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Benchmark Report SAP S/4HANA: State of the Market


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he decision whether to move to SAP S/4HANA is one of the most critical issues facing most SAP customers. The promise of digital transformation is just a single driver accompanied by SAP’s increasing investment in the platform and their looming plans to end ongoing support for ECC. There are additional business drivers and technical considerations that can significantly impact a customer’s path forward.

This SAPinsider benchmark report will help you:

Learn how early adopters have structured their business case and ROI models
Discover the key deployment decisions they grappled with such as whether to stay on-premise or move to the cloud and should they go with a greenfield or brownfield deployment
Understand what pushed the early adopters to take the plunge and what’s holding back companies who have plans to move forward
Find out how SAP S/4HANA can power both innovation and the intelligent automation of business processes
Understand how the migration impacts custom configuration, applications and existing infrastructure

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Benchmark Report SAP S/4HANA: State of the Market

  1. 1. SAP S/4HANA: State of the Market May 15, 2019
  2. 2. Agenda • Project Overview • DART Methodology • Survey Results • Insight from Early Adopters • Derivative Data Cuts • North America vs. EMEA Respondents • Greenfield • Cloud • Enterprise Companies • Takeaways for SAPinsiders
  3. 3. Project Overview • Research began in February 2019 • Surveyed over 400 respondents representing 196 customer companies • Conducted several in-depth interviews with respondents and customers CXO 4% VPs and Directors 16% Managers 34% Architects 13% Analysts 18% Developers and Administrators 9% Project Managers 6% North America 46% Europe 27% Asia-Pacific 12% Africa, Middle East 9% Australia 6%
  4. 4. Drivers (D): These are macro-level events that are impacting an organization. They can be both external and internal and require the implementation of strategic plans, people, processes, and systems. Actions (A): These are strategies that a company can implement to address the impact of the drivers on the business. These are the integration of people, processes, and technology. Requirements (R): These are business and process-level requirements to support the strategies. Technologies (T): These are technology and systems-related requirements that enable the business requirements and support the company’s overall strategies. •High total cost of ownership (TCO) of legacy ERP systems •Need for continuous innovation •Shortening of product life cycles and demand for more customized products, services, and pricing models SAPinsider DART Framework Drivers •Create a sustainable digital innovation strategy that enables your company to identify new revenue streams, lower costs, and improve current products and services •Deploy a cloud-based or hybrid business architecture to minimize costs and maximize speed to market •Prioritize specific business processes for intelligent automation based on return on investment (ROI) and cost models •Modernize your reporting, dashboard, and insights strategy to provide more real-time and high- value views into your business Actions •Faster consumer-driven innovation via real-time customer insights •Key performance indicators (KPIs) and ROI model for business process improvement and business impact measures •Self-service reporting and analytics •Platform for custom product and pricing configuration •Strong data cleansing, data management, and data governance practices •Elimination of long deployment and upgrade cycles •Elimination of complex patching and testing cycles •Business and IT team buy-in for next-level ERP via a bottom-up business case •A clear owner to manage advancement of ERP Requirements •On-premise and cloud-based ERP deployment models •Mobile and responsive-based user interface •Highly integrated financial planning and management solution •Rich developer framework for customizing and extending both cloud and on-premise applications •Powerfully integrated advanced analytics and visualization tools •Integrated financial, sales, and operational planning solutions •Best-in-class cloud and on- premise middleware solutions •End-to-end customer data management •Customer profiling and intelligence Technologies DART Methodology
  5. 5. Survey Snapshot: State of the Market • Most companies are moving in some way to SAP S/4HANA: - 7% have actually implemented the software - Many (41%) are still in evaluation mode - Only 4% say they have absolutely no plans to move to SAP S/4HANA • Many are building their early business case around analytics and finance • A good number of early adopters (39%) have taken a greenfield approach • 60% of customers are considering a cloud deployment of SAP S/4HANA • Custom code and data migration are top technical challenges • Early adopters cite performance and simplification among top benefits • Skillset expansion is needed to get full value out of SAP S/4HANA
