Our colleagues in Japan recently forwarded a series of SAP user group newsletter articles where the title of the series translates roughly into, "The Depression of SAP Users."
Why are they depressed? Likely, because they are being told they must hurry up and implement SAP S/4HANA before 2025, when SAP says it plans to end its mainstream maintenance window for the ECC (Enterprise Core Component) edition of its platform. ECC has been the core of SAP's ERP systems for the last 15 years. Among the user group's concerns is a shortage of people available for hire - or even on the staffs of system integrators - with the skills required to implement S/4HANA. And after they get it implemented, they worry about how they will support it.
These apparent concerns about a skill shortage come on top of persistent worries about lack of a business case or clear ROI for S/4HANA.
S/4HANA is a major architectural overhaul, partly because it's intended to be "simplified" and "streamlined" and partly because it substitutes a new database engine of SAP's own design for the relational databases that underpinned past versions. Previously, most large implementations used Oracle Database or IBM DB2 as the database backend, but SAP is pushing its HANA in-memory database design as a better combination of transactional performance and analytics.
Whatever the merits of the new architecture - which gets mixed reviews - it's different enough to require a different set of skills to implement, administer and support.
Some organizations may seek to lower the hurdles to fielding S/4HANA by adopting the Software as a Service version and shifting some technical responsibility to the cloud provider. The SaaS version is newer and less mature than the traditional implementation of S/4HANA, but some organizations are moving ahead with it (or at least piloting it) anyway.
But although adopting a cloud version of the software lowers some technical hurdles, it might raise others. To be successful with that strategy, organizations may have to build up the hybrid IT expertise necessary to share data and processes between local systems and the public cloud - or, more likely, multiple clouds. Those skills aren't easy to come by, either.
This big change is not entirely unprecedented. Some of us have been in the SAP world long enough to remember the rush of implementations in the late 1990s - driven by a combination of the Y2K panic and the transition from the old mainframe, R/2 incarnation of SAP to client-server and the web.
The transition to S/4HANA feels a bit like that big leap, when it was near impossible to find people with years of experience with the latest ERP platform because it had only been in the market a short time. R/2 experts had to learn R/3, and many more people needed to be recruited into the field.
The graduates of that phase of SAP's growth, who cut their teeth on SAP R/3 and stuck around for the emergence of ECC, are the gray-haired authorities on the platform today. Their wisdom is invaluable, but the catch is that many of these people with 15 or 20 years of SAP experience are now thinking about retirement. Meanwhile, new talent isn't necessarily attracted to SAP work the way it once was.
The Japanese seem particularly concerned, perhaps because they are taking SAP's 2025 planned end of its maintenance window more seriously and moving more aggressively to implement S/4, whereas companies elsewhere are more likely to view S/4HANA more skeptically and bet that either the deadline will be extended or another ERP modernization approach will be more appropriate. Some have already switched to third-party support, recognizing that SAP's interest in supporting ECC is likely coming to an end.
The other scenario where Rimini Street gets involved is to support companies that are phasing in S/4HANA but use us to lower their total cost of support in the meantime and help with the transition.
We expect to hear more concern about this issue from around the world as 2025 draws closer.
Stuart Browne, founder and managing partner of the SAP consulting firm Resulting Ltd., writes on LinkedIn that it's already extremely hard to recruit people with SAP FICO or SD experience in the U.K.. The S/4 HANA push "means that this situation is only going to get worse as demand increases and the local workforce ages. This has the potential to cripple some of the world's biggest companies who need to adapt their business models to compete in a digital era but who won't be able to due to a massive supply and demand imbalance and a talent war."
Eventually, the balance of supply and demand will equalize, but meanwhile things are going to get expensive for all SAP shops and S/4 ones in particular, he says.
A blog post on the website of specialty recruiter Phaidon International echoes that concern: "In 2025, SAP expects its customers to have transitioned to S/4HANA and will no longer support its current business suite ERP systems. As a result, every SAP customer will be looking to implement S/4HANA over the next few years, placing upward pressure on salaries as employers compete to recruit the best available talent to support their strategic goals."
An ERP talent crunch was already coming, and the industry is realizing that SAP's push for adoption of S/4HANA is just going to make it a bit more intense. It coincides with a surge of interest in the cloud, artificial intelligence, and digital transformation strategies, all of which come with their own demands for talent.
Gartner addressed the broader issue in its report, Retirements and Digitalization Are Creating an ERP Skills Gap - Are You Prepared to Fill It? (July 2018). "One Gartner client has said that their company is in a race to finish its ERP modernization initiative before the support team retires," Gartner reports. "Replacing ERP skills isn't as simple as it was 10 years ago, because the pool of external candidates with ERP product expertise is shrinking." Furthermore, "Growing demand to staff digital projects and the need for digital talent within business units are worsening the skills shortage by creating new competition for the best IT resources," the analysts write.
SAP may like to claim that the next wave of digital innovation will revolve around S/4HANA, but the best young talent is not necessarily flowing in the direction of ERP. There are too many opportunities to work with cloud and mobile apps or to create novel digital business models outside the bounds of ERP.
Meanwhile, you have a business to run. Even if you hire a fleet of consultants to get you through the implementation, you will need to have people in place to support it after they are gone.
That is not to say the skills to support ECC today will not translate to S/4 tomorrow. Many of the core concepts remain the same, meaning that it will be much easier for an ECC specialist to learn S/4 than it would be for someone transitioning from another ERP platform. However, it's the differences that are most likely to be relevant if the system crashes or an important ECC customization no longer works or a report no longer runs on S/4.
For example, S/4 supports the familiar ABAP application programming language, but the programs themselves must adapt to new data structures. Simple customizations like form validations and workflow rules may no longer work because S/4 no longer supports the "user exits" those programs hooked into. SAP is purposefully simplifying the ERP core and vastly reducing opportunities for customization with the goal of driving SAP users toward what it considers "best practices" - which is only a good thing if you agree those best practices are improvements.
Similarly, experienced Basis administrators will have to learn new rules for configuring applications and optimizing them for HANA rather than a relational database.
Rimini Street can be your ally in all this. Our engineers average 15 years of experience - and one of the benefits of experience is they've been through technological transitions before. If you see the business case for moving to S/4HANA, we can help you lower your total cost of support during the transition - our clients on average see about a 75% reduction in the total annual cost of support for ERP.
On the other hand, if you see no reason to abandon your ECC implementation, our support does not expire in 2025. We guarantee to support you on your current platform for at least 15 years from the day you sign your contract. Beyond offering award-winning support, we can help you benefit from economies of scale by helping you move your existing ERP into the cloud. We can help you extend its capabilities with additional software and cloud services.
So don't be depressed. We're here to help.
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Eric Robinson, Global VP & General Manager, SAP Services
Eric Robinson is responsible for the expansion of all Rimini Street SAP services and products worldwide. He works to ensure that all SAP teams are aligned on product strategy, management, messaging, delivery, and sales. He specializes in vision, guidance, planning, and management for technical solutions to complex business problems. Having worked with SAP systems since the early 1990s, he has extensive knowledge of manufacturing, distribution, and financial systems.