Quantifying the Fog of SAP S/4HANA Uncertainty
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A survey of 181 SAP users reveals a pervasive uncertainty about adopting S/4HANA, with only 17% planning to do so in the next two years. Many users express dissatisfaction with SAP's provided support, leading to increased interest in third-party support alternatives. The unclear value proposition and roadmap for S/4HANA are significant factors hindering adoption and driving users to consider more flexible and cost-effective support solutions.
Quantifying the Fog of SAP S/4HANA Uncertainty
- 1. May 4, 2015 SAP User Survey Quantifying S/4HANA TheFOG Uncertainty of © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential
- 2. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential PROPRIETARY COPYRIGHT All Spinnaker Support, LLC (Spinnaker) materials are prepared for the sole and exclusive use of the party or organization to which it is addressed. Spinnaker Support considers its materials to be proprietary and confidential. As such, materials may not be made available to any party other than the addressee or persons within the addressee’s organizations who are designated to evaluate or consider the materials. Spinnaker Support materials may be made available to other parties only with the written permission of the issuing Spinnaker Support office. © 2015 Spinnaker Support, LLC – all rights reserved. Other than for the purposes of evaluating this proposal, no part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval system, except as may be permitted in writing by Spinnaker Support.
- 3. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Survey Summary S/4HANA promises speed and simplicity to be delivered on-premises or via the cloud. Delivering the promise is far from reality. So, the majority of SAP users find themselves in a “fog of uncertainty” about if, when, and how to capitalize on the promise of S/4HANA. The majority of SAP users are at least somewhat familiar with S/4HANA yet our research indicates that just 17% of this community currently intends to adopt S/4HANA applications. Spinnaker Support is in the business of providing world-class SAP software support and there is a strong link between upgrades, migrations, and support. Besides questions related to S/4HANA, respondents were asked to assess what they like and dislike about their SAP-provided support. A growing number of SAP clients are investigating and subsequently adopting third-party support solutions - as means to navigate through the S/4HANA“fog of uncertainty”and to gain superior support for a fraction of the cost. Key TakeawaysIntroduction 1 2 3 4 5 6 7 8 One hundred eighty-one (181) respondents completed the survey. These IT, finance, and procurement professionals span 23 countries and work in virtually all industry sectors. 82% of respondents run ECC6 but only 36% on ECC6 have upgraded to enhancement pack 7 (EHP7). The business case to move has not been presented. Is the EHP7 adoption rate a leading indicator of things to come regarding S/4HANA adoption? 74% of respondents are at least vaguely familiar with S/4HANA. Most are either undecided about their adoption of S/4HANA or have no current intentions to migrate to S/4HANA. Just 17% of respondents plan to adopt S/4HANA within the next two years. 36% estimate migration in 6+ years. Respondents cite slowing responsiveness, decreasing value, and forced march to self-support as growing challenges with SAP-provided software support. Just 34% indicated they were happy with SAP-provided support. Many respondents feel that moving away from SAP-provided support precludes them from upgrading in the future, will result in excessive back charges to re-engage with SAP, and impedes their ability to purchase additional software licenses. These misnomers need to be more thoroughly vetted. Believing them can cost organizations dearly in terms of money and level of support. The vague roadmap and value proposition for S/4HANA, combined with growing challenges realized from SAP-provided software support, are driving more investigation and adoption of third-party support alternatives. The SAP user community is increasingly realizing that third-party software support vendors like Spinnaker Support can help them navigate through the fog of S/4HANA uncertainty.Disclaimer: The takeaways and descriptive text found within this survey report are strictly based on survey responses.
