sap application strategies for 2015 and beyond

Rimini Street | Survey Report

SAP Application Strategies for 2015 and BeyondLicensees Ponder S/4HANA and Weigh the Alternatives

Based on Survey Findings from 233 SAP Business Suite Application Licensees

Published: May 2015


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Executive Summary

Purpose of this Report

In March 2015, Rimini Street conducted a global survey of 233 SAP Business Suite applications licensees representing a variety of industries, company sizes and regions including North America, South America, Europe, the Middle East and Asia Pacific, to better understand the implications of choices regarding S/4HANA and how they affect licensees’ application strategies for 2015 and beyond.

The purpose and focus of this survey report is to help SAP licensees benefit from peer insights on how other companies are responding to the many questions and challenges surrounding SAP’s newly announced S/4HANA product with mandatory re-platforming to HANA.

Top Survey Feedback from SAP Licensees

The most significant survey results are summarized below:

1. 85% of SAP Licensees Not Committed to S/4HANA

Top reasons include:

n “No Strong Business Case, Unclear ROI” (68%)

n “Unproven, Early Stage Product” (44%)

n “Higher Migration and Re-Implementation Costs” (36%)

Many more respondents said they will not use S/4HANA (“No” 33%) or might use S/4HANA (“Maybe” 52%) than those who said they will use S/4HANA (“Yes” 14%).

SAP has yet to make a clear and definitive business case for why licensees should begin a long transition to unproven S/4HANA applications from their existing, stable and mature SAP platforms. Licensees are hesitant to commit to a disruptive early-stage product as part of their SAP application road map and strategies — especially since the proven releases and platforms they currently run work well and there are innovative “edge” solutions available from many vendors.

2. 72% of SAP Licensees Are Currently Using Stable, Mature ECC 6.0 Applications to Run Their Business


n “Current Version Meets Business Needs” (43%)

n “Cost Prohibitive to Upgrade” (37%)

n “Move to New Application Later” (23%)

72 percent of respondents are choosing to remain on their existing, stable and mature SAP ECC 6.0 platform, with only 3 percent reporting they are using HANA today.

These findings confirm that licensees are choosing to remain on their existing, stable and mature SAP application platforms and will not look to replace their mission-critical systems without a valid business case and ROI. SAP licensees will look to stay competitive by deploying hybrid IT strategies to add new features and capabilities using third-party solutions to “innovate around the edges” of their core SAP platform.


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3. 75% of SAP Licensees Are Not On Current Enhancement Pack Release


n “Current Version Meets Business Needs” (72%)

n “Cost Prohibitive to Upgrade” (35%)

n “Not Enough New and Valuable Functionality” (30%)

The survey also revealed 75 percent of respondents running the ECC 6.0 platform are still leveraging SAP Enhancement Pack 6 or earlier releases, rather than the most current Enhancement Pack 7.

These findings confirm that Enhancement Pack releases do not contain enough “must-have” functionality and show how licensees are being left behind. Older Enhancement Packs are meeting licensees’ needs, so there is no compelling reason to keep upgrading them or to install the most current Enhancement Packs. Licensees have little justification to incur additional costs and risks disrupting their business by deploying Enhancement Pack releases that in many cases do not offer enough clear business benefits.

4. SAP Licensees Challenged with the High Cost of SAP Support and Value Received


n “Too Expensive for Support Calls” (46%)

n “Too Expensive for Functionality Delivered” (37%)

n “No Support for Customizations” (35%)

Although licensees like having access to SAP product knowledge and expertise, survey respondents believe the cost of support and maintenance is too high for the functionality and service delivered.

In the body of this report we discuss and analyze all of these findings in greater detail, and offer strategic recommendations for SAP licensees based on the survey findings.

Background: S/4HANA — SAP’s Big Gamble

S/4HANA represents a major shift in the way SAP wants to build and deliver Business Suite applications to licensees. Over 400 million lines of code will need to be re-written.1 Supplanting major existing databases like Oracle (“roughly 60% of [SAP] apps and BW instances are believed to be running on Oracle database”2) with SAP’s new in-memory database platform and convincing licensees to migrate off of their existing application platforms in favor of a cloud deployment model changes everything.

Core SAP Business Suite applications are some of the most robust and proven applications in the world, with more than 282,000 organizations worldwide3 relying upon mature, proven and robust SAP solutions today; and yet SAP has done little to add innovative, must-have features for licensees who continue to pay SAP support and maintenance. As SAP turns its focus towards S/4HANA and cloud applications, current 4.x and ECC 6.0 licensees are left to wonder about their future road map if they don’t want to adopt S/4HANA.


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SAP Licensees Are Struggling to Understand S/4HANA

As widely reported in the media, licensees are struggling with key questions including:

n “Do I upgrade my stable SAP application to the latest release or Enhancement Pack? Should I have a transition plan to S/4HANA?”

n “Is there an upgrade path to S/4HANA or is it really a rip-and-replace reimplementation? What do I do with my customizations that are still necessary to run my business?”

n “What are the pros and cons of committing to S/4HANA and the impact on my business?”

n “What are my application strategy and support options, including third-party solutions, to evolve and grow my SAP landscape?”

