437,000 is a massive number, which commands real respect, but hang on a minute, are they all ERP customers? Well, no. Although SAP rose to prominence in the vital ERP market, we all know that SAP quickly ventured into other enterprise application markets (like CRM, Supply Chain, etc.) with its New Dimensions and Business Suites products. SAP then acquired a string of competitors to become more successful in the cloud Software-as-a-Service (SaaS) sector as this took off.
To fuel its growth and become more competitive SAP has acquired an almost unbelievable 70 software and service vendors since 1991! This includes vendors of SaaS, analytics, technology solutions. The latest acquisition in January 2019 was Qualtrics, who specialize in customer experience solutions. So you can see how the SAP total customer base has rocketed.
But most big SAP customers became SAP customers in the first place because of their ERP solutions. We estimate that there are about 38,000+ large and mid-size enterprises around the world running R/3, ECC or S/4HANA. SAP has also been very successful in the small enterprise sector with its Business One solution (with over 60,000 customers, just one year ago). SAP also sometimes offers its less successful Business ByDesign SaaS solution in this sector.
As we all know, as discussed in my previous article: 'When will your Business be Live on SAPS/4 HANA', the strategic ERP platform from SAP for the foreseeable future is SAP S/4 HANA (S/4). SAP stated long ago that you will need to have upgraded to S/4 by 2025 in order to remain on support. In view of the cost of this upgrade all SAP ERP large and mid-size customers have to re-evaluate their ERP Strategy. Do you stay with SAP, or… Your decision will probably depend on how well you think SAP is looking after you as an ERP customer, which is the whole point of this article. So, what options do you have? Well you will fall into one of 6 categories:
1) Already an S/4 customer
Net new SAP ERP customers have to buy either the S/4HANA on premise edition, or the much newer (and unproven) S/4HANA Cloud edition SaaS version.
A minority of installed based ECC customers have already upgraded to S/4.
2) In the process of upgrading to S/4
SAP claims that “thousands” of installed base customers are in the middle of such an upgrade project. This has been the claim for several years, but the number of live S/4 customers seems to increase only slowly.
3) Planning to upgrade to S/4 in the next 2 years
Various recent surveys show that between 50 and 70% of installed base customers are planning to upgrade in the next few years.
This is no surprise, as a huge number of these customers who are very satisfied with SAP and will remain as loyal SAP ERP customers. Their ECC systems may be big and global in nature. Many are in fact mission-critical. Actually, a surprising number are not that happy with SAP, but feel that they are stuck and don’t have a realistic alternative.
SAP has over 1300 of its most important customers on the more expensive Premium Support services (MaxAttention, etc). They are happy to pay more money to get the very best support for their SAP projects, including the move to S/4.
To encourage other ECC customers to make their move to S/4 SAP has, no coincidence, an “S/4 MOVE” program (https://www.sap.com/uk/products/s4hana-movement.html)
4) Not upgrading to S/4, staying on SAP ECC
Some ECC customers have spent so much time and money rolling out and optimizing ECC that they don’t fancy doing it all again, thank you very much. Their ECC systems have been bedded in and are doing either incredibly well, or maybe an OK job. These customers may be planning to do very little in improving the systems further. They just want to keep them running securely and as cheaply as possible.
There are a number of third-party support vendors out there that claim to halve the software maintenance costs for SAP ECC.
Category 4 customers typically cannot put together a viable business case to upgrade to S/4.
5) Undecided
For some installed base SAP ECC customers the jury is still out. They are revisiting their ERP Strategy and evaluating their options.
6) Dropping SAP altogether
Category 6 customers have had enough and are planning to move away from SAP altogether, they perceive that S/4 is not needed and is being forced upon them. Many of these customers conclude that SAP ERP is either too difficult to use in practice, or just too expensive to support throughout the life cycle. They may have had a bad software licensing experience with SAP.
So, where do you fit in, which category best describes your organisation? What’s your ERP Strategy?
If you fit into the first 5 categories you are likely to need skilled resource to be truly successful. You may need more traditional FI/CO consultants, or experts in your particular industry? Perhaps you are looking for S/4 gurus with several projects already under their belts? Whatever SAP skills you now need, Sapture can provide you with skilled professionals, contact us to find to speak to one of our consultants.
Dr Derek Prior spent 19 years as an analyst specializing in SAP at Gartner and AMR Research, advising organizations all around the world on SAP strategy and best practices.
