA - but in the context of future innovation? Hungershausen says yes, but there is a crucial issue: whether to look at S/4HANA as a technical upgrade, or a "real transformation."

I think the customers are deciding if they're going to do a real transformation. And in that case, if they have enough time to do real transformation coming from an ECC system, going to S/4, or if the customers have to do a brownfield migration - because they just don't have enough time to do real transformation, to really use and take benefit for S/4. 2027 is not so far away, so some timelines are closing. 

DSAG on S/4HANA migrations - and the RISE and AI innovation debate

Now we must reconcile the transformation agenda with the latest IT budget news. In the DSAG investment report 2024, DSAG summarizes the priorities: 

IT and SAP investment budgets continue to rise - but at fewer companies than in 2023. At the same time, the willingness to invest in S/4HANA is growing, But when it comes to the SAP S/4HANA cloud strategy, user companies see a need for discussion. RISE and GROW with SAP seem to be gaining in importance among those surveyed. According to the DSAG Investment Report 2024, the topic of artificial intelligence (AI) can also grow. In addition, DSAG member companies are convinced that the importance of SAP for their companies will continue to grow.

With end of maintenance deadlines coming, where do DSAG members stand on S/4HANA investments? As per the report: 

When asked about the relevance of the Business Suite for SAP investments in 2024, four percent of companies plan high investments (2023: 6 percent) and 18 percent plan medium investments (2023: 22 percent). With S/4HANA, high investments are relevant for 38 percent (2023: 28 percent) and medium investments for 32 percent (2023: 38 percent). 

Investments in S/4HANA continue to increase. In particular, the increase in high investments suggests that the efforts of DSAG and SAP in supporting user companies during the transformation are bearing fruit. 'Nevertheless, I would have expected a greater willingness to invest in S/4HANA – especially in view of the end of maintenance in 2027 and the resulting very short time window for a migration,' says Jens Hungershausen.

These findings give the impression of some alignment between SAP's priorities and that of DSAG members. However, there seems to be a bigger gap when it comes to perceptions of RISE and GROW. Via DSAG's investment report:

When asked about the role of RISE with SAP for companies, 16 percent of respondents stated that they were already using the offer or were planning to use it. Eight percent say they are not aware of the offer. 61 percent of those surveyed do not plan to use the offer.

DSAG member concerns about RISE reflect one of SAP's core jobs with RISE: help more customers understand the details of what the program can (and can't) do. DSAG member concerns about RISE include: 

The respondents also cited an unfavorable cost-benefit ratio, increased testing effort, limited expansion options and the high dependency on SAP, including a lack of exit options, as reasons.

My take - the SAP Sapphire season will reveal where we stand

SAP could make strides on these particular concerns - with more RISE education, specifics, and test drive scenarios for customers. The key thing is that when someone says "RISE," do we know the context? Is this migration tools, or a broader transformation service? Or can a customer adapt that to their scope? Are we clear on what the customer, partner, and SAP owns in this context, and how hyperscaler management is best coordinated? As the partner community gets a better handle on the RISE with SAP offering, this will also help customers move ahead - and bear down on the business case (I see more partners with solid RISE offerings and project stories this year). 

DSAG notes this survey took place prior to SAP's RISE Moderniziation and Migration initiative, announced in January 2024. There are other important RISE changes. In a recent podcast I taped with ASUG CEO Geoff Scott and Josh Greenbaum, we discussed the potential for RISE to be a more differentiated offering, via the deeper integration of cloud ALM, LeanIX, and Signavio (though I don't know if I can get on board with the "cALM" jargon; staying calm is not my best quality).

Nevertheless, this DSAG data on RISE is a wake-up call to SAP. The work on connecting RISE to the customer's transformation agenda is unfinished. But a bigger concern is when SAP gives the impression that if you're not on RISE (or GROW, the S/4HANA public cloud version of RISE), you won't get access to SAP's future innovations, particularly AI. This is a complex issue that invokes more debate than I have time for here (another podcast with Scott and Greenbaum gives you that AI debate on full throttle if you want it). But I did want to get DSAG's take on my last quote. As I wrote: 

However, when it comes to AI, my current take is that it's the caliber of your internal data structure, and level of overall systems messiness and customizations, that is the biggest determinant of your AI success. That's why I've argued that SAP focus more on delivering AI value through BTP rather than RISE, so that any SAP customer on any release can access AI services via SAP's BTP cloud platform.

DSAG's response to my framing:

In our opinion, RISE versus BTP is not presented correctly. SAP's focus has always been on delivering AI functionalities via BTP. DSAG's criticism relates to the coupling of RISE with some of the AI services on BTP. RISE with SAP is a contract model and there are restrictions on the use of AI functions without a RISE contract. DSAG is committed to ensuring that all AI functionalities can also be used by S/4HANA on-premises customers via the BTP.

DSAG has not found a technical reason why SAP would need to limit access to AI services to RISE customers - and neither have I. Providing access to SAP innovations to all customers, RISE or not, via BTP is the smart play - one that should earn SAP customer loyalty and AI service adoption. 

During backchannel talks, I've seen softening of SAP's stance on RISE as the only innovation pathway. SAP still maintains that RISE and GROW are the best paths to transformation, but that's an important semantic distinction. SAP has also explained why cloud applications are ideal for delivering AI services, and will receive priority for AI feature deployments. But I believe SAP can make that case, while also supporting customer choice in how and when to migrate to cloud. Let's see how this messaging sounds at the SAP Sapphire shows. One thing is for sure: DSAG will have something to say about it. 

When Josh Greenbaum and I caught up with Hungershausen at the inaugural ASUG Tech Connect event in New Orleans last November, it was the perfect time to ask him: just how different are DSAG's views on SAP direction from ASUG's?

I think the agenda is basically some of the same. A lot of customers are looking into that transformation. So: they're having issues with a digital transformation. A lot of customers I've heard here, and we have the same in Germany, Austria and Switzerland as well. are looking into their ECC to S/4 transformations. They're having having huge issues there. And they're trying to get the right strategy for their projects.

During our talk, Hungershausen broached another front burner issue: industry solution functionality in the cloud. After all, if SAP wants to incent customers to make these cloud moves, customers also need to know that the industry features they rely on are going to be there. Hungershausen:

There's still some some [industry] solutions which are not RISE-compatible. In Germany, we had some discussions with public sector, where there are some things which are not not able to go into the cloud.

During the published part of my talk with SAP's Jan Gilg, he mentioned the importance of SAP partners building out some of that industry functionality. The industry cloud and BTP conversation can be obscured by the AI buzzword buffet, but for customers considering RISE/cloud, it's just as important. I'll look to revisit this in the SAP Sapphire timeframe. 

Finally, DSAG's relationship with SAP can appear contentious. At times, the tabloid side of the tech press takes DSAG's strong positions and runs with them. This can lead to the impression of drama-filled sensationalism between DSAG and SAP. So I asked Hungershausen, how would you characterize DSAG's relationship with SAP?

We have a very good working relationship, and it's not always to the board members. The better working relationships you have at all levels, you get much more information and get more strategy discussion for it - so we have very good discussions with Jan Gilg. We have good discussions with Sven Denecken about the industry sections... I've said a dozen times to to SAP: 'Use us. Use us as user groups; just talk to us.' 

End note: next up, I'll have more from SAP's Jan Gilg on what he's hearing from customers on S/4HANA migrations. Jens Hungershausen will be in Orlando, and I'll have a full slate of ASUG customer sessions to digest as well, at the co-located ASUG Annual Conference.

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