SAP observers are decidedly skeptical about the company’s ability to successfully pull off a business model that strays from its traditional reliance on on-premise applications and moves towards new areas using mergers and acquisitions (e.g., Ariba, SuccessFactors) instead of organic growth. For example:

“ …turning this vague [S/4HANA] roadmap and value proposition into a reality is far from simple. As industry analysts talk to their customers and work through what SAP has revealed, the only clear message is that SAP has a lot of work to do.” — Chris Maxcer, TechTarget4

“ S4, as initially announced, covers only the core components of SAP’s current Business Suite. Many industry extensions will not be delivered for years. There is no clear time table for when recently acquired products like Ariba, SuccessFactors and Concur will become part of S4.” — Vinnie Mirchandani, Deal Architect5

Meanwhile SAP’s Business Suite licensees are left to wonder what the best path forward should be for their own SAP application strategies in 2015 and beyond. The detailed findings presented in the following pages reflect these concerns.


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Section 1: Survey Findings & Conclusions

Majority of SAP Licensees Not Committed to S/4HANA

Most SAP licensees are not ready to commit to S/4HANA. Only 14 percent of SAP licensees surveyed have committed to using S/4HANA, and the vast majority said “No” (33%) or “Maybe” (52%) to migrating to, re-implementing and running S/4HANA applications. Respondents cited the following top reasons for foregoing S/4HANA: “No strong business case/unclear ROI” (68%); “Unproven, early stage product” (44%); and “Higher migration and re-implementation costs” (36%).

Findings from this survey are consistent with a previous research study conducted seven months ago by the German SAP User Group (DSAG), which found that over “80 percent admit that they are not considering [HANA solutions].” When asked why this should be so, DSAG Chairman Dr. Marco Lenck explained:

“ It’s not necessarily the costs or technical knowledge. The basic problem is that, for many customers, there is no obvious business case. They simply don’t see the innovation potential for their business processes at this time.”6

The Americas SAP User Group (ASUG) reached a similar conclusion, as 75% of respondents said the number one reason why their company had not purchased any SAP HANA products yet was that they “haven’t built a business case.” When asked what factors would influence licensees’ SAP HANA purchasing decision, the ASUG study found that “costs stood out — [licensees needed] a better understanding of costs of the software, the hardware, and whether there would be discounts and incentives.7

SAP licensees who want to be on the latest technology and have a strong business case might be candidates for S/4HANA. These are licensees who have the appetite and risk tolerance to work with an early-stage product. S/4HANA today is not a direct 1:1 replacement for existing Business Suite applications,8 as SAP has initially launched with the Simple Finance module to be followed by Simple Logistics. The remaining S/4HANA product release map will be determined “based on popularity.”9 Dick Hirsch explains in Diginomica:

“ The idea of ‘one truth’ for the entire S/4HANA offering, however, is not entirely true. S/4HANA is not a 1:1 copy of existing OnPremise applications that will be ‘simplified / evolved.’ There will also be some replacements that enable SAP to take full advantage of its acquired cloud assets. The acquired cloud applications are separate SaaS entities that do not share a common database — thus, integration will be necessary.”10

According to the latest figures from SAP there are approximately 370 licensees who are using S/4HANA today,11 which represents the earliest of the early adopters.

Findings from the Rimini Street survey back up this hypothesis. Of those survey respondents who said they were either using S/4HANA today or planned to use S/4HANA today place an emphasis on leveraging the technical and functional benefits of the product. Top reasons include to “Simplify Business Processes” (68%), “Speedier HANA Database” (65%), and “More Attractive Fiori UX” (53%).

Target licensees for S/4HANA do not have budget constraints. SAP has clearly stated that S/4HANA is a new product, therefore licensees will need to purchase new product licenses and maintenance. Costs to migrate from existing Business Suite applications to S/4HANA have not been clearly defined as of yet. John Appleby, Global Head of SAP HANA, Bluefin Solutions, said in March 2015:

“ SAP S/4HANA is a new product SKU, which means that it does have to be purchased by customers. Existing customers will not get SAP S/4HANA licenses included in the maintenance of their SAP Business Suite…”12


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The majority of SAP’s 282,000 licensees should continue to focus their efforts on maximizing the value of their existing ERP platforms. Head of Group IT at DöhlerGroup and DSAG Chairman Marco Lenck summed it up:

“ [S/4HANA is] ideal for visionary companies and pioneers who gain a major competitive edge from innovative business processes. However, for the majority of companies, it is rather a future idea than reality. So for these companies, traditional projects that revolve around their ERP system are a higher priority.”13

Most SAP Licensees Use Proven SAP 4.x and ECC 6.0 Applications to Run Business

Based on the survey findings it is clear that SAP licensees want to remain on their existing, stable and mature SAP applications platforms instead of moving to S/4HANA. “No Strong Business Case” (68%) was the top reason survey respondents said they have not yet committed to use S/4HANA applications.

