S/4 Hana projects come off back burner, but skills shortage impedes progress

UK and Ireland SAP User Group members set to ramp up S/4 ERP migration projects, but skills shortage and retirement of SAP managers in user organisations are a concern

The UK and Ireland SAP User Group’s Digital Insights Symposium learned this week that the slowing down of S/4 Hana projects that members have seen during the pandemic year of 2020 is to be followed by a significant ramp-up, for which skills are in perilously short supply.

This is the time of year when the user group’s members gather for their pre-Christmas conference in Birmingham.

To the perennial delight of a handful of IT journalists, the group usually publishes some user group research that confirms whatever bold new innovation SAP has trumpeted at its annual Sapphire conference in Orlando, Florida, but is virtually unknown to its customers.

Neither of these things happened this year. The conference has been broken down into a couple of spaced-out webinars, and the member survey focused on the journey from older forms of SAP’s ERP (enterprise resource planning) system to S/4 Hana – which has been around for about six years now, but is still a promised land to be reached for the vast majority of SAP customers.

But that land now has to be reached by 2027 – until February of this year, it was 2025 – and the heat is getter hotter year by year.

A total of 353 user organisations responded to the 2020 member survey, and 75% said they are either using (16%) or planning (59%) to use S/4 Hana. Some 72% of respondents thought the extended ECC6.0 maintenance deadline gave their organisation enough time to make the move, while 30% said Covid-19 delayed their move to S/4.

Of those users planning to move, 25% said they plan to do so in the next 24 months, 33% in 24-36 months, and 42% in more than 36 months. That leaves 25% who have other plans or no plans.

The user group started the year “expecting to deliver 50 face-to-face events and ended the year having hosted only eight, but we provided over 350 webinars”, said Paul Cooper, chairman of the user group and head of information systems at Burton’s Biscuit Company, in his keynote address at the symposium.

Last year, the user group, alongside other SUGEN [SAP User Group Executive Network] members, called on the new SAP leadership to provide extra time for customers to embark on the S/4 journey,” said Cooper. “I’m pleased to say that last February, SAP announced the extension of maintenance on a number of products, including ERP, until the end of 2027.

“We welcomed this move and in fact our member survey showed over 60% of respondents felt it would be beneficial to their organisation and 70% of members felt it afforded them the time to successfully migrate to S/4.”

Cooper confirmed, however, that Covid-19 had “seen a slowing down of S/4 projects, with over 30% of our users saying they had delayed their projects due to the pandemic”.

And although 60% of its 600 members have started their programmes or are at the planning stages, said Cooper, “we are still seeing cost and change management as the main blockers to initiating projects”.

He added: “We have discussed this with the new managing director at SAP UK & Ireland [Michiel Verhoeven], and we are working together on how we can help you through the initial phase, developing your business case for the project.”

Cooper announced the release of a whitepaper concerning skills in the SAP “ecosystem”. The research in the paper revealed that nearly two-thirds of organisations are concerned about the shortage of SAP skills in the future.

Read more about the UK and Ireland SAP User Group

In fact, the survey, of 180 SAP user organisations in the UK and Ireland, revealed that 79% were concerned about losing their SAP skills. “The main issues driving staff turnover are salary, career development and the ability to access and use new technology,” it said.

The challenges of replacing existing knowledge and expertise as people who have been working with SAP since the late 1990s begin to retire can also not be underestimated – many organisations are looking to replace decades’ worth of experience.”

A talk at the symposium by Vincent Dunlop, managing director of the BluewaveSelect SAP-focused recruitment consultancy, and a skills panel session that featured him, Cooper and Lindsey Rowe, chief of staff and COO, head of people and programmes office at SAP UK and Ireland, explored the scale and scope of the skills crisis.

They suggested some possible solutions to the problem, including retraining existing staff, including non-IT staff, and widening the talent pool in organisations by opening up to remote workers, as well as recruiting apprentices directly from school.

Dunlop reported a complete shift in skills being sought by his company’s clients, from ECC6 to S/4 Hana. He said that from 2018-19, the demand was 59% for ECC and 41% for S/4 Hana. From 2019-20, it is 27% for ECC and 73% for S/4 Hana. And that is in a context where projects, as Cooper said, have been slowed down or paused.

SAP’s Rowe put an emphasis on apprenticeships, and said SAP was too much of a “best-kept secret” for school and university leavers. Once they find out how good the salaries can be in technology and realise that a business-to-business supplier like SAP delivers real outcomes – such as biscuits, in the case of Cooper’s company – they become more interested, she said.

Working with SAP for user organisations is “the right place and time to be”, said Cooper. S/4 projects are long-term commitments, with robotic process automation (RPA) and artificial intelligence (AI) projects coming on top, he added.

“When I’m recruiting, I am not necessarily looking for the finished article,” said Cooper. “You can train in technology knowledge. It’s more about experience, showing you can listen to the users and develop from there.”

And for school leavers seeking apprenticeships, he said, the demonstration of “participation in team sports” or other areas where they have shown proto-business skills in listening and responding, are critical.

He noted, however, that the older generation of SAP managers, battle scarred by implementations from the 1990s onwards, might be too war-weary for an S/4 migration.

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