It’s hard to fathom how much can change in an enterprise year. Seems like yesterday I was teeing up our coverage of UKISUG’s 2023 event, where AI was disrupting the talking points, inside and outside of SAP. 

Fast forward to UKISUG Connect 2024, and the AI topic has matured. In sum, at least we know the right AI questions to be asking – of SAP and other vendors. 

But, as I learned from UKISUG’s new Chair Conor Riordan, other pressing topics are keeping SAP leaders with full plates. The RISE evaluation/business case, end of maintenance ERP deadlines, and “clean core” discussions are all near the top of that list. 

As I type, UKISUG Connect, the annual conference for members of UKISUG, the independent UK & Ireland SAP User Group, is now underway in Birmingham. Our own Derek du Preez is in Birmingham for the event – look for his updates on the ground, including a UKISUG member survey reveal. With so many potent/controversial topics on deck for SAP customers globally, it’s a perfect time to have my first virtual sit down with Riordan, and pick hot topics to watch this week. 

As an SAP practitioner at Pfizer, Riordan has learned first hand about the IT/business gap – and the importance of trying to bridge it. As Riordan told me, he’s been on both sides of that now: 

I’ve worked in the SAP space for 25 years. But about three years ago, I switched out of IT into the business. So I now work on the business side in terms of global supply chain, but obviously, I’m still heavily involved in SAP as a user, and I’m still deploying a lot of SAP software. 

Hot topic #1 – the future of SAP innovation isn’t a tech project, or a business project – it’s both

Riordan has seen this one firsthand: 

I get the perspective from two ends, from the IT end, and also business end, which often is quite interesting, because one of the things I’ve learned since I’ve gone on to the business side is they don’t understand technology… I think as technology gets more and more complex, and as the pace of change gets faster, there’s such a reliance on IT to understand, and for IT to take the lead in terms of business process, and business process re-engineering technology selection.

Some might think this gap has closed, given all we’ve learned about enterprise project success (and failure). Riordan doesn’t think so: 

It’s even more polarized than say ten years ago, where often your business people had some kind of knowledge of what the IT landscape was. But 1733185035 you know, it is quite complex. 

2. SAP tech is a moving target, and the customer base is more complex

As SAP pushes ahead into RISE, GROW, Business AI, and a range of SaaS offerings, the customer base is more diverse. That creates new challenges for user groups. These organizations must find a way to serve members who show up at their events with very different landscapes – and questions. Riordan: 

If you look back three years ago, and you look at our world, even from the user group, I would say, 95 percent of our members were ECC on-prem. So our offering at the conference was fairly predictable in terms of what we were going to present. But now we’re in this landscape where we have ECC on-prem; we’ve got S/4 on-prem; we’ve got S/4 on RISE. We’ve got the cloud. We’ve got Business ByDesign. We’ve got Business One. And then for the S/4 on-prem customers, we’ve got S/4 customers that just did a technical upgrade that are still on the old GUI. And then we’ve got customers that moved into Fiori. So from a segmentation perspective, we have seven different customer types, and that makes life a little bit difficult, because when we look at it as a user community –  for us, it’s: ‘How do we service our members?’

3. Access to SAP innovation across customer types is a new challenge

Riordan points out that for SAP to add new functionality across all those releases and footprints is a daunting challenge. SAP has to find a way to push ahead on new innovation, while making sure older customers still have access to the new stuff. I argue that there is a different between getting new functionality in ECC, versus having access to SAP AI innovations via say, BTP – even if you are on an older release, and not ready for RISE or GROW. This is a debate – and a messaging problem – SAP has struggled with this year (though I’m seeing signs of progress; more on that in my next piece). 

Example: there are plenty of AI vendors more than happy to offer SAP’s ECC customers AI services right now, without upgrading ERP, without moving to cloud/RISE. It seems to me SAP needs better approaches – and messaging – for customers in that situation.  How does Riordan see this for UKISUG members? He responded: “It’s a good point. I actually raised this with Christian in April when I was over there” [Christian Klein is SAP CEO]. 

Riordan sees this problem in two ways: sometimes, new innovation simply doesn’t work on older releases, or on-prem, due to technical limitations. But other times, SAP has decided strategically not to make that innovation available. SAP’s Sustainability Control Tower appears to be one example that is now only available via RISE/GROW but, to the best of my knowledge, has no inherent technical requirement for that to be the case. Riordan: 

From my understanding and from my discussion with SAP two years ago, there’s no reason, technically why that Sustainability Control Tower can’t be made available – and actually was made available to ECC customers. Now you can only get it through a RISE contract. And that, to me, is a commercial decision, not a technical decision. That’s where I think things do get a little bit gray in terms of, are we getting fair return for our money that we’re paying SAP in terms of support, you know?

