Amid pandemic and economic uncertainty, enterprises find they've lost the will to migrate to SAP's S4/HANA

Third of customers stalling upgrades, says UK and Ireland user group data


A third of SAP users have hit the brakes on migrations to S/4HANA, the German vendor's in-memory database-powered ERP system, as a result of the COVID-19 outbreak and related economic disruption.

The data on stalled upgrades, from the early findings of the UK and Ireland SAP User Group (UKISUG) member survey, will be bad news for SAP in the wake of its disastrous Q3 results, which saw it cut its earnings forecasts.

The extension of support for the SAP Business Suite 7 from 2025 to 2027, announced earlier this year, also played a factor in users putting off the daunting upgrade, said UKISUG chairman Paul Cooper.

Although the full survey results are not available, last year's study questioned 467 organisations and found that 58 per cent do not intend to upgrade to S/4HANA in the next two years, while 27 per cent said they will not upgrade in the next three years.

Cooper, who is also head of information systems at Burton's Biscuit Company, told The Register more than half of SAP users were still more than three years away from a HANA upgrade, despite the product being around for five years.

"We have consistently seen that the majority will not be there in a tight time frame, even before the announcement to extend maintenance deadline that happened in February," he said.

But Cooper warned that, with users stalling upgrades, the new maintenance deadline would come around fast.

"That time is going to go quickly. There are lots of competing projects and demands in the wider business, finding their place and things like migration to S/4, however you're doing it, is something that you have to really think about. The planning phase will be one of the most significant proportions of the project."

In response to sluggish upgrades in its flagship ERP product lines, SAP was doubling down on development in these areas to get customers to see the value of the core enterprise product, said R "Ray" Wang, principal analyst and founder of Constellation Research, which worked with UKISUG on a white paper about the topic.

But customers have other ideas.

"SAP is doubling down on ERP," he said. "They weren't doing that last year. You can see that they are trying their hardest to improve ERP. They're putting their best people back onto the product; there's a concerted effort from Thomas Saueressig (board member for product engineering) to redefine and reinvent ERP. I see that, but customers don't see that yet. The ones we talk to see it as a commodity. It doesn't matter if you have a Rolls-Royce for ERP; it's just a car. It's transit, and businesses are asking, can we not even own the car and just get from point A to B?"

Despite SAP CEO Christian Klein's insistence that the COVID-19 pandemic would see companies wanting to become an "intelligent enterprise" to make data-driven decisions more rapidly and remold their business models on the fly, customers are not quite buying it.

From a business perspective it was hard to find a real imperative for the upgrade, Wang told us.

"There's no stick out there, like 'oh it's a regulatory requirement, you have to change all your accounting rules.' When you don't have that, it's very hard to say I want to go out and do an upgrade," he said. ®

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