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The Australian government’s finance department has earmarked SAP S/4 Hana as its government-wide enterprise resource planning (ERP) system that will provide core transactional services to government departments across the country.
The move is part of the government’s shared services programme that aims to consolidate, standardise and automate the delivery of a range of corporate and financial services.
The first tranche of the programme will prototype a foundation ERP platform for trialling across internal service providers grouped into provider hubs that already operate an SAP-based ERP system.
Besides using S/4 Hana as its core technology system, the government is also looking to roll out a range of complementary cloud-based products sourced from the open market, to test the delivery of common human resource and financial services.
The department of finance, which is conducting an industry briefing to prepare and educate the market on its plans later this month, had put out a job ad in December 2019 to hire SAP finance and procurement analysts and developers for its shared services initiative.
A report by SAP specialist Resulting IT found that the lack of skills could hamper the progress of organisations that are migrating from ECC to S/4 Hana.
This skills gap, among other findings based on a survey of more than 400 SAP experts, is expected to drive up the cost of external consulting fees and pose talent retention issues for those with in-house SAP expertise.
Earlier this month, SAP said it would extend mainstream maintenance for core applications of SAP Business Suite 7, including SAP ERP 6.0, by two more years until the end of 2027, followed by optional extended maintenance until the end of 2030. The German software giant also pledged to provide maintenance for SAP S/4 Hana until 2040.
Eric Robinson, global vice-president and general manager for SAP services at Rimini Street, a third-party supplier of support services for Oracle and SAP software, said SAP’s latest move is “further acknowledgement that SAP is feeling the pressure from Business Suite 7 licensees’ reluctance to embark on huge reimplementations to S/4 Hana”.
He added: “The Business Suite 7 software has a lot of years of life and value remaining and many SAP customers will be far better off maximising the value of their current robust SAP systems with alternatives like third-party support, which can offer support through at least 2035, enabling them to shift funds to innovation initiatives that will drive competitive advantage and growth more quickly and at far lower risk.”
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In Asia-Pacific, some SAP customers had asked for flexibility with the earlier 2025 deadline, said Scott Russell, SAP president for Asia-Pacific and Japan, but added that many are convinced of the need to migrate to S/4 Hana.
“This isn’t a new story or journey for SAP,” said Russell during a media and analyst conference in Bangkok last year. “When you think about all the different applications that we run and the thousands of products we offer, most companies have a very clear understanding that innovation is essential.”
A 2019 survey of 300 SAP customers conducted by IDC showed that 73% of businesses were planning to deploy S/4 Hana and 18% were currently deploying the next-generation business applications suite.
In the SAP-sponsored study, 9% said they already had S/4 Hana in production, and when asked about the planned timeline for their transition to the software, 54% of SAP customers said they would switch within three years.