The number one reason cited for not replacing current mature, proven application platforms was “Current version meets business needs” (43%). Other top reasons included “Cost prohibitive to upgrade” (37%) and “Move to new application later” (23%).

According to previous studies, “Just five percent of respondents consider moving their ERP system to the cloud in the next five years as a realistic option.”14

The pace of business will not let up: the need to continuously drive business results will compel licensees to add new features and capabilities to their stable and mature ERP platform whether they are sourced from SAP or not.

Mobility, HCM, Order and Spend Management, and BI and Analytics are just some of the features that are driving innovation and growth. Licensees will look to tap into these capabilities by adding best-of-breed solutions to their existing ERP platforms using a hybrid IT approach.

This approach allows organizations to add specific capabilities that are not necessarily tied to the vendor product roadmap and the inflexible “take it or leave it” approach of the application suite model.

The German SAP User Group (DSAG) findings from a year ago forecast this approach:

“ DSAG members are pursuing current hot topics such as mobility, in-memory computing, and cloud, but are not only using SAP products to do so. Customers analyze their current situation precisely and then seek out the products that fit their company’s landscapes.”15

SAP licensees are taking these factors into consideration and thoroughly weighing them against the existing Business Suite application platforms that run their businesses today. These SAP licensees are looking, understandably, to drive maximum value from every IT dollar. Says Constellation Research’s Ray Wang:

“ I’d want to know what industries SAP is going to go deep on and how much I’ll have to pay. One of the biggest challenges for SAP customers facing upgrades is figuring out what they’ll have to pay, because they don’t get itemized bills. That’s been holding them back from upgrades.”16

Three-Quarters of Respondents Not on Most Current Enhancement Pack Release

Seventy-five percent of respondents running ECC 6.0 said they are on Enhancement Pack 6 or earlier releases, instead of the most current Enhancement Pack 7. “Current version meets business needs” (72%); “Cost prohibitive to upgrade” (35%); and “Not enough new and valuable functionality” (30%) were cited as the top three reasons.

SAP launched its Enhancement Pack strategy for SAP ERP in 2008 and billed it as a means to “reduce conflict between stability and innovation”17 by doing away with full version upgrade projects and replacing them with “selective and non-disruptive”18 packages that can be deployed as part of routine maintenance. Licensees have the option to install and deploy the Enhancement Pack release while selectively activating new business functions based on their needs.


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Historic activation rates for Enhancement Packs is low. According to figures from the SAP Enhancement Package 6 Fact Sheet19 by Panaya, the activation of new business functions is in the single digit to low teens.

Panaya conducted a follow-up study in 2014 which showed that of the licensees who elected to install the Enhancement Pack 7 release, 76% did not activate any new business functions.20 This confirms the fact that most licensees are installing Enhancement Packs for maintenance reasons, not to access any new functionality.

SAP analyst Vinnie Mirchandani provides a macro-level explanation for why innovation for SAP’s products has slowed down:

“ The bigger problem is that Business Suite itself has lagged in expanding its functionality for years now. SAP has missed out on next-gen factory and supply chain innovations…”21

SAP is focused on becoming a cloud company and has slowed the pace of innovation for its ECC 6.0 Business Suite applications; customers are taking note.

German SAP User Group (DSAG) board members have called upon SAP to maintain a balance between driving new innovation and doing right by its existing licensees by including Business Suite applications, not just cloud products:

“ DSAG expects a ‘customer first’ attitude from SAP with respect to its product development efforts.” — Dr. Marco Lenck, DSAG Group Chairman22

“ We call on SAP to consistently align their products to the needs of customers and identify concrete tangible application scenarios. [SAP]…must not push the innovation for the sake of innovation.” — Andreas Giraud, DSAG Board Member23

If anything, the trend of low Enhancement Pack usage will continue as SAP licensees should expect that most new, major features and capabilities will be reserved for S/4HANA.

SAP Licensees Challenged with High Cost of SAP Support and Value Received

Software support and maintenance play an important role in enabling licensees to innovate and grow their businesses. Analyst estimates put the IT budget ratio at approximately 87:13 towards ongoing software maintenance operations and enhancements versus funding business transformation initiatives.24

Although survey respondents said they like having access to SAP patches, upgrades, documentation, knowledge and expertise, they acknowledge that the value, relative to the price they pay, is low. The top three challenges that licensees said they had with SAP support and maintenance:

n “Too expensive for number of support calls” (46%)

n “Too expensive for new functionality delivered” (37%)

n “No support for customizations” (35%)

A representative licensee comment:

“ Using SAP support is hard work for the customer as SAP appear to hide their experts behind layers of process and procedure before getting real assistance to business issues.” — IT Manager, Energy Company25

When asked why licensees would choose to remain with SAP support and maintenance over considering other alternatives, the top responses included:

n “I Believe I Will Be Unable to Upgrade” (33%)

n “I Believe SAP Will Charge Me Back Fees If I Return Later” (19%)

n “I Believe No One Can Support My Applications Better Than SAP” (18%)

Interestingly enough, Americas SAP User Group (ASUG) research concluded that 60% of SAP licensees using current, proven SAP applications “believe that SAP will support their existing investments for at least five years or more, while


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30% believe that SAP will turn up the heat to get them to adopt SAP HANA during the next two to three years. And just under 10% said they will likely be left behind if they don’t adopt.”26

SAP licensees will not find relief from SAP: if anything, the software maintenance-to-business transformation ratio will increase. SAP has steadily increased prices for its maintenance contracts and current projections are that licensees will be paying, on average, 22% a year by the year 2016.

