Fund Your Innovation
Blog Finance

Fund Your Innovation

No company will be able to ignore digitalisation. Everything must be upgraded and converted. And a budget must be allocated to innovation. Where will the money come from if the budgets aren’t increasing? The answer: Savings on support through independent third-party maintenance.

Those who speak of digitalisation and innovation mention the cloud in the same breath. The latter is an essential prerequisite for the former, they say. Only with the cloud can digital business models be developed and operated.

In light of this, SAP’s monolithic plan to move all existing clients to a standardised x86 architecture, Linux and Hana as the database platform no later than 2025, and to oblige them to use these in and from the cloud, makes perfect sense.

Existing SAP clients, however, take an entirely different view: only one-third of existing clients see S/4 Hana as a basis for innovative business models, nearly 60 percent are still using Oracle databases and 62 percent will only gradually migrate to S/4 Hana.

These are the findings of a study conducted by the market research and consulting firm PAC in collaboration with SNP AG, Dell, Intel and Arvato Systems. “They do recognise the benefits S/4 Hana offers for scenarios like Big Data though,” emphasises Frank Niemann, Vice-President of Software & SaaS Markets at the analyst firm and author of the study.

According to PAC, the vast majority of SAP clients would run S/4 in their own data centre or through the classic hosting model. Another third would consider a hybrid cloud concept, while demand for 100% cloud is negligible for S/4. The reluctance towards the cloud is surprising only at first glance.

After all, the manufacturing companies among the existing SAP clients, in particular, have spent many years investing heavily into individual adjustments – their own intellectual property. It remains unclear how this could be transferred to the cloud to run profitably and protected. In the worst-case scenario, previous expenditures must be written off and the special code rewritten.

Budget for Innovation

In contrast to SAP’s all-Hana and all-cloud  message, the reality in most enterprises is more complex. But two things are certain: First of all, existing SAP clients need to define their own path into the digital future and must not simply put all their trust in SAP’s strategy alone. Next, they need money. For the way into the brave new digital world is associated with investments, both in licenses and in infrastructure.

The possibilities for companies to increase their IT budgets are limited. It is, therefore, enormously important to identify and tap into savings. However this must not be a cheap solution that ultimately impede the digitalisation strategy.

One area with high savings potential is support; 22 percent for services which cover only the SAP standard, but not the crucial individual adjustments – this raises the question of whether this even makes sense at all. In addition, only some of the existing SAP clients use the updates and new features in live operation.

Rimini Street: Save and Invest

“SAP is an excellent product. Many existing SAP clients have perfected their systems over the years, so they run stably and map their business processes perfectly,” explains Jill Harrison, Rimini Street’s Managing Director for Europe and Africa. “This will remain the case throughout the gradual migration to Hana. Existing SAP clients will occupy a fixed place even in the digitalisation and cloud strategy, for example, using hybrid models.”

Analysts like Nucleus Research confirm the savings  potential,  but also at test to the quality of the support provided by Rimini Street. The manufacturer-independent third-party maintenance specialist offers as standard what SAP sells as premium support. This means all customisations are included in the maintenance service. As a result, clients not only receive comprehensive support for their SAP landscape – including those parts that are or will be built on Hana – but also save 50 percent of the annual maintenance fees.

Furthermore, there are no costs for installing unwanted updates. Finally, businesses can deploy in-house or external SAP experts to work on innovations, rather than continue with their previous task of mapping support cases in the SAP standard in order to receive support from Germany. This relieves IT budgets and frees up funds for innovation. Smart saving means investing.

E-3 Magazine (German) - September 2016, Rimini Street

About the author

E-3 Magazine

Articles published through E-3 Magazine International. This includes press releases by our partners as well as articles and reports from the E-3 team of journalists.

Add Comment

Click here to post a comment

Sign up for e3zine´s biweekly newsbites

Please do not use administrative mail adresses like "noreply@..", "admin@.." or similar as these may get blocked for security reasons.

We use rapidmail for dispatching our newsletter. By signing up, you agree that the data you have entered will be transmitted to rapidmail. Please take note of their terms and conditions and privacy policy.termsandconditions.

Our Authors