- 4. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Respondent demographics Other Procurement Information Technology Finance 11% 67%15% 7% APAC Americas EMEA 67% 24% 9% 15% 29%18% 24% Process Mfg Discrete Mfg Consumer Public Services 14% respondentstotal181
- 5. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential What core SAP product & enhancement pack (EHP) do you now use ? EHP7 36% EHP6 27% EHP5 or earlier 25% Unknown 12% ECC6 8% 6% 3% 1% HANA R/3 4.7 R/3 4.6 or earlier ECC5 82% It is not surprising that 82% of respondents currently use ECC6. SAP expends a lot of marketing effort to implore its customer base to upgrade to current versions, i.e., ECC6. Those on earlier versions are paying for “extended support” or “customer-specific support” - which reduce support level, drive higher self-service requirement, and cost as much or more than full SAP software support. The majority of organizations that run SAP have yet to migrate to the current enhancement pack EHP7. Historically, bleeding edge and IT-driven organizations have upgraded to the latest and greatest version very promptly. Most others prefer to wait until the kinks are worked out and then upgrade to a more stable and mature version.
- 6. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Do you plan to upgrade If you don’t why not to enhancement pack 7? 60% 40% 20% 0% Satisfied with existing version Can’t afford or justify upgrade Other Insufficient new functionality and value 24%42% 34% Yes Undecided No Enhancement packs (EHP) were introduced as a way to simplify how SAP clients deploy and manage new software functionality. Interestingly, less than 40% of ECC6 users have chosen to upgrade to EHP7. For many users, even after more than six years since EHP7 roll-out, the business case to become current has either not been made or organizations have not found the capital to fund desired upgrade.
- 7. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential are you andHow familiar are you with S/4HANA planning to use S/4HANA applications Not Familiar 26%Vaguely Familiar 67% Very Familiar 7% Undecided 52% No plans to use 24% Planning to use 17% Already using HANA 7% 93% of respondents are not very familiar with S/4HANA. Not surprising. SAP has revealed bits and pieces of information; a vague roadmap and value proposition that is far from reality. Clearly, much is left to be done. As of this report, over three-quarters of respondents are either undecided about their adoption of S/4HANA or have no intentions to migrate to S/4HANA.
- 8. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential to adopting not yet committed Why have you S/4HANA applications Respondents allowed to choose more than one answer Other Not ready for my industry Not sure about customizations Unsure of license and support costs Too early to commit Much interest, skepticism, uncertainty, and hype surrounds S/4HANA. It promises speed and simplicity. But it is just too early for S/4HANA to merit serious consideration by the majority of potential adopters. In time, roadmaps will be firmed, but not yet. An earlier survey question asked users if they had intentions to upgrade to EHP7. 58% of respondents answered a firm no or are still undecided after almost a decade. S/4HANA seems a much bigger deal. Reportedly, SAP is rewriting hundreds of millions of lines of code. Deployment options for on-premises, public cloud, or fully managed cloud offer options for users but questions about costs, customizations, and industry specificity must be addressed. And, perhaps most importantly, SAP S/4HANA must be good for the business and not simply an IT-driven nice-to-have. 24% 27% 32% 51% 54%
- 9. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential It’s not hard to understand why over 80% of respondents see a 3+ year time horizon for migration to S/4HANA. Applying logic by merging answers to multiple questions, only 3% of total survey respondents estimate migration to S/4HANA within the next two years. The real questions; when will the actual client adoption rate return a positive ROI for SAP? What percentage of support-paying clients are happy to fund S/4HANA? Why should clients pay twice as much as they have to in order to receive the support they deserve? what is your to migrate to S/4HANA, If you are planning estimated timeframe 17% 47% 36% 1-2 years 3-5 years 6+ years
- 10. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Spinnaker Support’s business is providing world-class software support for a fraction of what SAP (and Oracle) users have historically paid to their software providers. So, of course we’re going to ask about user satisfaction and intentions regarding ongoing support. However, there is a very strong link between upgrade, migration, and ongoing support. Like it or not, SAP places timeframes and deadlines on cost and level of support for each version they roll out. They are motivated to motivate clients to stay as current as possible. It’s a smart and necessary business decision. But, that doesn’t mean that they should control client decisions. There are proven alternatives that allow user organizations to maintain control. This survey clearly shows that users are encountering issues with SAP support; especially as their versions age. Responsiveness and value never stop being important and clients aren’t thrilled with self-support tools as a replacement for support provided by skilled humans. any of the following encounteredHave you challenges with software support from SAP Respondents allowed to choose more than one answer 59% 58% 51% 35% 27%Missing skillsets Customizations not supported Push to self-support model Less service, higher price Slowing responsiveness
