Research undertaken by the firm (disclosure: Rimini Street asked me for input on the questionnaire construction) among 233 customers from around the world shows that 14% are committed to SAP S/4 HANA. Of the remainder, 33% are reported to say a flat out ‘no.’
Of the 85% who are ‘no/maybe,’ the biggest blocker is ‘No strong business case/unclear ROI’ among 68% of respondents. But ROI is not the only issue. The survey also highlighted ‘unproven/early stage’ and fears around higher migration and re-implementation costs.
These findings are consistent with previous reports and findings from ASUG, DSAG and SAPUG UK&I. Most recently for example, we reported the UK and Ireland user group saying that:
“A new survey among 120 SAP UK and Ireland User Group members shows that while 63% of those surveyed intend to adopt SAP HANA at some stage, current take up is low at 10%. 22% plan to use it in the next three years and 31% say it is on their roadmap but it won’t be implemented in the next three years.''
In conversation with Greg Palesano, EVP, global head of application services, HCL, I asked how he is seeing the evolving market for SAP solutions. He pointed out that while there are ‘handfuls’ of really big projects of the kind S/4 HANA implies, they are ‘like finding needle in a haystack.’
Even where the appetite is there for change, the prospect of associated change management will require a cultural shift among customers for the simpler solution SAP is promising.
Palesano offers an additional perspective:
“In the early 1990’s there were many choices and from which as we know, SAP emerged the winner. We are at some kind of similar tipping point where an upgrade can trigger a wholesale rethinking of the applications landscape. We have to do much more by way of consulting to ensure our customers have the right mix of applications. But let’s not forget, SAP has many fanatical customers and advocates.''
That is in line with what I heard last week at Confluence and if Palesano is right then S4/HANA is as much a risk as it is an opportunity. That in itself raises interesting questions.
Right now, the vast majority of SAP customers are struggling to understand the value of S4/HANA – a topic we have discussed on many occasions and believe CEO Bill McDermott has to address head on in his keynote tomorrow. On the other hand, if S4/HANA is not a breakthrough upgrade then that, combined with a ‘steady state’ approach by customers means that innovation will be a very hard sell into the installed base.
If that reading is correct, then SAP will have to accelerate its marketing on non-ERP solutions. To that extent, some of the hybris related customer experience related products I’ve seen that will be showcased this week are genuinely exciting. But then as one observer noted, having just 14% committing to S4/HANA, a solution that does not exist today as a complete offering, is solid enough for SAP. I’m not so sure.
The winds of change have been swirling around SAP for several years and there is a sense that something is changing. While it is easy pickings to write off the ‘old dog’ the fact is SAP is now seen as a legacy vendor among a significant number of buyers looking for what they consider innovation. On this showing, S4/HANA isn’t it. Yet.
More worrying, while a good few people like the potential around hybris, there is almost no talk of SuccessFactors or Ariba, two of SAP’s biggest recent acquisitions. That doesn’t jibe with SAP’s reported earnings and the acceleration of cloud revenue. That can only mean one thing: despite the good news on the cloud front, SAP is starting to lose its grip on account control as IT departments look to free up ERP related resource for what they need to get done by way of business support beyond internal processes.
In the meantime and of no surprise to anyone reading the report, third party maintenance providers like Rimini Street have everything to gain. Of the 28% of licensees who are not running ECC 6.0…43% say they are on a version that meets their business needs, according to the report. That gives Rimini Street a clear line of sight directly into some 5,400 SAP R/3 ERP customers. If sentiment remains the same for the ‘no’s’ in the overall survey then these vendors have a much larger addressable market.
Disclosure: SAP and Rimini Street are premier partners at time of writing. SAP covered most of my T&E for attending SAPPHIRE Now 2015.