  6. 6. SAP S/4HANA Adoption
  7. 7. What Release Are You Currently On? R/3 or earlier ECC 5.0 ECC 6.0 ECC 6.0 ehp 7 ECC 6.0 ehp 8 Business Suite on HANA S/4HANA (1511) S/4HANA (1610) S/4HANA (1709) S/4HANA (1809) Other
  8. 8. Leaders vs. Industry Average vs. Laggards Category Drivers Actions Requirements Technologies Laggard Deadline • Technical and IT driven • Use technical measures to dictate success • History of technical upgrades • Large focus on immediate priorities, not SAP S/4HANA • Continued focus on technical support and effects of ERP change, including custom code, security, data prep, and migration • Currently invested in core infrastructure and management technologies such as SAP Solution Manager • Will stay put for a year and then start moving toward foundational technologies for SAP S/4HANA Industry Average Deadline and process efficiency • More focused than any other group on intelligent automation of business processes • In evaluation and preparation mode for SAP S/4HANA • Significant focus on analysis and preparation of business case and both functional and technical effects • After evaluation, plan to invest in SAP S/4HANA enabling technologies such as in-memory database, advanced analytics, and modern conversational user interface technology Leader Digital transformation and competition • Prioritizing analytics and data-driven strategies to build on current use of SAP S/4HANA • Want to improve decision making and support digital transformation • History of delivering value to wide range of lines of business • Place high importance on data management and data cleansing • Also focused on assessing cost and ROI of cloud models • Building on initial investment in SAP S/4HANA by focusing on private cloud, high-end hardware, and cognitive solutions • Will continue to make data management and integration a priority
  9. 9. What Are the Main Drivers of ERP Upgrades? • Leaders much more focused on transformation and process efficiency
  10. 10. Challenges to SAP S/4HANA Migration • Expense and competing priorities are two of the biggest reasons laggards are delaying their plans for SAP S/4HANA
  11. 11. Analytics and Finance Are Driving Activity • Analytics and finance were cited as the main beneficiaries of SAP ERP in general Areas of the business that significantly benefit from ERP
  12. 12. Analytics and Finance Are Driving Activity • The trend looks to continue with SAP S/4HANA Top strategies prioritized to address the top drivers of change
  13. 13. Migration Approach: Greenfield vs. Brownfield • 39% of early adopters are taking a greenfield approach to: - Simplify their environment and enable consolidation - Correct past mistakes 0% 10% 20% 30% 40% 50% 60% Greenfield (reimplement SAP) Brownfield (upgrade current release) Hybrid Not sure Other Leaders Industry Average Laggards
  14. 14. Migration Approach: Cloud vs. On Premise • 60% of respondents plan to deploy SAP S/4HANA on the cloud
  15. 15. Migration Approach: Cloud vs. On Premise • Leaders are even more focused on the cloud: - 70% will deploy on the cloud with over 40% choosing private cloud
  16. 16. Top Requirements for SAP S/4HANA Projects • Customers are focused on tools and compliance as top requirements • Leaders are prioritizing data cleansing (custom code and data migration were top challenges cited by early adopters)
  17. 17. Technology Adoption Coming in Waves • Leaders will build around their initial investment in SAP S/4HANA, moving to analytics, a better user interface, and cognitive solutions in the coming year What technologies are you running today 0% 10% 20% 30% 40% 50% 60% 70% 80% Advanced analytics Modern UI Integrated analytical solution Integrated business planning solution High-end infrastructure Cognitive analysis solution In-memory database
  18. 18. Technology Investment in 24 Months • Laggards will start to invest more within the next 2 years What technologies do you plan to run in 24 months 0% 10% 20% 30% 40% 50% 60% Advanced analytics Modern UI Integrated analytical solution Integrated business planning solution High-end infrastructure Cognitive analysis solution In-memory database Leader Laggard
  19. 19. Insight from Early Adopters • Most early adopters are satisfied with their project: - 85% report that SAP S/4HANA has met or exceeded expectations • Many are completing their project in a year or less: - 69% report a project duration of 7-12 months - 23% are getting it done in 6 months or less - Only 8% are taking more than a year • Top challenges reported were not surprisingly custom code and database migration • Early adopters are still customizing SAP S/4HANA functionality: - 85% are customizing less than 50% of SAP S/4HANA functionality - 31% are customizing 0%-10% of SAP S/4HANA functionality
