Over a period of years, you've likely invested millions in an SAP platform that today is robust, stable and core to running your business.
Like any good investment, your ECC 6.0 system and other Business Suite applications should yield strong dividends for years to come. In the context of IT, that means delivering the efficiency, availability and reliability required to meet business needs and drive growth.
But is your payback in jeopardy? Two factors are prompting many SAP licensees to rethink their enterprise IT strategies for the near term and beyond.
For one, many recognize the frequency of enhancements and innovation for Business Suite have waned, likely due in large part to SAP's new commitment towards an S/4HANA future. Such licensees remain hesitant to begin a migration path for a product that is not yet complete with an unclear ROI.
Secondly, licensees need to innovate and meet the ever-evolving needs of their business, now. Although SAP touts S/4HANA as an engine for innovation, many don't see it that way. According to a recent research survey of SAP licensees, two-thirds of respondents plan to keep running their existing SAP ERP applications while more than 50 percent have no strong business case to migrate to S/4HANA.
Many organizations are deploying best-of-breed applications around their stable SAP core to enhance customer centricity, business agility, or data-driven insights — rather than relying on a single vendor to supply it to them. Organizations can't afford to wait for ERP vendor-driven innovation strategies as the only way to drive forward to a digital future.
A Roadmap for Innovation
SAP licensees that have ruled out S/4HANA for now find themselves in an untenable situation: They need to find new funding for best-of-breed innovations. But they continue to pay a small fortune to support and maintain their existing Business Suite applications.
"Organizations are trying to figure out how they're going to change their business models and innovate," said Ray Wang, the head of Constellation Research and a noted SAP watcher, in a recent conversation with Rimini Street.
"Legacy systems work great, are fully functional and very robust," Wang said. "But [customers] are just spending a fortune trying to keep them running and paying support."
SAP licensees surveyed by Wang identified three top objectives:
- Freedom from forced upgrades and lock-in to a single vendor
- Cost optimization that frees funding for best-of-breed innovation
- Reduction in maintenance costs (typically 22 percent of license fee for SAP customers)
Those three objectives are key triggers that prompt customers to engage with independent support. Moving to independent support reduces maintenance spend by 75 percent on average compared to the original software vendor's annual support fee and related maintenance costs, freeing up funds to buy new software, build new functionality and add staff — while continuing to reap the rewards of a stable SAP core.
"For most of [Constellation Research] customers, they've at least engaged in independent support to figure out what opportunities are out there," Wang said. "And once you do the math you say, 'Why am I spending all this money when I can stop paying for all this?'"
Besides cost savings, SAP licensees also find that independent support provides better service, with 24/7/365 support for customizations, delivery of tax, legal and regulatory updates, senior support engineers assigned to each client, and interoperability support.
Independent support has emerged as a compelling option that lets companies maximize the value of their SAP investments. They realize significant cost savings, preserve their heavily customized and mission-critical SAP applications, and gain the freedom to innovate now and well into the future.
Survey Report: 2017 SAP Applications Strategy Findings
Rimini Street surveyed 208 SAP ERP licensees across the globe to gain insights into their strategies for their SAP ERP/Business Suite implementations. Find out what your peers are thinking.
Hari Candadai, GVP, Global Product Marketing and Strategy
Mr. Candadai is a seasoned marketing professional with over 22 years’ experience in global product marketing and corporate marketing management. He has consistently demonstrated his leadership by building strong customer relationships and optimal cross-functional partnerships. The author of several thought-leading white papers on disruptive software and services models, and one of the chief evangelists for independent support, Mr. Candadai is a frequent speaker at industry conferences globally.