This is not a mistake on SAP’s part but rather part of their drive to eventually push all of its licensees closer to the cloud. The cloud model is a more profitable revenue model, for SAP, over time. John Appleby, Global Head of SAP HANA at SAP partner Bluefin Solutions shared some insight on SAP’s ambitions:

“ SAP has also been clear that they are looking to take a larger portion of customer spend in the cloud — the average revenue per customer over 5 years is higher than for on-premise software.”27

Frank Scavo, president of management consulting firm Strativa, adds:

“ As far as I can tell, SAP is not making a promise to forever support the Business Suite on anything other than HANA. At some point, customers will need to make the migration. This will not sit well with customers, especially when there are new licensing costs.”28

The findings suggest a vicious cycle: licensees are not happy with the value and ROI that they are receiving from the vendor, and yet continue to feed the system that will potentially put their businesses at risk with a slow, but consistent move away from on-premise applications towards S/4HANA and the cloud.


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Section 2: Strategic Recommendations for SAP LicenseesRimini Street has come up with the following set of strategic recommendations based on the findings from this survey combined with publically available perspectives and opinions from SAP licensees and experts.

Recommendation #1: Give S/4HANA Time to Mature

A typical comment from our survey respondents:

“I want a clear roadmap for conversion. And I want it to be easy. And I don’t want to be responsible for doing all the legwork to make it a success. I think SAP’s direction is a good direction, but they need to provide the path to get from where we are to the new world. Next, just because they offer an improved architecture doesn’t mean we should have to pay extra for it. Since the real cost is often the cost of conversion. A burden which tends to be on us.” — IT Program Management Director, Municipal Transportation Agency29

SAP licensees have time on their side. On-premise ERP solutions have been at the center of companies’ mission-critical systems of record for over 15 years. Organizations across the globe have developed and optimized their applications to perform exactly to their specific business requirements. More than 282,000 licensees cannot be wrong. SAP formally announced S/4HANA on February 3, 2015 and at the time of writing this report there are only approximately 370 organizations that are using SAP’s latest offering.30

Moreover, SAP has not provided licensees with the ability to completely replace their existing Business Suite applications with cloud equivalents, as the current S/4HANA product release map does not provide much clarity beyond the announced Simple Finance Module.31 There is currently not even a “best-guess” road map from SAP “as to when the functional and vertical modules will be ready under S/4HANA.”32 The majority of SAP licensees would be best served by giving S/4HANA ample time to mature before investing time, money and resources into the platform. Not only does SAP need to provide guidance on costs, product direction, and information on migration paths from existing applications, but they must prove to the market that S/4HANA is a clear leader in the ERP marketplace and there is a compelling business case to migrate.

Oracle, IBM and other software vendors have ERP solutions that compete directly with S/4HANA and yet there is no clear leader in the space today. SAP licensees can take their time in assessing which ERP platform will suit their needs in the upcoming years.

“The biggest single question I keep getting is how much of the existing ECC 6 suite or capability is going to end up in S/4HANA and when? That’s the core question that everyone is asking. SAP is starting with Finance, they’ll add Logistics, and they’ll be rolling out other pieces later. Ariba and SuccessFactors will come out ... next year some time.” — Joshua Greenbaum, Principal Analyst at Enterprise Applications Consulting33

Recommendation #2: Use a Hybrid IT Strategy to Maximize Your Core ERP Investment

“Despite hundreds of billions of [dollars] wasted on failed research and development projects, most market influencers would agree that enterprise software vendors have produced a dearth of innovation over the past decade … Innovation came from the consumer tech side and next-generation solution providers.” — Ray Wang, Principal Analyst, Constellation Research34

Licensees who employ a hybrid IT strategy can add new capabilities to their existing, core ERP platforms. Licensees have the ability to add new features and functionality without the need to do a wholesale “rip and replace.” Mobile, HCM, Order Management, Analytics and Big Data are some of the new capabilities that licensees have deployed successfully around the edges of their core ERP system of record.

Organizations also have the flexibility to select from best-of-breed solutions. No longer tied to the one-size-fits-all application suite approach, licensees are free to work with other vendors in the extended SAP ecosystem.


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Having access to the extended SAP ecosystem matters, because historically, smaller and more agile organizations have been at the front of the pack driving new and innovative products. Larger vendors, like SAP, have traditionally relied upon strategic acquisitions to add new capabilities to their product portfolios.

It is in these third-party solutions that licensees often find new and innovative technologies that will help them drive competitive differentiation.

Recommendation #3: Acknowledge the Cloud but Beware of Potential Lock-In, Long-Term Costs

Licensees should plan for cloud-based applications and deployment models as part of their application strategy, but the main focus should be on protecting their investment in core ERP.

