Quantifying the Fog of SAP S/4HANA Uncertainty

May 4, 2015SAP User Survey

Quantifying

S/4HANATheFOG

Uncertaintyof

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Survey Summary

S/4HANA promises speed and simplicity to be delivered on-premises or via the cloud. Delivering the promise is far from reality. So, the majority of SAP users find themselves in a “fog of uncertainty” about if, when, and how to capitalize on the promise of S/4HANA.

The majority of SAP users are at least somewhat familiar with S/4HANA yet our research indicates that just 17% of this community currently intends to adopt S/4HANA applications.

Spinnaker Support is in the business of providing world-class SAP software support and there is a strong link between upgrades, migrations, and support. Besides questions related to S/4HANA, respondents were asked to assess what they like and dislike about their SAP-provided support. A growing number of SAP clients are investigating and subsequently adopting third-party support solutions - as means to navigate through the S/4HANA “fog of uncertainty” and to gain superior support for a fraction of the cost.

Key TakeawaysIntroduction1

2

3

45

6

7

8

One hundred eighty-one (181) respondents completed the survey. These IT, finance, and procurement professionals span 23 countries and work in virtually all industry sectors.82% of respondents run ECC6 but only 36% on ECC6 have upgraded to enhancement pack 7 (EHP7). The business case to move has not been presented. Is the EHP7 adoption rate a leading indicator of things to come regarding S/4HANA adoption?74% of respondents are at least vaguely familiar with S/4HANA. Most are either undecided about their adoption of S/4HANA or have no current intentions to migrate to S/4HANA.Just 17% of respondents plan to adopt S/4HANA within the next two years. 36% estimate migration in 6+ years.Respondents cite slowing responsiveness, decreasing value, and forced march to self-support as growing challenges with SAP-provided software support. Just 34% indicated they were happy with SAP-provided support.Many respondents feel that moving away from SAP-provided support precludes them from upgrading in the future, will result in excessive back charges to re-engage with SAP, and impedes their ability to purchase additional software licenses. These misnomers need to be more thoroughly vetted. Believing them can cost organizations dearly in terms of money and level of support.The vague roadmap and value proposition for S/4HANA, combined with growing challenges realized from SAP-provided software support, are driving more investigation and adoption of third-party support alternatives.The SAP user community is increasingly realizing that third-party software support vendors like Spinnaker Support can help them navigate through the fog of S/4HANA uncertainty.Disclaimer: The takeaways and descriptive text found within this survey

report are strictly based on survey responses.


Respondent demographics

Other

Procurement

Information Technology

Finance11%

67%15%

7%

APAC

Americas

EMEA67%

24%9%15%

29%18%

24%Process Mfg

Discrete Mfg

Consumer

PublicServices

14%

respondentstotal181


WhatcoreSAP product

& enhancement pack (EHP) do you now use?

EHP736%

EHP6

27%

EHP5 or earlier

25%

Unknown

12%

ECC68% 6% 3% 1%

HANA R/3 4.7 R/3 4.6 or earlier

ECC5

82%It is not surprising that 82% of respondents currently use ECC6. SAP expends a lot of marketing effort to implore its customer base to upgrade to current versions, i.e., ECC6. Those on earlier versions are paying for “extended support” or “customer-specific support” - which reduce support level, drive higher self-service requirement, and cost as much or more than full SAP software support.

The majority of organizations that run SAP have yet to migrate to the current enhancement pack EHP7. Historically, bleeding edge and IT-driven organizations have upgraded to the latest and greatest version very promptly. Most others prefer to wait until the kinks are worked out and then upgrade to a more stable and mature version.


Do youplan to upgrade

If you don’twhy not

to enhancement pack 7?

60%40%20%0%

Satisfied with existing

version

Can’t afford or justify upgrade

Other Insufficient newfunctionality and

value

24%42% 34%

Yes Undecided No

Enhancement packs (EHP) were introduced as a way to simplify how SAP clients deploy and manage new software functionality. Interestingly, less than 40% of ECC6 users have chosen to upgrade to EHP7. For many users, even after more than six years since EHP7 roll-out, the business case to become current has either not been made or organizations have not found the capital to fund desired upgrade.


are youandHow familiar are you with S/4HANA

planning to use S/4HANAapplications

Not Familiar

26%Vaguely Familiar

67%

Very Familiar

7%Undecided

52%

No plansto use

24%

Planning to use

17%

Already using HANA

7%

93% of respondents are not very familiar with S/4HANA. Not surprising. SAP has revealed bits and pieces of information; a vague roadmap and value proposition that is far from reality. Clearly, much is left to be done.

As of this report, over three-quarters of respondents are either undecided about their adoption of S/4HANA or have no intentions to migrate to S/4HANA.


to adopting not yet committed

Why have you

S/4HANA applications

Respondents allowed to choose more than one answer

Other

Not ready for my industry

Not sure about customizations

Unsure of license and support costs

Too early to commit

Much interest, skepticism, uncertainty, and hype surrounds S/4HANA. It promises speed and simplicity. But it is just too early for S/4HANA to merit serious consideration by the majority of potential adopters. In time, roadmaps will be firmed, but not yet.An earlier survey question asked users if they had intentions to upgrade to EHP7. 58% of respondents answered a firm no or are still undecided after almost a decade. S/4HANA seems a much bigger deal. Reportedly, SAP is rewriting hundreds of millions of lines of code. Deployment options for on-premises, public cloud, or fully managed cloud offer options for users but questions about costs, customizations, and industry specificity must be addressed. And, perhaps most importantly, SAP S/4HANA must be good for the business and not simply an IT-driven nice-to-have.

