Rimini Street, a global provider of enterprise software products and services, and the leading independent support provider for Oracle and SAP products, revealed the findings from a recent global survey of SAP licensees conducted by Rimini Street to better understand their SAP application strategies and future plans.
A key finding in the report is that the dominant strategy for SAP licensees, selected by 89% of respondents, is to continue running their current proven SAP ERP releases, given that the rich functionality of their current releases meet business needs and also forms the foundation of a preferred hybrid IT model.
Additionally, 65% of survey respondents have no plans to, or are currently not committed to, migrate to S/4, with the number one reason for not committing to S/4 cited as “no strong business case and unclear ROI.”
The report, “Rimini Street Survey: 2017 SAP Applications Strategy Findings,” is based on responses from CIOs, CTOs, IT VPs, directors and managers from a broad range of industries and company sizes across North America, Europe, Latin America and Asia-Pacific.
Hybrid IT Strategy Optimizes the Value of SAP ERP
Of the survey respondents that plan to stay on their current SAP Business Suite application, 30% are already adopting a hybrid IT strategy to maximize the value of their core SAP system as a system of record, while also freeing up funds and resources that can be used to more quickly and flexibly drive innovation through systems of engagement.
A hybrid IT strategy offers the best of both worlds – it provides the ability to reliably run the business on a robust core ERP application, and at the same time enables an organization to more quickly adopt new innovative applications and services, including cloud, mobile and analytics.
Organizations have the flexibility to deploy systems of engagement from any technology provider, including SAP, which enables faster time to innovation and overall competitive advantage.
In addition, an increasing number of companies are running their SAP ERP implementations in their private cloud or hosted environment, realizing many benefits of the cloud model without a costly, risky reimplementation.
By shifting IT funds from expensive, disruptive upgrades to innovation, a hybrid strategy can accelerate the achievement of business objectives.
“When I speak with SAP customers, one of the most common strategies they enlist to maintain their core ERP while still having the ability to innovate, is to take a hybrid IT approach,” said Vinnie Mirchandani, CEO of Deal Architect and author of SAP Nation.
“The SAP Business Suite is remarkably robust and feature rich, but SAP’s ability to successfully innovate outside core ERP has not kept up, so a two-speed approach makes sense. Stick with the proven core, but continue to innovate around the edges with many modern solutions that are available from some very nimble companies in the market today.”
High Cost and Risk of S/4 with Low ROI
In addition to citing “no strong business case and unclear ROI,” for the low commitment to S/4, another top reason by survey participants for the low commitment to S/4 is the “high migration and reimplementation costs.”
Of those respondents who have committed to S/4, 56% estimated the total cost of reimplementation for a move to S/4 to be between $10 and $100 million, an expensive undertaking which makes it difficult to build a positive business case for the move and is financially untenable for many organizations.
Additional Survey Highlights:
- 47% of respondents consider SAP’s support and maintenance costs to be too high
Nearly half of all respondents feel that SAP support and maintenance costs are too high, including those who state that the costs are “way out of control.” With the continued high cost of SAP support, budgets are squeezed and resources stretched thin.
With Rimini Street, clients consistently realize cost savings of up to 90% in total maintenance costs as they are no longer on the upgrade path dictated by the vendor, no longer need to budget resource for self-support and no longer need to seek outside support for their customizations which are not covered by the vendor.
- Respondents cite top issues with SAP’s support
The top three areas cited as problematic for SAP support, based on a survey question that allowed for multiple responses, include “Issues take too long to resolve” (36%), “Lack of support for customizations” (33%), and “Lack of expertise or adequate knowledge to resolve issues” (29%).
These critical gaps in SAP support point to the need for an alternative solution that offers better, more responsive service than is available from the vendor today.
Rimini Street addresses all of these issues by providing full support for SAP customizations, a dedicated Primary Support Engineer with an average of 15 years’ experience with SAP applications, and a guaranteed service level agreement response time of 15 minutes for critical issues.
“This survey highlights that CIOs and IT decision makers prefer to maximize the value of their current robust SAP ERP system that more than meets their business requirements, rather than advancing to a new platform that is still in development with no current business case to support a full reimplementation,” said Seth Ravin, Rimini Street CEO.
“It also illustrates how they are pursuing innovation strategies, such as hybrid IT, to help their business gain competitive advantage now, without having to wait indefinitely for meaningful new innovations and capabilities from SAP,” adds Ravin.