COVID-19 delays the already slow process of taking S/4HANA customers live
For decades, service partnerships have been of utmost importance to SAP (NYSE: SAP). Migrating customers onto S/4HANA is a key part of SAP’s growth strategy, and none of those deployments happen without the involvement of partners. At the end of 2019 SAP reported a total of 13,800 S/4HANA customers; however, most of those customers are not yet running the solution live in production. As SAP has clearly noted, the time lag between when customers sign up for S/4HANA and when they actually deploy it is due to the business processes changes required, rather the technology challenges involved.
Although SAP and its services partners have been working to increase the number of trained resources available to help customers navigate business process changes associated with the upgrade to S/4HANA, the current lack of skilled resources has been a persistent and enduring problem. The COVID-19 outbreak has exacerbated the issue for SAP and partners, as 42% of IT decision makers in a recent TBR survey indicated they would be delaying existing projects due to the virus’s impact. The rollout of S/4HANA is among those existing projects that will be delayed, slowing the shift to live production for the majority of the 13,800 contracted S/4HANA customers.
The COVID-19 outbreak has certainly stressed the networks, the IT support staff at most enterprises, and the employees themselves as they adjust to new work-from-home (WFH) realities. In addition, traditional IT services deployments, such as upgrades to existing SAP instances or a move to SAP Business Suite 4 HANA (S/4HANA), and nontraditional technology-infused consulting engagements, such as design thinking sessions or agile enterprise workshops, have come under new pressures, including requiring creative solutions to carry out engagements that have not been postponed or outright canceled. The new challenges around deployment and execution are accelerating, in TBR’s view, industrywide trends around partnering, forcing consultancies, IT services vendors and technology providers to reconsider the strength of their alliances, address the gaps and shortfalls made evident by the COVID-19 pandemic, and take advantage of the opportunity to serve a broader client base as the global economy recovers.