Most SAP licensees are ignoring S/4, pursuing hybrid IT instead

Two-thirds of survey respondents have 'no plans' to migrate to S/4HANA

SAP customers are not committing to the company's new enterprise resource management (ERP) platform, S/4HANA, instead continuing with their current systems. A survey by third-party support services supplier Rimini Street found that 89 per cent of SAP licensees plan to continue with their current proven SAP ERP releases.

65 per cent of respondents said that they had no plans to migrate to S/4HANA, which was launched in 2015; most cited ‘No strong business case and unclear ROI' as the reason. Instead, they prefer a hybrid IT strategy.

"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, 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."

30 per cent of the respondents that said that they plan to continue with the current SAP Business Suite are already adopting a hybrid IT approach. A hybrid approach maintains the SAP suite as a system of record while also freeing up funds and resources for other areas of business.

Respondents were also not keen on the high migration and reimplementation costs of S/4HANA. Of those who had committed to the new system, 56 per cent estimated that the total cost of reimplementation for a move was between $10 million and $100 million. 47 per cent thought that SAP's support and maintenance costs were too high, with some saying that they are "way out of control."

CIOs at a meeting organised by Computing recently agreed that today's licensing models are "archaic," and should be revisited by providers. SAP came up in the discussion several times.

Seth Ravin, Rimini Street CEO, said, "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. 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."

These results echo an those of an earlier survey performed by Rimini Street, shortly before the official S/4HANA launch

S/4HANA was launched in 2015, and growth was said to be positive after SAP's first half results of that year. Customers had reached 1,300 by Q3'15 and 5,400 by Q4'16.