EXECUTIVE SUMMARY

SAP S/4HANA
Objectives, implementation strategies and
concerns of German SAP users

Lead analyst: Frank Niemann

October 2016

Premium sponsor
TABLE OF CONTENTS

Background and methodology ............................................................................................... 4

Introduction ........................................................................................................................................... 4
Methodology .......................................................................................................................................... 4

Main points ............................................................................................................................. 5

SAP users are divided ............................................................................................................. 6
Project objectives range from targeted process transformations to pure
technology upgrades ............................................................................................................. 7
The number of planned projects involving a direct change to S/4HANA
has increased ........................................................................................................................ 7
External support is in strong demand ..................................................................................... 8
IT investments: A lot of system integration and consulting but few cloud
services .................................................................................................................................. 9
Conclusion and outlook ....................................................................................................... 10
Outlook ................................................................................................................................................ 10

Appendix ............................................................................................................................. 11
Disclaimer, usage rights, independence and data protection ............................................................. 11
About SNP ............................................................................................................................................ 12
About PAC ........................................................................................................................................... 13

LIST OF FIGURES

Fig. 1: The role of S/4 HANA .................................................................................................................... 6

Fig. 2: Use of SAP components ............................................................................................................... 7
Fig. 3: Use of SAP components ............................................................................................................... 8
Fig. 4: Use of SAP components ............................................................................................................... 9
Fig. 5: Drivers for S/4HANA investments .................................................................................................. 9

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PREFACE
Dear reader,

SNP AG consistently focuses on supporting companies during their

digital transformation. We believe that IT can contribute to increases
in value for many companies. Our motto is "Creating Value by IT."

In many, often highly complex, global projects we have shown that

this is possible even within very tight deadlines. It has become clear
to us that IT departments can act as catalysts for the strategic
development of their companies, despite many prevailing
reservations.

S/4HANA in particular provides opportunities for IT to set new trends

for the ongoing development of companies and their business
models.

With the current study, we want to encourage the debate about the
modernization of IT structures in Germany. Databased knowledge of
the current status of one of the largest future issues, i.e. S/4HANA,
reveals how today’s companies are developing, where action
potentials exist and how agility within companies has grown.

Joerg Petzhold Joerg Kaschytza

Global Marketing Director Senior Advisor S4HANA
SNP AG SNP AG

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SAP S/4HANA
Frank Niemann
Vice President – Software & SaaS Markets

October 2016

BACKGROUND AND METHODOLOGY

INTRODUCTION

In 2015, PAC had already conducted a study on SAP S/4HANA. Back

then, its main focus was the relevance and strategic importance of The focal point of
the new product generation. In the present study, we now look at this study was the
implementation strategies and approaches. actual
This study focuses on...: implementation of
• ...if and when companies that use SAP software today want SAP S/4HANA.
to introduce SAP S/4HANA, In addition, results
• ...what their objectives for the introduction are, were compared to a
• ...what concrete implementation approaches and strategies similar survey
they choose, and conducted in 2015.
• ...what the barriers to implementation are.

A separate section will deal with any developments and changes

that have taken place since the previous study.

"SAP S/4HANA is an important new

technology."
(Statement made by a study participant)

METHODOLOGY
The survey is based
For the second time in a row, telephone interviews were conducted on telephone
with more than 100 IT/SAP managers in German companies (CATI). interviews with
The sample comprises SAP user companies with more than 1,000 IT/SAP managers in
employees from the manufacturing and service sectors. The German companies
distribution by industry group and size category was selected in such with 1,000 or more
a way that a sufficient number of interviews per group were employees.
conducted to allow for meaningful statistical analysis.

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MAIN POINTS
• The relevance of S/4HANA is controversial
For 38 percent of surveyed companies S/4HANA is
strategically important for their digital transformation or an
anchor point for the redesign of new SAP processes. For
instance 41 percent of companies have concrete plans to
introduce S/4HANA in the next few years, while 14 percent
have already launched projects of this kind. However, many
are still discussing, if and when to take this step. Many also
believe S/4HANA to be no more than a new SAP release. For
every fourth respondent S/4HANA is completely irrelevant.

• There is much to be said for S/4HANA

Companies are looking to accelerate their processes and
data analyses with S/4HANA (88 percent) and hope to
modernize their SAP applications (72 percent) as well as
being able to accomplish their transformation towards real-
time operations (70 percent). Many, however, feel that they
are being forced to follow SAP's strategy (63 percent).

• Most focus on a "system conversion" only

Almost half of the companies surveyed are planning a
gradual technological migration to S/4HANA. Only 24 percent
are looking for a step-by-step transformation of their
processes. Just as many, however, are pursuing a completely
new implementation.

38 percent of the companies are looking to bring

SAP Business Suite to SAP HANA first, in order to later switch to
S/4HANA. Almost the same number (37 percent) prefer a
direct transformation to S/4HANA in a single step. Frequently,
the target platform is the On-Premise edition.

Many companies (44 percent) are looking to introduce the

financial system first; some are planning the SCM
implementation as a next project.

• External support is in strong demand

Many companies are planning and discussing a SAP
database migration (79 percent) to SAP HANA and the
updating of existing SAP software (75 percent) and require
assistance in doing so (87 and 79 percent respectively).
Companies are investing in system integration services as well
as in process consulting, e.g. for process transformation to
real time as well as for the design of new business processes.
Often IT/SAP departments act as investment drivers
(67 percent).

• Uncertain costs often inhibit the implementation process

For three quarters of companies, it is difficult to estimate the
costs involved in the conversion of SAP-based processes to
S/4HANA. Many also lack the business cases they need to
justify such substantial investments.