24%

27%

32%

51%

54%


It’s not hard to understand why over 80% of respondents see a 3+ year time horizon for migration to S/4HANA. Applying logic by merging answers to multiple questions, only 3% of total survey respondents estimate migration to S/4HANA within the next two years. The real questions; when will the actual client adoption rate return a positive ROI for SAP? What percentage of support-paying clients are happy to fund S/4HANA? Why should clients pay twice as much as they have to in order to receive the support they deserve?

what is your to migrate to S/4HANA,

If you are planning

estimatedtimeframe

17% 47% 36%

1-2 years

3-5 years

6+ years


Spinnaker Support’s business is providing world-class software support for a fraction of what SAP (and Oracle) users have historically paid to their software providers. So, of course we’re going to ask about user satisfaction and intentions regarding ongoing support. However, there is a very strong link between upgrade, migration, and ongoing support. Like it or not, SAP places timeframes and deadlines on cost and level of support for each version they roll out. They are motivated to motivate clients to stay as current as possible. It’s a smart and necessary business decision. But, that doesn’t mean that they should control client decisions. There are proven alternatives that allow user organizations to maintain control.This survey clearly shows that users are encountering issues with SAP support; especially as their versions age. Responsiveness and value never stop being important and clients aren’t thrilled with self-support tools as a replacement for support provided by skilled humans.

any of the following encounteredHave you

challenges withsoftware support from SAP


59%58%51%35%27%Missing skillsets

Customizations not supported

Push to self-support model

Less service, higher price

Slowing responsiveness


The responses to this survey question are quite revealing. This topic is arguably one of the most important to accurately interpret.Over half of respondents believe that SAP software upgrades are dependent on continuous payment for SAP-provided support. The question asked was strategically worded to include “in future,” and is subject to interpretation by respondents. This misnomer is widely believed throughout the SAP user community as factual and SAP doesn’t appear eager to dispel it. User organizations have indeed left SAP-provided support and re-engaged to successfully upgrade.The second most popular answer regards back fee payment as a right to re-engage with SAP. Users avoid these back-fees by negotiating good up-front contracts and/or negotiating with software sales personnel instead of with services sales personnel. It’s business and your money will be gladly accepted.Interestingly, less than 40% of survey respondents claimed happiness with the level of service being received from SAP. Only a quarter of survey takers are aware that viable support alternatives exist. As awareness increases and myths are debunked, the adoption rate of third-party support will continue to accelerate.

challenges,Despite

from SAPsoftware support


why have youremained on

0% 20% 40% 60%

Regulatory and security updatesAbility to purchase more SAP products

Just renewed support agreementWasn't aware of alternatives

OtherHappy with service level

Back fee charges if I leaveAbility to upgrade in future


Almost 40% of survey respondents see the vague S/4HANA roadmap and value proposition as a prompter to look at alternative means of SAP software support.Third-party support is not appropriate for every organization. At its best, this service delivers comprehensive support for substantial cost reduction. For some, it is a great way to preserve the right to negotiate the right level of service at the right price.

a toreasonor adopt

Is uncertaintywith S/4HANA

third-partySAP software

investigate

supportfor your organization

No61%

Yes14%

Partially25%


Over 70% of respondents indicate, pending what they learn about S/4HANA, that third-party support alternatives merit deep investigation. As a software version ages, as customization increases, and as support levels degrade - third-party support will become increasingly viable. A break from SAP-provided support - onto third-party support - would generate cost savings to fund the new licenses and expanded footprint brought about by S/4HANA.

When mightuncertainty with S/4HANA

trigger of third-party SAP

support

serious consideration alternatives

for your organization

20152017 orbeyond

Never 2016

11%53% 27% 9%


The word is getting out. Increasingly more organizations are displacing SAP-provided software support with third-party support. Analyst firms, like Gartner, are pushing out more and more information validating the advantages of third-party alternatives. Myths are getting debunked. SAP users can restore great support, pay a lot less, obtain tax and regulatory updates (including payroll), and purchase new SAP licenses - all while under a third-party support contract. Their ability to re-engage with SAP support in the future is never hindered.

Has yourorganization

third-party considered

servicesSAP support

No58%

42%Yes


What wouldcause toyou consider

Third-Party Support


Other

Migrating to new application

Financially stressed

Content, stable, not upgrading

Uncertainty related to S/4HANA

Superior service

Higher value proposition76%

61%39%39%

24%11%

9%


Spinnaker Supportnavigate

throughthe

helps you

of S/4HANAFOG

Uncertainty

About Spinnaker SupportSpinnaker Support has steadily emerged as the leading global provider of third-party support and managed services for SAP and Oracle enterprise software and database applications. According to our more than 400 clients, spanning over 70 countries, we consistently deliver them a higher caliber of service for a fraction of what they’ve previously paid. We help keep their SAP and Oracle solutions more available, adaptable through constant change, and decidedly more valuable from the instant ROI we provide.Spinnaker Support headquarters are in Denver, Colorado with regional operations centers located in London, Singapore, and Mumbai. We support SAP, Oracle E-Business Suite, JD Edwards, Siebel, and Oracle Database.

Quantifying the Fog of SAP S/4HANA Uncertainty

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