IT and SAP budgets in Germany, Austria, and Switzerland (DACH) will continue to rise this year—this is a key finding of the Investment Report 2023 published by the German-speaking SAP User Group (DSAG). S/4 Hana will also gain in terms of relevance for companies, but SAP’s Business Suite is still the preferred solution. To read the second part of this two-part report, click here.
Compared to 2022, the IT budgets of most of the companies surveyed are increasing at 54 percent, with only 26 percent remaining the same, and 15 percent actually decreasing. 52 percent of companies’ SAP budget increased, 31 percent remained the same, and 15 percent decreased.
“The upward trend in IT budgets and budgets for SAP solutions, which was already evident last year, is continuing at approximately the same level. This speaks for confidence among companies that crisis situations will be mastered well,” summarizes DSAG Chairman Jens Hungershausen and adds: “In addition, some established SAP solutions will soon be coming out of maintenance and the project pipelines of the companies are well filled—budget is needed accordingly.”
S/4 Hana and transformation projects require time
Another question revolves around digital transformation and the progress companies are making with it. This question was not asked last year, so the comparison was made with figures from 2021. 5 percent of companies said they were very far along with their digital transformation (2021: 2 percent), 39 percent described themselves as far along, the same value as in 2021. 52 percent see themselves as not very far, an increase of two percentage points compared to the report from two years ago.
“This indicates that companies set other priorities during the pandemic and may have initially postponed planned digitization projects due to the existing uncertainties,” says Jens Hungershausen.
When asked about the SAP ERP solutions used, Enterprise Resource Planning or Business Suite, is still clearly in the lead with 79 percent (2022: 75 percent), ahead of S/4 Hana On-Premise with 41 percent (2022: 32 percent). This is followed by S/4 Hana Private Cloud with 8 percent (2022: 6 percent) and S/4 Hana Public Cloud with 3 percent (2022: 2 percent).
“The following applies to S/4 Hana projects in particular and transformation projects in general: depending on the complexity, migration projects can take several years. A real transformation requires new technologies to be evaluated and introduced, and processes to be rethought,” says Jens Hungershausen.
In addition, migration projects often involve replacing old code or existing processes and cleaning up master data. The DSAG believes that SAP has a duty to empower its partners to provide adequate support for migration projects.
End of maintenance pushes switch to S/4 Hana
Business Suite is relevant for SAP investments in 2023 at 6 percent (2022: 6 percent) for high investments and at 22 percent (2022: 18 percent) for medium investments. In S/4 Hana, 28 percent (2022: 26 percent) of comanies plan high investments and 38 percent (2022: 24 percent) medium investments. The willingness of DSAG member companies to invest is not surprising. After all, companies will have to switch from their old ERP system to S/4 Hana by 2027 or 2030 at the latest. After that older systems will fall out of maintenance.
„2027 still sounds far away. Nevertheless, the effort involved in such a migration should not be underestimated. Companies need strong partners with sufficient resources at their side,“ says Jens Hungershausen.
The necessary availability of partners for the short time span until 2027 will be an additional external challenge for the success of the project. Companies are therefore called upon to act quickly.
BTP as a central element of the SAP strategy
When it comes to SAP cloud solutions, 24 percent of companies say they will make high and medium-sized investments into the SAP Business Technology Platform (BTP). Investment in this case means increasing spending in cloud solutions, including subscriptions. In second place in the ranking of SAP cloud solutions is SuccessFactors, with high and medium investments by 17 percent of respondents. Customer Experience is in third place with 9 percent.
„SAP positionizes BTP as a central element of its strategy. Against this background, it is understandable that the survey participants are considering this SAP cloud solution,“ says Jens Hungershausen.
From the DSAG’s point of view, the fact that the first migration services are now being developed to support the conversion of existing integration architectures to BTP’s Integration Suite is something positive. However, the costs for development, quality assurance, and use of the services without productive reference are too high—as are the costs for general operation. The DSAG is in discussion with SAP about this.
This report has been split into two parts. To read the second part, click here.