Provided by Register 'Customers will not - at least not in the short term - move exclusively to cloud scenarios'
SAP can't be more clear with its customers about the challenges they face in application upgrades and cloud migration, but for one reason or another, they're struggling to get the message across. Or maybe hope it goes away…
A few years ago, Oliver Betz, SVP head of product management for SAP S/4HANA, told customers moving to the cloud that "standardization needs to be driven by the customer." They must be prepared to say goodbye to changes made to on-premises systems. That's not how the cloud works, he said.
SAP claims its customers are 99 of the world's 100 largest companies – ignoring the fact that most large firms use more than one ERP system – but in its German-speaking hearts at least, the standardization message is not being delivered. Choosing Shower Curtains
Speaking to The Register this week during user group DSAG's annual conference, chairman Jens Hungerhausen said the point about standardization was "not fully understood by every single user."
At the heart of Europe's manufacturing base, the German industry runs more or less on SAP. While the cloud is part of their plans for applications, it is not the whole story and there is little sense that they are ready to leave on-prem systems behind.
"Standard procedures are the right way to go, but it's a transformational plan to get there. It's not easy," Hungerhausen said. "A lot of customers aren't able to go down that path right now. That's one of the issues that SAP needs to be more clear about. They need to invest a little more in education, and knowledge transfer to the customer so that everyone can see the benefits of that. Going that way."
For context, it helps to understand that SAP, with its vast customer base, is more or less betting on the farm to move them to the cloud sooner or later.
The third-quarter 2020 results were so poor that they prompted a reset of revenue forecasts and a 25% cut in the company's price. CEO Christian Klein followed by announcing a new strategy to accelerate cloud adoption. It was included in the SAP program with its RISE, which promises to lift and shift customers' existing applications to the cloud, and then transform their processes to meet the needs of standard SaaS software. does. The vendor is driving the program, with hyperscalers and third-party system integrators trailing behind.
But DSAG research this week highlighted the scale of the challenge. A survey of 434 members in Germany, Austria, and Switzerland found that when they considered the future of their SAP landscape, 85 percent gave high or medium importance to on-premises solutions, while 77 percent placed the same importance on the cloud.
Hungerhausen warned of the potential for a gap between new SAP solutions and ways to integrate both cloud-based and on-premises systems that customers want for the foreseeable future.
Shower Curtains
"Customers have highly customized and highly individualized ERP systems and have put a lot of effort into that customization," he said. "Each customer probably needs a little more individualized help moving their legacy SAP system or SAP landscape to the cloud. And it's highly individualized for each customer because there's no one-size-fits-all process." Is."
At the same time, not all customers are planning to move to the cloud, preferring instead to upgrade existing business suite systems to S/4HANA – the latest version of its core ERP application suite. In-Memory Repetition - Premise.
"If we're looking to transition from a business suite system to S/4HANA, we're not talking exclusively about moving to a cloud or public cloud scenario," Hungerhausen said.
It's not that customers aren't interested in the cloud, it's just not their only focus when it comes to application strategy, he said.
"Customers are not going to — at least in the short term — move to cloud-only scenarios. You're not going to get by without using any cloud scenario or any cloud solution because there's so much innovation happening in the cloud. And because of the technology that's available in the cloud. But there are still a lot of different processes where customers rely on on-premises systems and on-premises landscapes."
To make matters worse for SAP, customers were not convinced of the need to migrate to S/4HANA whether on-prem or in the cloud on purely technical grounds. Achieving a business case for an upgrade requires wholesale business change, while the cost is difficult to justify on technical grounds alone.
In the broader context, SAP has vendors like ServiceNow willing to take a piece of its lunch. For example, ServiceNow CEO - and former SAP boss - Bill McDermott has promised customers what they need in terms of so-called digital transformation without changing their core ERP systems.
The tension between keeping investors happy with the pace of its cloud transformation and keeping customers satisfied with a more sophisticated cloud and on-premise approach is proving to be vexing as they flock to the SAP TechEd Jamboree next month and beyond.
