ERP yes, SAP no

SAP fails to convince with S/4 cloud strategy

The German-speaking SAP user group (DSAG e. V.) asked on the occasion of the current investment report: How do you rate SAP's S/4 Hana cloud strategy for your company or organization? Only 38 percent of existing SAP customers are positive. A full 56 percent of study participants are neutral to very negative. Six percent did not provide any information.

This year, DSAG and SAP jointly surveyed the entire existing customer base in Germany, Austria and Switzerland. The figures therefore appear to be valid and representative, even if the sample is only 243 participants. The willingness to provide information in one's own environment is therefore disproportionately low. In the medium and long term, this weak commitment to its own community could become a problem for SAP.

The results of this year's DSAG Investment Report show an increasing willingness on the part of existing SAP customers to invest in forward-looking technologies such as AI and platforms and, in some cases, in SAP solutions. The growing importance of AI and cybersecurity underlines the current challenges and opportunities that companies are facing. The shift towards increased cloud usage, the positive development of the S/4 cloud strategy and the growing importance of AI reflect the urgency to evolve technologically in order to remain competitive. At the same time, there is an increasingly differentiated picture in the use of on-prem solutions (ERP/ECC 6.0 and S/4 Hana), meaning that the SAP "cloud only" approach is not accepted. When it comes to ERP usage, existing SAP customers show a clear preference for hybrid systems.

SAP Migration and Modernization

Markus Bierl, DSAG Board Member for Switzerland, explained: "The results of the investment report suggest that the SAP offerings Rise and Grow are becoming more interesting for users in the DACH region. Nevertheless, the figures also show that a substantial proportion of SAP customers are still using on-prem solutions. It must therefore be ensured that SAP continues to make innovations available not only in the cloud, but also for on-prem users. This user group cannot be left behind and forced to make the switch. Instead, the path to the cloud should be paved with incentives - such as the Rise with SAP Migration and Modernization programme." Following the discontinuation of the SAP Migration and Modernization programme last year, an adapted new edition is to be launched in 2025.

Growing support for S/4 Hana cloud strategy

Existing SAP customers were asked what they thought of SAP's S/4 cloud strategy. The first survey in 2024 was conducted before the launch of the new SAP Rise Migration and Modernization programme, which includes incentive measures when moving to the cloud. At the time of the survey for this DSAG Investment Report, the program can be considered established. This time, 40 percent attest to the program's high to medium relevance. "While only 13 percent of those surveyed in the last investment report gave a positive assessment of the S/4 Hana Cloud strategy, this year the figure is 38 percent. The SAP program seems to be bearing fruit," says Jens Hungershausen, Chairman of the DSAG Executive Board. Incentives are also set to continue in 2025, with an official announcement expected in the coming weeks. From DSAG's point of view, however, this must be a permanent offer that continues to provide added value for existing customers.

Meaning of Rise and Grow with SAP

When asked about the role of Rise for existing SAP customers, 48% (2024: 16%) of respondents stated that they already use or plan to use the offering. Four percent (2024: eight percent) state that they are not aware of the offering. While 61% responded in 2024 that they were not planning to use the service, this year the figure is 23%. 16% do not consider the service to be relevant to them.

Grow is experiencing a slightly weaker increase in importance. While 55% of respondents said they would not use the service in 2024, this year the figure is 26%. The service is not relevant for 38%. In contrast, 17% say this time that they use or plan to use Grow. "Companies are increasingly realizing that there is no way around the cloud in the long term - not least because of SAP's roadmap and maintenance strategy or the approaching end of maintenance for numerous on-prem solutions," Hungershausen concludes.

From DSAG's perspective, the developments surrounding Rise and the SAP Migration and Modernization programme are clear signs that DSAG's demand not to leave on-prem customers out in the cold is necessary and correct. "On the one hand, the program takes into account investments that have already been made. In addition, SAP is providing some best practice guidelines, tools and services to facilitate the transition to the cloud. These measures help companies to protect their existing investments while benefiting from the advantages of the cloud," says Jens Hungershausen.

Sword of Damocles: Cloud only

Nevertheless, the DSAG CEO warns: "Some customers feel under pressure from SAP to move to the cloud. The pace that the software manufacturer is setting here is not sustainable for every company. SAP must not pressure its customers to make quick decisions for the sake of its own share price. Instead, SAP must ensure that companies have a realistic, economically viable and strategically sensible migration perspective. Freedom of choice, long-term planning security and fair conditions for on-prem customers are still needed."

Automation and SAP BTP

DSAG Chairman Jens Hungershausen on the SAP Business Technology Platform: "Companies seem to be increasingly recognizing and wanting to use the advantages of the BTP to optimize their business processes and remain competitive. The willingness to invest in application development and automation on the BTP speaks for the need for individually tailored solutions. In order to remain competitive, companies do not want to rely solely on standard SAP software, but want to develop their own applications."

The Steampunk and BTP Summit 2025, of the E3 magazine from the beginning of March this year confirms the impression and the results of the DSAG investment report. The platform concept has arrived in the SAP community, but many existing SAP customers are also evaluating alternative platforms from hyperscalers or specialist providers such as Boomi.

The topic of automation in an on-prem or cloud SAP landscape will also be discussed at the SAP Competence Center Summit 2025 in Salzburg on May 21 and 22. Ultimately, on-prem and in the cloud face similar challenges in terms of automation, testing and AI. In Salzburg, there will be a special SAP partner presentation on the topic of automation in the cloud. However, the success of SAP BTP is beyond doubt, as more and more existing ERP/ECC customers (SAP Business Suite) are using BTP to integrate AI and data management functions into established on-prem ERP systems.