Many SAP users are still skeptical about S/4Hana and cloud ERP

There's little enthusiasm for the cloud, a recent survey found

SAP placed a big bet on S/4Hana when it launched the new enterprise suite earlier this year, but users aren't so sure it's the technology they're looking for.

That's one conclusion from the results of a new survey released Tuesday by DSAG, the German-speaking SAP User Group. The results of the study were presented this week at the 16th DSAG annual meeting in Bremen.

Just 6 percent of the 357 German, Austrian and Swiss user companies surveyed have already started a project using the new technology, DSAG found, while 4 percent have acquired licenses.

At the other end of the spectrum, some 37 percent of survey respondents said they feel S/4Hana does not provide added value. Eleven percent have not yet examined the software, while roughly 42 percent are still gathering information about it.

Information, however, is apparently a bit of a sticking point, as many feel SAP does not provide enough about the technology's functionality or about business benefits, the license model and conditions under which companies can migrate to S/4Hana.

The classic SAP Business Suite was broadly embraced by participants in the survey as a strategic ERP backbone, but enterprise resource planning in the cloud didn't fare nearly so well, garnering support from a proportion only within the lower single digits, DSAG said.

SAP customers are generally a conservative group, noted Frank Scavo, president of Computer Economics, which specializes in metrics for IT management.

"Although there are certainly innovators among them, most are not early adopters," Scavo explained. "They tend to move slowly and cautiously, waiting until new technologies are proven before adopting them."

ERP users in general tend to hold an "if it ain't broke, don't fix it" attitude, he added. "It is difficult to build a business case for a major upgrade when the current system is in place and operating adequately."

The cloud is a perfect example.

"Cloud migrations take place more often when companies are migrating to a new system, not upgrading an existing system," Scavo said. "Security and privacy concerns aside, it is simply an easier option for them to continue to do what they are doing in terms of deployment."

The real opportunity for cloud deployment of S/4Hana, then, is likely in brand-new deals, where customers do not already have large investments in infrastructure and staff to support an SAP instance on-premises, Scavo said.

Though it has undergone significant adoption in midsize companies, cloud ERP software is still at a very early stage in larger enterprises, said Paul Hamerman, a vice president with Forrester Research.

Still, given how new S/4Hana is, "the current level of adoption is at least encouraging," Hamerman said. "Many businesses will wait for customer success proof points at scale before undertaking significant S/4 projects."

Complicating the issue is the fact that the majority of the current users of SAP Business Suite are not on the latest versions, Hamerman noted, making migration to S/4Hana more difficult.

"SAP has more work to do to clarify Suite to S/4 migration scenarios and make it easier to move down that road map," he said.

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Katherine Noyes

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