Quarter of UKISUG members plan S/4 Hana migration by 2022
Research by UK and Ireland SAP User Group and analyst firm shows SAP customer base still moving slowly to S/4 Hana
Research by the UK and Ireland SAP User Group, most of whose 600 members are mid-tier, medium to large companies, and analyst firm Constellation Research has painted a picture of a SAP customer base that is still moving slowly and tentatively to the supplier’s flagship S/4 Hana enterprise resource planning (ERP) system.
Paul Cooper, chairman of the user group and head of information systems at Burton’s Biscuit Company, confirmed in a group webinar and subsequent press briefings that 25% of members plan to move to S/4 Hana over the next one to two years. One-third plan to make the move over a three-year period, and the remaining 42% have no current plans to move.
The full results of the user group’s annual member survey will be revealed in December, said Cooper. Last year, the survey, disclosed at the group’s annual conference in Birmingham, showed that 9% of members saw SAP as diminishing in significance as a business partner. And although 70% were using, or planning to use, SAP’s latest-generation ERP, S/4 Hana, only 10% were actually using it. However, those active user organisations rated the S/4 migration process either good (44%) or excellent (10%).
In February 2020, SAP announced a stay of execution for its older ERP system, ECC6, from 2025 until 2027.
Cooper said the user group’s members welcomed the extension, and that 60% were “positive about the extra time”.
This year, the group commissioned a report from Constellation Research on the intentions of SAP customers to move to S/4, in the light of the extension. Ray Wang, principal analyst, founder and chairman at Constellation, told the user group webinar that SAP customers that were undertaking S/4 migration projects were likely to be wrapping them up in an overall digital transformation programme.
He also said it was typically a 20-month or so project, and that users should think of it as a “re-implementation”, not an upgrade. But he added that many customers are simply “waiting it out” to see how S/4 matures.
The Constellation Research report is exclusive to user group members and has not yet been made available to the press.
In an interview with Computer Weekly, Cooper and Wang said many SAP-related projects had been frozen in 2020 because of the Covid-19 pandemic, so it was hard to judge the pace of S/4 Hana adoption, in particular.
“I don’t think it’s as fast as SAP would have liked it,” said Cooper. “And we’ve seen that in some of the feedback they’ve given us when we’ve produced our figures. It has improved again this year, but I think it’s really hard to baseline this year [because of Covid].
Read more about the UK & Ireland SAP User Group
- UKISUG 2019: Qualtrics unknown to 43% of SAP customers.
- UKISUG 2018: Upswing for S/4 Hana, C/4 Hana unknown to 39%.
- UKISUG 2017: only 2% of British and Irish SAP users plan to use Leonardo.
- UKISUG 2016: 5% of SAP customers are using S/4 Hana.
- UKISUG 2015: Minority of users see SAP as digital protagonist.
“I put SAP into a factory we acquired last year. I’ve never run an SAP project before where I couldn’t put boots on the ground until the cutover week and weekend. It would have been extremely challenging trying to do something as big as an S/4 project this year, with people wanting to be at home. There are many organisations whose head offices have just not reopened yet.
“It’s going to be hard this year to be able to say it’s not gone well for SAP or has gone really well because it’s not a baseline year. All bets are off. I suspect a number of projects got put into hiatus.”
Wang added: “This year has pretty much been lost to these types of activities.”
He said that Constellation’s engagement with the user group’s members in producing the whitepaper found that 15-20% are “super-committed to SAP” and to the S/4 move. “But the second scenario, which is more than half of customers, is the attitude of ‘well, we’ve got to 2027 – let’s talk about it when it gets closer’ – the usual procrastination crowd,” he added.
“And you know, most people will probably start in 2025. And there are a lot of reasons why customers are saying that. They want to learn from their fellow peers, what are the best practices, and so on.”
SAP’s latest financial results showed that S/4 Hana attracted 500 customers globally in the third quarter of 2020, up to 15,100. SAP said this represented a 20% year-on-year increase. The increase was in line with the run rate of 500 new customers disclosed in the company’s second-quarter 2020 results.