SAP S/4HANA Adoption Rebounds After COVID-19 Slump, as Providers Strengthen Portfolios

SAP S/4HANA Adoption Rebounds After COVID-19 Slump, as Providers Strengthen Portfolios

  • Macroeconomic uncertainty may push enterprises to maintain legacy ERP systems or slow transition plans, ISG Provider Lens Archetype report finds

The outlook for SAP S/4HANA began to improve in late 2020, after enterprises slowed down adoption of the integrated ERP system early in the COVID-19 pandemic as they focused on cost efficiency and other objectives, according to a new report published by Information Services Group, a leading global technology research and advisory firm.

“While some enterprises may delay major SAP S/4HANA transformations in favor of shorter, results-oriented projects, service providers continue to strengthen their portfolios”

The ISG Provider LensTM 2021 SAP HANA Ecosystem Partners Archetype report finds enterprises may delay decisions on large-scale SAP S/4HANA transformation as their business requirements and decision-making processes change amid macroeconomic uncertainty following the pandemic. They may consider retaining current SAP ERP arrangements that help them meet short-term goals such as cost control and agile delivery, the report says.

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“While some enterprises may delay major SAP S/4HANA transformations in favor of shorter, results-oriented projects, service providers continue to strengthen their portfolios,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Preconfigured, industry-focused templates and other enhancements help meet companies’ needs for both greenfield and brownfield implementations.”

SAP S/4HANA Adoption Rebounds After COVID-19 Slump, as Providers Strengthen Portfolios 1

SAP S/4HANA, available in both on-premises and cloud versions, is designed to help enterprises address growing IT complexity, legacy applications and customizations and other issues while migrating databases and maintaining their operations, the report says. It has been undergoing an evolution to meet the needs of companies that aim to transform their business processes, with artificial intelligence (AI) as a major component.

Enterprises are at different levels of maturity for SAP S/HANA adoption, ISG says. Many enterprises with legacy ERP environments managed by third-party service providers have delayed decisions about moving to SAP S/4HANA due to concerns about cost, complexity and manageability. However, to reap the benefits of digital-enabled ERP, they will need to prepare for a transition to a newer version of SAP ERP in cooperation with either SAP service partners or third-party software support providers.

SAP service providers continue to develop new tools to help clients carry out transformations, such as frameworks, tools and accelerators that utilize AI, machine learning (ML) and other technologies to simplify the process, the report says. In addition, managed service providers are increasingly using bots and automation to streamline clients’ operations. Alliances with hyperscale cloud providers, designed to ensure their services meet SAP S/4HANA requirements, are also essential to support cloud implementations.

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Meanwhile, ISG finds providers aiming to capture new opportunities in emerging industries and potentially gain first-mover advantage are focusing on the creation of more industry-specific templates that can help those industries adopt SAP S/4HANA.

The ISG Provider Lens 2021 SAP HANA Ecosystem Partners Archetype report examines four types of clients, or archetypes, that are seeking services for SAP S/4HANA. The report evaluates the capabilities of 18 providers to deliver services to the four archetypes:

Transactional Users: These organizations use SAP ERP Central Component (ECC) or R/3 as an existing ERP solution and are seeking services to manage these applications. They hesitate to adopt a different ERP system due to resistance to change, inability to manage more complex SAP environments, lack of skills or lack of resources to invest.

Transitioners and Cloud Adopters: These clients have SAP ECC and intend to adopt SAP S/4HANA. Due to macroeconomic changes related to the COVID-19 pandemic and changes in working environments, they want to implement either SAP S/4HANA Cloud or SAP S/4HANA through Suites on HANA (SoH) or carry out a brownfield conversion. They also want to manage their cloud infrastructure with the aim of maintaining stable business processes and IT application landscapes.

Landscape Transformers: These clients want to realize the benefits of SAP S/4HANA and thus are ready to invest in an integrated ERP system as soon as possible. The enterprise leadership seeks advantages from responsive applications and a rich user interface and is prepared for organizational process changes.

Intelligent Digital Adopters: These buyers have a digital transformation strategy to optimize and automate business processes and manage and govern data using technologies such as AI and ML. They intend to integrate all existing applications, including third-party solutions, with SAP solutions.

Among the providers ISG evaluated, Capgemini, Cognizant, HCL, Infosys, Tech Mahindra and Wipro were named Leaders across all four archetypes. Mindtree was named a Leader for three archetypes and Atos and NTT DATA were named as Leaders for two archetypes each.

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