German enterprises are embracing S/4HANA but still cautious about SaaS-based, public cloud implementations, ISG Provider Lens report says
German enterprises are increasingly willing to move to SAP S/4HANA but have been slow to adopt it in the form of software-as-a-service (SaaS), according to a new research report published by Information Services Group, a leading global technology research and advisory firm.
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“However, many are planning their S/4HANA migration and beginning to engage with providers.”
The 2022 ISG Provider Lens SAP Ecosystem report for Germany finds enterprises around the world have been hesitant to migrate from their traditional SAP ERP core to S/4HANA in production systems, despite SAP making this transition a high priority as it prepares to end support for previous products at the end of 2027. However, organizations in Germany have an even greater reluctance to deploy S/4HANA on public clouds instead of private clouds or on-premises infrastructure, the report says.
“German companies are conservative about making the full transition to SaaS-based S/4HANA,” said Anna Medkouri, partner at ISG. “However, many are planning their S/4HANA migration and beginning to engage with providers.”
Last year, SAP launched the RISE with SAP initiative to ease customers’ transitions to cloud-based S/4HANA by offering a bundle of licenses and services. While RISE has developed a following among midsize customers with relatively simple SAP environments, many larger enterprises with longstanding licensing agreements have been reluctant to use it, ISG says.
The report examines a series of questions enterprises face as they consider the transition to cloud-based S/4HANA. These include whether to start by migrating their applications to the cloud or by implementing S/4HANA, or whether to do both at the same time. A shortage of professionals with the skills to carry out such projects further complicates these questions for both providers and clients, ISG says.
SAP also offers the option of replacing ERP systems with a standard process-oriented implementation using SAP Business Technology Platform (BTP). This allows for the integration of SAP and non-SAP applications in a unified platform and supports a digital-first approach that can include new technologies such as AI, machine learning and blockchain. Most German enterprises have been cautious about taking such approaches to full implementation, the report says.
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“German enterprises are under pressure to remain relevant and agile,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Service providers can help them integrate the necessary technologies.”
The report also includes insights on other SAP trends in the German market, including the needs driving adoption of SAP managed application services and the importance for midmarket clients of providers having strong onshore and nearshore resources.
The 2022 ISG Provider Lens™ SAP Ecosystem report for Germany evaluates the capabilities of 46 providers across five quadrants: SAP S/4HANA System Transformation — Large Accounts, SAP S/4HANA System Transformation — Midmarket, Managed Application Services for SAP ERP, Managed Platform and Cloud Services for SAP ERP, and SAP Business Technology Platform Services.
The report names Accenture, All For One Group, Atos, Capgemini and T-Systems as Leaders in four quadrants each. It names Infosys and Wipro as Leaders in three quadrants each and Cognizant, NTT DATA and TCS as Leaders in two quadrants each. Arvato, Camelot ITLab, CANCOM, DATAGROUP, Devoteam, Fujitsu, Innovabee and Syntax are named as Leaders in one quadrant each.
In addition, HCL is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. Wipro is named as a Rising Star in one quadrant.
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