But sometimes it’s more about SAP messaging/communications. In the past, UKISUG has taken the position that innovations like AI should be available via BTP. In fact, many AI capabilities are indeed available this way, via BTP and SAP’s Gen AI Hub (watch for my story on this tomorrow). Even Joule, which appears to be tightly connected to RISE/GROW in SAP’s messaging, can be accessed via a range of SaaS solutions like SuccessFactors. When SAP holds innovation inside of a RISE commitment, it risks missing out on that innovation opportunity with customers. Riordan has firsthand experience here:

We’ve now gone a separate direction with scope three sustainability via a separate vendor, because we need it now. We might go with SAP here in a couple years when we go to RISE, or whatever. But for now, it’s like, ‘We’re not going to wait,’ and also, you don’t change your technical strategy because of one piece of innovation… Deciding to go to RISE is too big that one piece of functionality is going to tip the balance. 

It will be very interesting to see what UKISUG members say on this topic, and whether they agree with my take, Riordan’s take, or have a different view entirely.

4. The business case for RISE and S/4HANA upgrades must contend with migration risk management

Last but not least in my hot topics: the challenge of making the business case for a major SAP ERP upgrade, with end of maintenance deadlines looming. On the good news front for SAP, Riordan says many SAP IT leaders understand the business value of S/4HANA, and also of cloud (they may well be running solutions like SAP Commerce Cloud already, or installing them in parallel with their SAP ERP upgrades). 

The dilemma: in order to reduce the perceived risk of a RISE S/4HANA move, which includes business user UI changes etc., IT leaders may divide the move in stages. The problem with that? The first stage, a technical migration to S/4HANA, without even moving from SAP GUI to Fiori, may not have the business value that gives such projects priority and momentum. Riordan explains:

Sometimes I feel SAP looks at this as a one step process: you go from ECC to RISE in the cloud. I don’t think anybody doubts that the long-term strategy is correct, but for most organizations, that’s just too risky. It’s too much of a multi-year, multi-step process to minimize business risk and business change. And so the first step will be to ECC on-prem to S/4 on-prem technical, so you’re still live in the GUI. It looks the same; it feels the same. 

And then you’re probably going to go from S/4 on-prem to S/4 on-prem with Fiori, right? And then probably from there, you go to RISE private cloud. It’s going to be a multi-year journey for a lot of the big companies. If you’re a big organization, this is a big, big change, so you’ve got to do it in chunks. I think some of the frustration is that maybe some of our customers, whenever they come to SAP with a problem, RISE is the solution, right? And not maybe understanding that this is a multi-step process. Yes, we’ll eventually get there, but we won’t get there in one step because it’s just too risky; it’s too much change.

Sounds like a challenge worthy of a keynote to me. Riordan adds: 

I’m going to talk about the challenge with the business case. The business case for the end-to-end – you can make sense of it. You can make that story about moving from on-prem to the cloud with Fiori, with Joule, with embedded analytics – that’s a relatively straightforward business case to put together, but if you’ve got to break it down into chunks, and the first chunk is a technical migration from on-prem ECC to on-prem S/4, and you need millions of dollars to do that… And then, if you’re competing with other projects in your organization, and you still have three years of warranty left then…  Thomas Saueressig said it really well last year. He said, ‘You know, one of the problems is ECC is just so good.’

Riordan says part of the issue is SAP dealing with its own success, via established products customers trust: 

[As our members say], ‘These solutions work.’ It’s not like you’re going to your board saying, ‘Look, we have this huge problem – our solutions can’t keep up the pace with the industry. We’re losing competitive advantage,’ or whatever. That’s not the case, because all the innovation happens at the edge. So you can put in SAP Service Cloud, Commerce Cloud, Concur. You can deploy all the new tools on ECC.

That’s a position for SAP to examine closely – I’ll be interested to hear how SAP responds this week and beyond (I do think there can be a strong business case for a purely technical upgrade, but only in situations where the customer’s legacy ERP footprint is, in short, messy – perhaps due to mergers/acquisition, or spinning up too many instances. Even so, that would be a cost reduction business case, not a case for business growth/agility). 

My take

I believe there is a strong business case to be made for an SAP cloud or RISE move – perhaps more so for the S/4HANA public cloud edition, or even a hybrid deployment of private and public – an argument for another time. I’ve also seen good examples where the innovation isn’t from the edge, but based on a real-time ERP core (and data platform). 

Are some organizations just too risk averse? Shouldn’t they have an overall transformation imperative, an urgency to compete in rapidly-changing industries? Once you have that in place, couldn’t you make a strong case for SAP platform modernization within that context, even if it has to happen in stages? Couldn’t you front-load some cloud services and AI innovations to spark the longer term transition? If you pull that off, then how do you sustain momentum throughout such a project, with buy-in from users and leadership, even when times of tougher sledding might hit?

I doubt there is one right answer; UKISUG’s survey results should be interesting. One thing is certain: SAP fares best in open dialogue with customers. 

I’ve shared some of my opinions here, but what I really want to hear are customer views on the ground. For that, we’ll turn to Derek du Preez, and his updates from Birmingham. Meantime, my ASUG Tech Connect AI review comes out tomorrow, where I’ll hit on themes of LLM accuracy and accessing Gen AI Hub through BTP. Oh, and DSAG, the German speaking SAP user group, has had notable events also. We’ll look to catch up with them soon as well.