This strategy takes into account how licensees should think about their existing SAP Business Suite applications but also the potential impacts of purchasing new products and solutions using bundled contracts and master licensing agreements.

Licensees should seek to avoid potential vendor lock-in scenarios and pursue strategies that afford the most flexibility and independence down the road.

Ray Wang, Principal Analyst at Constellation Research, outlines nine specific tactics on how to do this:35

n Ask for all copies of previous order docs and price lists.

n Itemize every unit of software and cost per unit.

n Use independent third-party maintenance as a lever.

n Battle indirect licensing.

n Understand your license usage.

n Never, ever, bundle your contracts.

n Focus on designing SOA principles.

n Stabilize the core, invest in cloud.

n Remember you are the boss of the licensee-vendor relationship.

Recommendation #4: Consider Independent Support as an Alternative to Vendor Support

Independent support is a viable alternative to vendor support and maintenance for SAP licensees not ready to adopt an unproven solution like S/4HANA. SAP licensees switching to independent support enjoy cost savings and continued strategic flexibility and independence.

“ [By switching to independent support] I was able to reallocate 10% of my budget growth initiatives with the stroke of a pen. I want to be clear about this, because this is a big deal. This is 10% of my total IT spend.

“ We’re in a position to literally drive the number-one priority of the CEO with the resources we gained back from the decision to go with [independent support]. It’s a new business model that is going to enable us to compete even more commercially.” — CIO, Global Chemical Manufacturing Company36

Although survey findings showed that SAP licensees were interested in understanding potential vendor fallout from moving to independent support (including being unable to upgrade and, potentially, having to pay back fees in the future), these beliefs are being questioned. Licensees using independent support today report they are able to maintain upgrade paths independent of the vendor and are able to return to SAP to purchase additional licenses and new products.


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Case Study: Embraer S.A.

Independent support also enables licensees to innovate and grow their business. Alexandre Baulé, CIO of Embraer, the third largest airplane manufacturer in the world, was compelled to explore options when his IT budget costs began rising. Citing a potential multi-million dollar SAP upgrade looming, with the only justification being to stay on a supported version, Baulé changed course by dropping SAP support and maintenance in favor of independent support.

The result: Embraer was able to remain on the existing ERP platform that was optimized for its business, an unnecessary and expensive upgrade project was avoided, and Baulé was able to reverse the ratio for his IT budget:

“Our percentage ratio of IT maintenance costs to innovative projects, which formerly was 70/30, is 50/50. And we envision opportunities to go even further than that, putting even more money into innovation, reversing the original ratio to 30/70.” — Alexandre Baulé, CIO, Embraer 37

The results of this survey are consistent with analyst commentary and other industry surveys, and a clear theme has emerged: survey respondents cited HANA and S/4HANA as unproven, speculative products with little or no compelling business case in return for the cost and risk of implementation. Pursuing HANA and S/4HANA strategies at this time create unnecessary risk at significant expense with no clear business benefit according to many respondents.

SAP licensees can now adopt a more relevant, cost-effective support service model that does not require upgrades for at least 15 years and reinvest the savings in ‘edge’ solutions including hybrid IT deployments and to drive other needed innovations.

We hope you find this research report valuable as you prepare your strategic SAP application roadmap for 2015 and beyond.


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Section 3: Data AnalysisThis section provides detailed analysis on the four major licensee feedback categories outlined in the Executive Summary.

Licensee Feedback #1: 85% of SAP Licensees Not Committed to S/4HANA

Are You Planning to use S/4Hana Applications?

Maybe52%

Yes14%

No33%

Using S/4HANAapplications today

1%

Figure 1

The survey data shows that SAP licensees are choosing to wait, for the time being, and continue running their existing Business Suite applications. Respondents said they would not use S/4HANA (“No” 33%) or might use S/4HANA applications in the future (“Maybe” 52%). Only 14% of respondents said that they would use S/4HANA (“Yes” 14%), followed by 1% who said they are using S/4HANA applications today

Why Have You Not Yet Committed to Use S/4HANA Applications?

No strong business case, unclear ROI

Unproven, early-stage product

Higher migration and re-implementation costs

Unclear license / maintenance cost

No guaranteed transition for existing customizations

Unclear product roadmap with no defined release schedule

Potential increase in our talent costs

Does not include industry-specific features for my business

Other (Please Specify)

Does not include new products like Ariba and SuccessFactors

0% 10% 20% 30% 40% 50% 60% 70% 80%

Figure 2

Survey participants show a high sensitivity towards a lack of business case and unclear ROI (68%) for S/4HANA, as well as towards the fact that SAP’s newest flagship product is an early-stage and an unproven product (44%) with an unclear high license cost (36%), and high projected migration and re-implementation costs (36%).