- 11. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential The responses to this survey question are quite revealing. This topic is arguably one of the most important to accurately interpret. Over half of respondents believe that SAP software upgrades are dependent on continuous payment for SAP-provided support. The question asked was strategically worded to include “in future,” and is subject to interpretation by respondents. This misnomer is widely believed throughout the SAP user community as factual and SAP doesn’t appear eager to dispel it. User organizations have indeed left SAP-provided support and re-engaged to successfully upgrade. The second most popular answer regards back fee payment as a right to re-engage with SAP. Users avoid these back-fees by negotiating good up-front contracts and/or negotiating with software sales personnel instead of with services sales personnel. It’s business and your money will be gladly accepted. Interestingly, less than 40% of survey respondents claimed happiness with the level of service being received from SAP. Only a quarter of survey takers are aware that viable support alternatives exist. As awareness increases and myths are debunked, the adoption rate of third-party support will continue to accelerate. challenges, Despite from SAP software support Respondents allowed to choose more than one answer why have you remained on 0% 20% 40% 60% Regulatoryandsecurityupdates AbilitytopurchasemoreSAPproducts Justrenewedsupportagreement Wasn'tawareofalternatives Other Happywithservicelevel BackfeechargesifIleave Abilitytoupgradeinfuture
- 12. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Almost 40% of survey respondents see the vague S/4HANA roadmap and value proposition as a prompter to look at alternative means of SAP software support. Third-party support is not appropriate for every organization. At its best, this service delivers comprehensive support for substantial cost reduction. For some, it is a great way to preserve the right to negotiate the right level of service at the right price. a toreason or adopt Is uncertainty with S/4HANA third-party SAP software investigate support for your organization No 61% Yes 14% Partially 25%
- 13. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Over 70% of respondents indicate, pending what they learn about S/4HANA, that third-party support alternatives merit deep investigation. As a software version ages, as customization increases, and as support levels degrade - third-party support will become increasingly viable. A break from SAP-provided support - onto third-party support - would generate cost savings to fund the new licenses and expanded footprint brought about by S/4HANA. When might uncertainty with S/4HANA trigger of third-party SAP support serious consideration alternatives for your organization 20152017 or beyond Never 2016 11%53% 27% 9%
- 14. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential The word is getting out. Increasingly more organizations are displacing SAP-provided software support with third-party support. Analyst firms, like Gartner, are pushing out more and more information validating the advantages of third-party alternatives. Myths are getting debunked. SAP users can restore great support, pay a lot less, obtain tax and regulatory updates (including payroll), and purchase new SAP licenses - all while under a third-party support contract. Their ability to re-engage with SAP support in the future is never hindered. Has your organization third-party considered services SAP support No 58% 42% Yes
- 15. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential What would cause toyou consider Third-Party Support Respondents allowed to choose more than one answer Other Migrating to new application Financially stressed Content, stable, not upgrading Uncertainty related to S/4HANA Superior service Higher value proposition 76% 61% 39% 39% 24% 11% 9%
- 16. © 2015 Spinnaker Support, LLC – all rights reserved Private, Proprietary, & Confidential Spinnaker Support navigate through the helps you of S/4HANA FOG Uncertainty About Spinnaker Support Spinnaker Support has steadily emerged as the leading global provider of third-party support and managed services for SAP and Oracle enterprise software and database applications. According to our more than 400 clients, spanning over 70 countries, we consistently deliver them a higher caliber of service for a fraction of what they’ve previously paid. We help keep their SAP and Oracle solutions more available, adaptable through constant change, and decidedly more valuable from the instant ROI we provide. Spinnaker Support headquarters are in Denver, Colorado with regional operations centers located in London, Singapore, and Mumbai. We support SAP, Oracle E-Business Suite, JD Edwards, Siebel, and Oracle Database.