sap s/4hana and the opportunity for it€¦ · 06/01/2020 · sap s4ana and the pportunity for it...

SAP S/4HANA and the Opportunity for IT

An IDC InfoBrief, sponsored by SAP | January 2020

US45671219BROI

An IDC InfoBrief, sponsored by SAP I 2US45671219BROI


In This InfoBrief

Findings for this InfoBrief are based on an IDC-conducted survey of 300 SAP clients in April 2019, and

discussions with SAP S/4HANA and SAP S/4HANA Cloud customers from January through May 2019.

The 300 participants in the IDC survey were IT and line-of-business (LOB) executives from the C-level to

the manager level. The participants spanned 10 countries covering three regions, from organizations with

1,000–25,000 employees across a multitude of industries, and either were planning to deploy (73%), have in

production (9%), or currently deploy (18%) SAP S/4HANA.

The 30 participants in the IDC interviews spanned manufacturing, consumer products, services, automotive,

and retail, including CIOs, CTOs, and LOB leaders.



IT Is Leading the Way to the Intelligent Enterprise with SAP S/4HANA

Lower costs mean more competitive and profitable: “We are better positioned to deal with the increased competition with SAP S/4HANA. In particular, we’ve reduced operational costs by an estimated 20–25%, so we are more profitable.” —Manufacturing company

Improve profitability: “We are more profitable as operations have improved 20–25% with SAP S/4HANA.” —Automotive company

Top 6 Business Cases for Moving to SAP S/4HANA

IT cost reduction 67.4%

58.9%

57.9%

52.6%

44.2%

29.5%

0%IT (N=95) 50% 100%

Digital transformation initiatives,including digital core

Speed, scale, and agility

Innovation

Line-of-business process improvements

Old systems are/were too costly tomaintain or update



The Modernization of Enterprise Applications

“Our partnership with SAP is very important to us. We wanted less complexity, more speed, lean operations, and the ability to become a true digital company.” —Energy and industrial company

“Our business processes were outdated, our infrastructure outdated, so that was the pivotal point for us to really look at SAP S/4HANA.” —Telecom company

Organizations are rationalizing their enterprise applications so they can make the right move to more modern

systems. Application rationalization allows organizations to gain control of their legacy environment while

establishing a framework to support the digital era and to create a road map for modernization.

Replace

Rebuild

Retain

BenchmarkFind best fit solution

UpgradesEnhancements Migrations

Minimal changesSuperior appsHigh business value



SAP S/4HANA Is Leading the Way in Modernization and Digital Transformation With 73% of SAP clients planning on deploying SAP S/4HANA within five years, it’s obvious that SAP S/4HANA is

generating extraordinary benefits.

“Modernization of workflows, while setting up the digital aspects to digital transformation, are reshaping the way we think about our technology partners. Deploying SAP S/4HANA and tying ourselves to SAP has brought more improvements to our business.” —Telecom company

$31,704,578

$7,941,235 $7,717,885$5,742,292

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

Employee productivity IT sta� productivity Business productivity Risk mitigation

Total: $53.1 million



Digital Transformation Is Making a Significant Impact on Organizations WorldwideEnterprises that place a high value on vendor partnership behaviors tend to have better success modernizing and

digitally transforming their organizations.

“We had a digital transformation project framework with one of the pillars linked to digital workers. Our digital transformation framework includes the backbone of e-billing and procurement ERP and support processes that were established in SAP. Our future needs and ideas were starting to evolve faster and optimize business processes with a database in real time. SAP S/4HANA naturally fit into our future business road map. The rest was history!” —Energy company

Revenue Analysis of Digital Transformation

Source: IDC 2019 N = 402 Global Manufacturers

8,995,425

2013 2014 2015YEAR

Rev

enue

(in

Mill

ions

)

$440 billionUSD from2013–17

$450 millionUSD from2013–17

2016 2017

9,435,926

1.2% CAGR

3,778 3,331–3.1% CAGR

Cumulative Revenue (Non Digital) Cumulative Revenue (Digital)

Gross Profit Analysis of Digital Transformation

Source: IDC 2019 N = 402 Global Manufacturers

2,520,310

2013 2014 2015YEAR

Gro

ss P

rofi

t (i

n M

illio

ns)

$250 billionUSD from2013–17

$180 millionUSD from2013–17

2016 2017

2,754,129

2.34% CAGR

2,309 2,123–2.1% CAGR

Cumulative Gross Profit (Non Digital) Cumulative Gross Profit (Digital)



The Move to SAP S/4HANA Is Critical to the Enterprise for Digital Transformation, Agility, and the Future

