RISE with SAP struggles to gain purchase with German-speaking users

Investment sentiment for S/4HANA drops off while public cloud hosting only two per cent of environments

Investment sentiment in S/4HANA, SAP's in-memory ERP platform, is falling for the first time among the software giant's German-speaking users.

According to a survey from DSAG, which counts users in Germany, Austria, and Switzerland among its members, the proportion of organizations to which S/4HANA was relevant to their SAP investments fell to 50 per cent in early 2022, down from 56 per cent the previous year.

A willingness among users to spend on the Business Suite platform – the earlier generation of technology based on the ERP Central Component or ECC – also fell slightly, from 25 per cent to 24 per cent over the same period.

The German vendor will not be encouraged by the data. It has made shifting customers to its newer S/4HANA platform, first launched in 2015, a strategic priority, as well as getting customers onto the cloud and a subscription payment model. In January last year, it tried to kill two birds with one stone with its RISE with SAP initiative – designed to lift and shift customers to the cloud, then transform business processes to take advantage of S/4HANA.

The project might still need work.

"The caution surrounding S/4HANA is somewhat surprising. I would have expected there to be an increase in S/4HANA transformation activities this year. RISE with SAP is clearly still unable to provide the necessary encouragement. As DSAG, it will therefore be our job to provide our members with even more support during transformation and provide assistance," said Jens Hungershausen, DSAG chairman.

The DSAG survey of 198 companies, mainly in Germany, also found 57 per cent of participants said they were "extremely unlikely" and "somewhat unlikely" to consider RISE with SAP. While 21 per cent were neutral on this point, only five per cent said they were "likely" to take up the offer.

Understanding and awareness of the RISE with SAP model had barely shifted since last year, the survey found.

"Transformations are fluid, flexible processes that encounter IT systems with a wide variety of release statuses and configuration levels within companies. This requires significantly more clarity and a holistic understanding by SAP of a company's individual circumstances. Business transformation on an equal footing must be the goal, rather than Business Transformation as a Service," Hungershausen said.

The results on progress in the cloud will be no more encouraging to SAP. Only two per cent of German-speaking SAP customers are running S/4HANA in the public cloud, while six per cent host it in a private cloud. Thirty-two per cent of customers run the software on-premises while 75 per cent remain on SAP Business Suite – a sign of how far SAP has to go in its objectives.

Nonetheless, CEO Christian Klein was upbeat on the company's most recent earnings call. He said S/4HANA cloud revenue grew 61 per cent in Q4 – the highest rate yet reported. The cloud backlog for S/4HANA grew 76 per cent, according to the Q4 figures announced in January.

"RISE with SAP is a blockbuster success in the market. And we are just getting started. Our massive on-premise installed base of more than 30,000 ERP customers presents a significant opportunity for our RISE with SAP offering as these customers begin their transformation to the cloud," Klein said. ®

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