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Why are you planning to use S/4HANA applications?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Simplify business processes

Speedier HANA database

More attractive Fiori UX

Gain insight from analytics and Big Data

Deploy in the cloud

Other (Please Specify)

Figure 3

S/4HANA adopters are presently in the minority. Of those 14% of survey respondents who said they plan on using S/4HANA applications, reasons for adoption emphasized a desire for simplification (69%), database speed and performance (66%) and Fiori usability (53%). Interestingly the S/4HANA cloud-based deployment model (22%) rated second-to-last place amongst the responses, implying that these are early adopters who may not be as cost-sensitive as other SAP licensees.

Licensee Feedback #2: 72% of SAP Licensees Use ECC 6.0 Applications to Run Their Businesses

Respondents by SAP product usage

ECC 6.072%R/3 4.6

or earlier

7%

R/3 4.77%

ECC 55%

Other6%

HANA3%

Figure 4

72% of surveyed licensees indicated that they were already running the most-current ECC 6.0 Business Suite applications. The remaining 28% of licensees who are not running ECC 6.0 and are instead on earlier versions of the application platform said that the current version that they’re running meets business needs (43%), that upgrading to a more current version of Business Suite is cost-prohibitive (37%), and that they would move to a new application at a later time (23%).


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Why have you not yet committed to an application upgrade?

Current version meets business needs

Cost prohibitive to upgrade

Move to a new application later

Not enough new and valuable functionality

Other

0% 10% 20% 30% 40% 50%

Figure 5

Surveyed licensees who say they are not committed to upgrading cite reasons which emphasize an awareness of business strategy but also tactical considerations like cost. The most popular response for not committing to an upgrade was that the licensee’s current application meets business needs (43%). Pressures around cost-prohibitive upgrades (37%) followed closely behind. Licensees also indicated that they were taking the long view and are choosing to postpone making any major changes to their SAP applications strategy in the interim while leaving the door open to making changes at a later time (23%).

Licensee Feedback #3: 75% of SAP Licensees Are Not On Current Enhancement Pack Release

Which Enhancement Pack release are you using?

Other8%

EhP 637%

EhP 5or earlier

30%

EhP 725%

Figure 6

The majority of SAP licensees we surveyed said they were not using the latest Enhancement Pack 7 release. 37% said they were on Enhancement Pack 6, 30% were using Enhancement Pack 5 or earlier versions, 25% said they were on the most current release, and 8% reported as “Other.”


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Why have you not yet committed to upgrading to the latest Enhancement Pack 7 release?

Current version meets business needs

Cost prohibitive to upgrade

Not enough new and valuable functionality

Other

Move to a new application later

0% 10% 20% 30% 40% 50% 60% 70% 80%

Figure 7

When asked if they are planning to commit to an Enhancement Pack 7 upgrade project, licensees said the top three reasons why they would not commit were the fact that their current version meets business needs (72%), that it is cost prohibitive to upgrade (35%), and that there is not enough new and valuable functionality (30%).

Licensee Feedback #4: SAP Licensees Cannot Justify the High Cost of SAP Support and Maintenance for Value Received

What are your biggest challenges with SAP Support and Maintenance?

Too expensive for number of support calls

Too expensive for new functionality delivered

No support for customizations

Explaining the same issue multiple times

Reproducing the issue to prove its validity

Required to try all self-service options first

Lack of responsiveness and ownership

Almost always escalating to a senior engineer

Finding a specific fix from a support packageor support package stack

Other

0% 10% 20% 30% 40% 50%

Figure 8

Respondents say that SAP Support and Maintenance contracts are too expensive for the number of support calls (46%), that it is too expensive for new functionality delivered (37%), and that lack of support for customizations is an issue (35%).


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What do you like most about SAP Support and Maintenance?

0%

10%

20%

30%

40%

50%

60%

70%

80%

Access to patchesand upgrades

Knowledgeand expertise

Documentation Time to resolution Other

Figure 9

Licensees said that what they liked most about SAP Support and Maintenance included having access to patches and upgrades (66%), available knowledge and expertise (50%), and documentation (28%).

However, licensees continue to pay north of 19% per year for both Standard and Enterprise Support and are struggling with the value side of the equation.


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What are some of the key reasons you chose to remain with SAP Support and Maintenance?

I believe I will be unable to upgrade

Other

I believe SAP will charge me back fees if I return later

I believe no one can support my SAP applicationsbetter than SAP

I am currently on a Master Service Level Agreement with SAP

I just renewed our SAP maintenance agreement

My SI / services partner handles our support issues

I renegotiatied my SAP maintenance agreementwith more attractive terms

I believe I will be unable to purchase more products from SAP

I have regulatory issues with third-party support

I believe lower price means lower quality of service

0% 5% 10% 15% 20% 25% 30% 35%

Figure 10

Licensees are conflicted about SAP support and maintenance. As seen in Figure 8 above, they speak freely about major challenges with the vendor’s support program. Figure 10, on the other hand, reveals the top reasons preventing them from exploring alternatives: a belief they will be unable to upgrade their existing application is the number one reason (33%); “Other” ranked second place (22%), with sample responses including “using local, third-party organizations,” “still investigating,” and “I did not make that decision”; third was an belief that SAP will charge them back fees it they return to SAP support and maintenance at a later time (19%).


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Appendix: Survey Respondents and MethodologyThis appendix provides information on our survey respondents and methodology.