“SAP has a very stable and robust ERP, but with their road map on digital transformation, we can optimize our processes even more, bringing the digital worker front and center and positioning us for the future.” —Energy company

“Our key driver was business transformation — truly enabling the business which was moving away from a time and materials setup to outcome-based. And then really having MIS and the automation on the operation side to move forward from where we are today and become more competitive, more agile, etc. So, at the outset, that’s what we wanted to achieve, and that’s how we started our journey with SAP S/4HANA.” —Telecom company

It is a large part of our digital strategyor digital transformation strategy

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

We need more agilitywith our systems

It is SAP’s future strategy

We need our ERP systemto be more modern

We need to scale and innovate faster

We need lean operations

We need speed

38.7%

37.7%

37.0%

37.0%

33.3%

32.0%

41.3%

Why was moving to SAP S/4HANA important to your organization?



Digital Transformation: IT Challenges and Opportunities Abound

Organizations face many challenges as they digitally transform the

business to more modern ERP systems:

• Little or no innovation within the business

• Too many disparate technology systems

• Inconsistent data sets exist across the business

• Semi-automated business processes

• Lack of real-time information because of batch processing

• Too many ERP instances

• Slow response times

• Too much information with little business insight



SAP S/4HANA Helps Organizations Address the Challenges and Capitalize on the OpportunitiesIT benefits with SAP S/4HANA include landscape consolidation, cost reduction, and setting up the organization

of the future with a digital platform, bringing more room for innovation, increasing optimization, and making the

business more agile.

“Our IT benefits included simplification of our IT landscape and future migration savings as the system readies us for the future now, without additional migration and customization costs. We now have mobile capabilities that our business loves, and we have positively impacted our TCO as we now can make a single change instead of several.

“Our business also has found benefits in optimization, innovation, and agility in a few areas such as mobile workflows and faster, more transparent workflows in payroll and insurance. The business has found efficiencies in all areas, but finance is a huge area.” —Energy company

Digitally enabledour organization

0% 10% 20% 30% 40% 50% 60%

Optimized processes (suchas maintenance, HA/DR)

Improved agility—ability tothink, understand, and move

Allows IT to o�er innovationto the business

Reduced costs

Simplified landscape (fewersystems to manage)

52.6%

52.6%

49.5%

41.1%

36.8%

54.7%

How has/will the move to SAP S/4HANA benefit the IT organization?

IT (N=95)



The Most Useful Tools Moving to SAP S/4HANASAP Business Scenario Recommendations helps build the business case by identifying business processes that can be improved by moving to SAP S/4HANA as well as industry benchmarks for comparison.

“I rate BSR a 4 out of 5 because during the implementation, the team could create more scenarios that you could have without using software or tools; you have a higher probability to have a very successful implementation. It’s normal that after the implementation, you say I don’t have time to test this scenario, but this scenario is very relevant or very important.” —Services company

SAP Transformation Navigator provides visibility into each component of an organization’s current SAP ERP landscape.

“This tool we used to migrate all components that we had, and it checked for compatibility issues as well. A very good tool.” —Automotive company

SAP Readiness Check helps plan the move by revealing the technical requirements and actions needed for a conversion to SAP S/4HANA.

“We used SAP’s Readiness Check, to determine if there was anything missing or any other prerequisite that needed to happen. It helped highlight, for example, all the custom code that needed remediation. Also, the third-party add-ons. I think that was a good tool.” —Medical device company



Business Scenario Recommendations(BSR) or Pathfinder

0% 10% 20% 30% 40% 50% 60% 70% 80%

Transformation Navigator

Readiness Check

Don’t know

Other

65.0%

53.3%

1.0%

0.3%

71.7%

Which of the following tools did/will your organization be utilizing?

SAP Survey Participants Recognized Three Tools



Partners Are Key in SAP S/4HANA Deployments

“System conversion tends to bring organizations faster to the digital world, but a methodology is required to redesign and transform the business processes and change the organization structures as needed, whereas new implementations have a brand-new design and require completely different thinking.” —SAP partner

Of organizations moving to SAP S/4HANA, 77% plan on using SAP partners.

73%

33%

23%

plan on deploying SAP S/4HANA in the next five years.

will do a system conversion from ECC to keep current data, configuration, and customizations.

will do a completely new implementation.



Digital transformation

0% 10% 20% 30% 40% 50% 60% 70%

To plan out the integrations

Business process mapping

Change management

For deployment only

56.7%

55.0%

45.0%

28.6%

59.7%

For what parts of the move to SAP S/4HANA did/willyour organization use partners?