  20. 20. North America vs. EMEA Respondents • EMEA audience is more current on their SAP ECC release - Slightly higher percentage of North American respondents have moved to SAP S/4HANA 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% SAP R/3 or earlier SAP ECC 5.0 SAP ECC 6.0 SAP ECC 6.0 EHP 7 SAP ECC 6.0 EHP 8 Business Suite on SAP HANA SAP S/4HANA (1511) SAP S/4HANA (1610) SAP S/4HANA (1709) SAP S/4HANA (1809) Other General North America EMEA
  21. 21. North America vs. EMEA Respondents • EMEA audience 6% more likely to do a greenfield reimplementation • EMEA audience more likely to stay on premise: - Feel it will be an easier deployment and more secure 0% 10% 20% 30% 40% 50% 60% On-premise Public cloud Private cloud Hybrid Industry Average North America EMEA
  22. 22. North America vs. EMEA Respondents • Both regions identify finance as a key beneficiary of their ERP strategies • North American respondents more likely to then focus on analytics, compliance, and HR • EMEA respondents more likely to focus on supply chain, manufacturing, and sales
  23. 23. Insight from Large Companies ($1 Billion and above) • Represents about 51% of our completed survey respondents • They are further along in their SAP S/4HANA migration • 22% have implemented or are currently implementing SAP S/4HANA • Top drivers are the 2025 deadline and need to increase business process efficiency • Migration toolsets and building the business case are important initiatives for this group
  24. 24. Insight from Large Companies ($1 Billion and above) • 20% of these customers are planning Greenfield implementations of SAP S/4HANA • 59% will deploy SAP S/4HANA on the cloud • 32% will choose private cloud • Costs, security, and customization are the top reasons for their decision • Finance, Supply Chain, and Analytics are the big business drivers for their SAP ERP strategy • 68% of these customers who migrated customized 10%-50% of their SAP S/4HANA functionality • 75% of this audience was able to complete their project in 7-12 months
  25. 25. Greenfield Respondents • 16% of our overall respondents • Top Upgrade drivers for this group are business process efficiency (50%) and organizational focus on digital transformation (44%) • 47% have implemented SAP S/4HANA or are in the process of implementing • High importance on data cleansing and data management practices • 69% are deploying or plan to deploy on the Cloud • 49% are planning for private cloud
  26. 26. Cloud Respondents • Represents 60% of our overall audience • Drivers resemble those of the leader group • Focus on digital transformation and business process efficiency 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% End of maintenance and support Pressure to increase business process efficiency Need for greater visibility into all areas of the business Focus of business and management on innovation and digital transformation
  27. 27. Cloud Respondents (cont.) • Greenfield approach is similar to general sample • 18% of cloud responses plan to follow greenfield approach to deployment • (vs 16% of general audience) • Not surprisingly one of the top strategies is deploying low cost hybrid architecture 0% 10% 20% 30% 40% 50% 60% 70% 80% Deploy a flexible, low cost cloud based or hybrid business architecture Prioritize specific business processes for intelligent automation Modernize reporting and business intelligence strategy Centralize and automate financial planning, accounting, and reconciliation activities Modify customer experience management strategy
  28. 28. Cloud Respondents (cont.) • Expected benefits of cloud deployment • Cloud didn’t dramatically lower the time to deploy • Most cloud respondents still deployed SAP S/4HANA in about 7-12 months 0% 10% 20% 30% 40% 50% 60% Security Costs Simplification of IT Integration requirements Ease of maintenance and deployment
  29. 29. Takeaways for SAPinsiders • Laggards prospects need to: - Learn the basics and build a foundation of knowledge - Explore industry based case studies - Reconnect IT and business to look at SAP S/4HANA together • Industry Average prospects are in assessment mode and need to: - Leverage the free tools and resources out there to build a picture of the project’s impact on custom code, configuration, security, and data - Select a deployment model and platform approach - Do not dismiss Cloud and Greenfield options - Organize tools and skillsets for their project - Connect with trusted experts
  30. 30. Takeaways for Targeting SAPinsiders • Leader prospects need to: - Scale the current benefits of SAP S/4HANA - Select and implement the analytics, applications, user interface, and cognitive solutions that will bring further business benefit to your SAP S/4HANA investment - Broaden SAP S/4HANA scope beyond finance and analytics - Build out skillsets in cloud, core data services, SAP Fiori, and more
  31. 31. THANK YOU Rizal Ahmed Chief Research Officer 781-751-8603