Survey Respondents

Survey respondents were represented across North America, South America, Europe and the Middle East as well as Asia Pacific.

Geographic location of respondents

NorthAmerica

50%

Europe &Middle East

35%

SouthAmerica

9% AsiaPacific

6%

Figure 11

Survey respondents were distributed across a spectrum of executive and manager-level job roles. We identified these parties as ideal respondents as they would most likely possess the ability to make high-level decisions directly impacting their companies’ application strategies.


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Survey respondents by job role

CFO1%VP of

IT

4%

ITManager

44%Other16%

Directorof IT

18%CIO17%

Figure 12

Survey Methodology

Survey respondents were asked to indicate their responses using single-choice, multiple-choice and free-text forms where appropriate. All questions, and responses, were scored and weighted with equal importance.

Rimini Street fielded its SAP Applications Strategy Survey between 10:00 AM PST on March 16, 2015 and 11:59 PM on April 13, 2015. The survey was administered online, with 233 respondents, including Rimini Street customers and prospects, completing the survey.

The sampling method was a voluntary sample with the incentives of receiving a complimentary copy of the book SAP Nation: A Runaway Software Economy or having a chance to win an Amazon.com gift card. The audience was solicited through the following channels: Rimini Street website, LinkedIn, Facebook, Twitter, Paid and Email.

All participants and responses were validated by Rimini Street to ensure the integrity of the survey. In cases where survey responses deviated from the norm we elected to discard the survey response.


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Endnotes1Chris Maxcer, “SAP S/4HANA roadmap seems uncertain,” TechTarget, March 31, 2015, http://searchsap.techtarget.com/news/4500243503/SAP-S-4HANA-roadmap-seems-uncertain, accessed April 21, 2015.

2Doug Henschen, “Oracle Strikes at SAP Hana with TimesTen Database,” InformationWeek, Jan. 12, 2012, http://www.informationweek.com/software/information-management/oracle-strikes-at-sap-hana-with-timesten-database/d/d-id/1102231, accessed April 29, 2015.

3SAP, “SAP Global Corporate Affairs: January 23, 2015, preliminary figures,” http://www.sap.com/bin/sapcom/en_us/downloadasset.2015-01-jan-20-01.sap-corporate-fact-sheet-en-pdf.bypassReg.html, accessed April 21, 2015.

4Chris Maxcer, “SAP S/4HANA roadmap seems uncertain,” TechTarget, March 31, 2015, http://searchsap.techtarget.com/news/4500243503/SAP-S-4HANA-roadmap-seems-uncertain, accessed April 21, 2015.

5Vinnie Mirchandani, “SAP’s S4HANA: The Potential Customer Disconnect,” Forbes, http://www.forbes.com/sites/ciocentral/2015/02/10/saps-s4hana-the-potential-customer-disconnect/2/, accessed April 25, 2015.

6Marco Lenck, “2014 DSAG Annual Conference: Results of the latest DSAG study on cloud and HANA solutions unveiled,” DSAG, https://www.dsag.de/pressemitteilungen/demand-innovation-potential-be-demonstrated, accessed April 21, 2015.

7ASUG Research Services Team, “SAP HANA Adoption, What Do Customers Say?,” http://www.asugnews.com/article/asug-member-survey-reveals-successes-challenges-of-sap-hana-adoption, accessed April 21, 2015.

8Dick Hirsch, “SAP S/4HANA — a deeper analysis from the technical side,” Diginomica, February 15, 2015, http://diginomica.com/2015/02/15/sap-s4hana-deeper-analysis-technical-side/, accessed April 21, 2015.

9John Appleby, “The SAP® Business Suite 4 SAP HANA® (SAP S/4HANA) FAQ,” SAP, March 2, 2015, http://www.bluefinsolutions.com/Blogs/John-Appleby/February-2015/The-SAP-Business-Suite-4-SAP-HANA-(SAP-S4-HANA)/, accessed April 21, 2015.

10Dick Hirsch, “SAP S/4HANA — a deeper analysis from the technical side,” Diginomica, February 15, 2015, http://diginomica.com/2015/02/15/sap-s4hana-deeper-analysis-technical-side/, accessed April 21, 2015.

11SAP, “SAP Announces First Quarter 2015 Results,” April 21, 2015, http://global.sap.com/corporate-en/investors/newsandreports/news.epx?articleID=24389&category=45, accessed April 29, 2015.


13Marco Lenck, “SAP S/4HANA — the user, analyst and partner views, Diginomica, Feb. 3, 2015, http://diginomica.com/2015/02/03/sap-s4hana-user-analyst-partner-views/, accessed April 25, 2015.

14DSAG, “2014 DSAG Annual Conference: Results of the latest DSAG study on cloud and HANA solutions unveiled,” https://www.dsag.de/pressemitteilungen/demand-innovation-potential-be-demonstrated, accessed April 21, 2015.

15Quoted in Chris Kanaracus, “SAP user group says members will pull back on IT spending growth this year,” PCWorld, http://www.pcworld.com/article/2097220/sap-user-group-says-members-will-pull-back-on-it-spending-growth-this-year.html, accessed April 25, 2015.