SAP Partners Provide a Variety of Services



SAP S/4HANA Means the Enterprise Is More Intelligent, Agile, and Modern

User response time improvements: “We are seeing immediate improvements with SAP S/4HANA in user response time by as much as 15% and expect this to go up over time to perhaps 50% as we get better with the systems and working with the data.” —Construction machinery company

Decision making: “It helps us in the decision-making process. For instance, finance doesn’t have to wait for whatever time it takes, maybe two or three hours, for information. This is especially critical during the month-end closing or the period-end closing. Now, based on the output, finance quickly decides if it must make some correction entries or not. If it is pretty much real-time, then they won’t have to wait for two or three hours for the consolidation to show up.” —Midsize medical device manufacturer

More responsive to the competition: “SAP S/4HANA has allowed us to automate more processes. We are now more streamlined, cost-effective, and more responsive to the competition.” —Automotive company



We can use data for better analytics, predictions, or simulations

0% 10% 20% 30% 40% 50% 60%

We have/will have significantlyimproved the time it takes for our

business to process and utilize information

We are now/will be digitally enabled—able to drive new levels

of e ciency and eectiveness

The businesses are now/willbe enabled to implement new

products or services quickly

The business can respondto customer demand

more eectively

Our existing processes are/willbe better optimized

50.5%

46.3%

49.5%

44.2%

40.0%

56.8%

From an IT perspective, how has/will the deployment ofSAP S/4HANA impact the following for your organization?

IT (N=95)

SAP S/4HANA Brings Value to IT



IT Measures of SuccessBetter positioned to deal with competition: “We are better positioned to deal with the

increased competition with SAP S/4HANA. We

have reduced operational costs by one quarter,

making us more profitable.” —Services company

Improved financial processes: “We decided

to deploy SAP S/4HANA because of all of the

wonderful capabilities that it has. For example,

it has a collaborative finance functionality that

supports our finance operations. SAP’s financial

planning and analysis dashboard is easy to use,

and it simplifies the processes. We can also

manage our enterprise risk and compliance

more effectively because we can now automate

the risk. It also impacts areas such as sales

performance, professional services, expense

billing…. The list goes on.” —Telecom company

• Optimized processes (such as maintenance, high availability, and disaster recovery)

• Improved agility • Allowed IT to offer innovation to the

business • Digitally enabled the organization • Reduced costs • Simplified the landscape



Strengths & Challenges for SAP S/4HANASTRENGTHS

In-memorydatabase

Consistent Lower costs mean more competitive and profitable

SAP S/4HANA has a single in-memory, columnar data model for both transactions and analytics, eliminating redundant data and providing real-time insights. The insights are tied to an AI-powered set of functionalities within ERP to automate routine work and flag exceptions for human action, with a strong commitment to automating half of all ERP activities in the next three years.

SAP S/4HANA has a consistent code line, data model, and user experience for both cloud and on-premise deployments, making it easier and cheaper for companies to manage hybrid scenarios.

Companies believe they are better positioned to deal with increased competition with SAP S/4HANA. In particular, one organization noted, “We’ve reduced operational costs by an estimated 20–25%, so we are more profitable.”



CHALLENGES

Customersupport

Implementation Perceptionof cloud

Customers interviewed for the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Operational ERP Applications 2019 Vendor Assessment report noted that live interaction for customer support is not always available, hurting customer satisfaction. The ticket system in place can make customers a little wary about any critical issues they may experience.

Some customers also indicated that implementation of SAP can be a daunting project if not prepared. A common issue encountered is if there are customizations needed by a customer.

Manufacturers tend to be slower to overcome their fear and hesitation of relying on cloud technology. There is also a general lack of understanding around the nuances of SaaS, including the subscription pricing model, continuous updates versus upgrades, and configuration versus customization. SAP customers listed cloud adoption as a concern for them before adoption, but after adoption they prefer the regular updates to derive more functionality/value.



Message from the Sponsor

As a market leader in enterprise application software, SAP is at the center of today’s business and technology revolution. SAP helps streamline your business processes, giving you the ability to use real-time data to predict customer trends across your entire business.

To learn more about SAP S/4HANA:• Read this report to learn more about building the business case for intelligent ERP, and

learn about the tools customers are using to successfully move to SAP S/4HANA.

https://www.sap.com/documents/2019/05/881be239-4f7d-0010-87a3-c30de2ffd8ff.html


An IDC InfoBrief, sponsored by SAP | January 2020

US45671219BROI

sap s/4hana and the opportunity for it€¦ · 06/01/2020 · sap s4ana and the pportunity for it...

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