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COVID-19 outbreak allows SAP and SIs to work on their relationships

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.

SAP Digital Business Services enables customers to create their own intelligent enterprise

After SAPPHIRE NOW in June, a burning question remained: How does SAP’s professional services organization fit into the company’s new intelligent enterprise vision? SAP’s Digital Business Services (DBS) Analyst Day provided the answer: DBS is the enabler to the intelligent enterprise, which is a system of SAP and non-SAP applications, underpinned by a digital platform and made intelligent by the SAP Leonardo technologies.

As the enabler, DBS will have several responsibilities including helping to create business cases, and road map, architect and implement the customers’ version of the intelligent enterprise. SAP certainly has the technical expertise in-house to architect and implement the intelligent enterprise and has reskilled and hired over the last few years to bolster its advisory capabilities, particularly as it relates to emerging technologies such as artificial intelligence. Critically, SAP’s partners have ample opportunity around the necessary change management responsibilities that are undoubtedly needed to ensure successful business process transformations.

Repeatedly during the two-day event SAP leaders emphasized that DBS helps the company accelerate clients’ time to value and reduces risk for all involved — the client, SAP, and any consultancy or SI partners. By being close to software-related services, not necessarily project-related, such as change management, SAP DBS plays to its core strengths and competencies and brings the value clients expect. More broadly, DBS assures clients that a large partner-led engagement meets SAP standards, often through a separate SAP Value Assurance contract between SAP and the client apart from the partner or project arrangements. This clear vision of what DBS does well, why, and how built on last year’s DBS Analyst Day, particularly when reinforced consistently by the DBS leadership team.

SAP shows customers the intelligent enterprise, and S/4HANA is surprisingly not at the center

SAP (NYSE: SAP) has always put ERP at the center of its portfolio diagrams, coining it the “digital core” upon the launch of SAP Business Suite for SAP HANA (S/4HANA) in 2014. All other applications orbited around S/4HANA, seemingly less important. However, the modern enterprise is increasingly being driven by the customer. For companies that buy into this way of doing business, putting internal-facing business processes ahead of customer engagement seems counterintuitive.