16Ray Wang, “SAP S/4HANA: Big Bet On ‘Simplified’ ERP,” InformationWeek, Feb. 4, 2015, http://www.informationweek.com/software/enterprise-applications/sap-s-4hana-big-bet-on-simplified-erp/d/d-id/1318938, accessed April 25, 2015.

17SAP, “SAP enhancement packages for SAP ERP: Technology Facts,” Sept. 25, 2009, http://www.sdn.sap.com/irj/scn/go/portal/prtroot/docs/library/uuid/20bcc5d8-0275-2b10-2a8f-bbced21e010f?QuickLink=index&overridelayout=true&45518063927863, accessed April 29, 2015.

18SAP, “SAP enhancement packages for SAP ERP: Technology Facts,” Sept. 25, 2009, http://www.sdn.sap.com/irj/scn/go/portal/prtroot/docs/library/uuid/20bcc5d8-0275-2b10-2a8f-bbced21e010f?QuickLink=index&overridelayout=true&45518063927863, accessed April 29, 2015.

19Panaya, “SAP Enhancement Package 6 Fact Sheet,” undated, http://panaya.com/images/stories/Datasheets/29_021_fact_sheet.pdf, accessed April 29, 2015.

20Panaya, “Enhancement Pack 7: Avoiding the Pitfalls,” March 19, 2014, http://go.panaya.com/19-03-14-UpgradingtoSAPEnhancementPackage7HowtoAvoidthePitfalls_UpgradingtoSAPEnhancementPackage7-Webinar_Recorded_thankyou.html?aliId=22894917, accessed April 21, 2015.

21Vinnie Mirchandani, “SAP’s S4HANA: The Potential Customer Disconnect,” Forbes, http://www.forbes.com/sites/ciocentral/2015/02/10/saps-s4hana-the-potential-customer-disconnect/2/, accessed April 25, 2015.

22Quoted in Chris Kanaracus, “SAP user group says members will pull back on IT spending growth this year,” PCWorld, http://www.pcworld.com/article/2097220/sap-user-group-says-members-will-pull-back-on-it-spending-growth-this-year.html, accessed April 25, 2015.

23Quoted in Martin Beyer, “Die Pläne von SAP und seinen Kunden sind nicht kongruent,” Computerwoche, Feb. 24, 2014, http://www.computerwoche.de/a/die-plaene-von-sap-und-seinen-kunden-sind-nicht-kongruent,2554751, accessed April 25, 2015.

24Gartner; “Gartner IT Key Metrics Data, 2014 IT Enterprise Summary Report”, January 31, 2014.

25Source: Rimini Street.


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26ASUG Research Services Team, “SAP HANA Adoption, What Do Customers Say?,” http://www.asugnews.com/article/asug-member-survey-reveals-successes-challenges-of-sap-hana-adoption, August 7, 2014, accessed April 21, 2015.


28Quoted in Chris Maxcer, “SAP S/4HANA roadmap seems uncertain,” TechTarget, March 31, 2015, http://searchsap.techtarget.com/news/4500243503/SAP-S-4HANA-roadmap-seems-uncertain, accessed April 21, 2015.


30SAP, “SAP Announces First Quarter 2015 Results,” April 21, 2015, http://global.sap.com/corporate-en/investors/newsandreports/news.epx?articleID=24389&category=45, accessed April 29, 2015.

31SAP, “SAP S/4HANA Frequently Asked Questions,” March 2015, http://www.sap.com/bin/sapcom/en_us/downloadasset.2015-03-mar-02-23.sap-s-4hana-frequently-asked-questions-pdf.bypassReg.html, accessed April 29, 2015.

32Brian Sommer, “Burning questions following SAP S/4HANA announcement,” diginomica, Feb. 15, 2015, http://diginomica.com/2015/02/12/burning-questions-following-sap-s4hana-announcement/, accessed May 4, 2015.

33Quoted in Chris Maxcer, “SAP S/4HANA roadmap seems uncertain,” TechTarget, March 31, 2015, http://searchsap.techtarget.com/news/4500243503/SAP-S-4HANA-roadmap-seems-uncertain, accessed April 21, 2015.

34R. Ray Wang, Research Report: “How The Five Pillars Of Consumer Tech Influence Enterprise Innovation,” Software Insider Blog, October 4, 2010, http://blog.softwareinsider.org/2010/10/04/mondays-musings-how-the-five-consumer-tech-macro-pillars-influence-enterprise-software-innovation/, accessed April 25, 2015.

35R. Ray Wang, “How to plan for SAP’s S/4 HANA,” ZDNet, February 13, 2015, http://www.zdnet.com/article/how-to-plan-for-saps-s4-hana/, accessed April 21, 2015.


37Rimini Street, “Leading Aerospace Manufacturer Cuts Costs, Drives Innovation with Rimini Street Support,” http://www.riministreet.com/Documents/Collateral/Rimini-Street-Client-Success-Story-Embraer.pdf, accessed April 25, 2014.


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About Rimini Street, Inc.

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