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SAP USERS ARE DIVIDED
The vast majority of companies has already formed an opinion about
SAP S/4HANA. Nearly 40 percent believe the new product generation
to be strategically important and see it as an anchor point for their
digital transformation. Just as many, however, think of SAP S/4HANA
as no more than a new SAP release and simply want to update their
backend systems up to the next release, just like they always do.

Furthermore, many companies (41 percent) already have concrete

plans to introduce SAP S/4HANA within the next few years or are
already working on the project. Approximately one in three
companies (34 percent), however, is still undecided and discussing
this step.

For 25 percent an introduction is currently out of the question. In the

2015 study 33 percent of companies still thought such an introduction
was irrelevant. At the time, only 2 percent were working on an
implementation project.

... is of central, strategic importance for

our digital transformation.
10%
24%
... is an important anchor point for the
redesign our SAP-based processes.

... represents an important advancement

S/4HANA… in our SAP landscape for us.
39% 14%
... is just like a new SAP release for us.

14% Do not know/no answer

n=102 © PAC - a CXP Group Company, 2016

Fig. 1: The role of S/4 HANA

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PROJECT OBJECTIVES RANGE
FROM TARGETED PROCESS
TRANSFORMATIONS TO PURE
TECHNOLOGY UPGRADES
First and foremost, surveyed IT and SAP managers mention S/4HANA’s
technical advantages: The acceleration of processes and data Companies should
analyses. Reasons for S/4HANA introductions are strongly linked to the focus not just on
companies’ views on the new product’s relevance. For some the technical
companies S/4HANA is of strategic importance in the introduction of release change
new business processes/models as well as the creation of real-time but instead try to
processes. 63 percent of respondents, however, argue that it really is fully exploit the
the SAP product strategy that is forcing them to make the innovation
introduction. potential S/4HANA
represents for their
Completely agree Somewhat agree company.
Acceleration of processes and data
55% 33%
analyses

Modernization of SAP applications 34% 38%

Transformation of existing processes

32% 38%
towards realtime
SAP release strategy leaves no other
39% 24%
option
Centralization/standardization of the
24% 29%
system landscape

Reduction in process costs 18% 32%

Introduction of new business

24% 22%
processes/models
Take-over or spin-off creation of a
3%
company
0%
Companies for which S/4HANA is relevant, n = 76 © PAC - a CXP Group Company, 2016

Fig. 2: Use of SAP components

THE NUMBER OF PLANNED It is worth

considering
PROJECTS INVOLVING A whether it might be
DIRECT CHANGE TO S/4HANA worthwhile to
implement
HAS INCREASED completely new
SAP systems
As it turns out, many companies simply want to carry out some kind of (greenfield
release change by means of a "system conversion.” 24 percent approach), in
choose a step-by-step migration of SAP-based processes to S/4HANA order to create
while the same number prefer a complete re-implementation of their new infrastructures
business processes. When companies switch to S/4HANA, irrespective and processes free
of the implementation strategy they adopt, the majority then seeks to from existing faults
bring all of their SAP systems up to the new product generation. and liabilities.

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Most companies would consider the introduction of the On-Premise
edition. Cloud options are of interest only to a few companies. A
significant number of companies would like to switch directly from the
currently operating system to S/4HANA, i.e. undergo a single stage
transformation.

Introduction of the S/4HANA On-

45%
Premise edition

First of all the transition to SAP

Business Suite powered by SAP 38%
HANA, then the transition to S/

S/4HANA transformation in a single

37%
step

Introduction of further SAP HANA-

23%
based applications

Introduction of the SAP S/4HANA

9%
cloud edition

Introduction of S/4HANA via the SAP

9%
HANA enterprise cloud

Companies for which S/4HANA is relevant, n = 76 © PAC - a CXP Group Company, 2016

Fig. 3: Use of SAP components

EXTERNAL SUPPORT IS IN
STRONG DEMAND
The introduction of S/4HANA is accompanied by a whole range of
technical and organizational measures. Obvious tasks include the If the introduction
migration of existing databases on which today’s SAP systems are run of S/4HANA is to
to SAP HANA (79 percent) as well as the implementation of user bring the company
software upgrades (75 percent). true benefits, then
For most planned or discussed measures SAP users require support it must be more
from an external partner which will provide consulting services as well than a pure IT
as implement the introduction. The need for support with planned or project. In fact, a
discussed measures is greatest during the introduction of the new technical and
general ledger and the database migration to SAP HANA. organizational
Here businesses expect their SAP partner to possess not only technical transformation
migration expertise (89 percent) but also advanced process must take place.
transformation skills (88 percent).

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 Planned Discussed

Migration of SAP databases to SAP HANA 41% 38%

Upgrade/update of existing SAP

software
43% 32%

In-depth analysis of our specialist

departments’ needs
37% 29%

Consolidation & harmonization of SAP-

based processes
32% 24%

Companies for which S/4HANA is relevant, n = 76 © PAC - a CXP Group Company, 2016

Fig. 4: Use of SAP components

IT INVESTMENTS: A LOT OF
SYSTEM INTEGRATION AND
CONSULTING BUT FEW CLOUD
SERVICES
In view of the high demand for external support many companies
plan to invest in IT services for IT consulting (42 percent) and for the When IT and
migration of databases and applications (42 percent). Where specialist
companies require process consulting this is mainly for the departments try to
improvement of existing processes. jointly transform
Investments are driven not only by IT and SAP organizations but in business processes,
almost every second company specialist departments are also the importance of
involved, too. Among the specialist departments the finance, change
accounting and controlling departments in particular act as key management
drivers for S/4HANA investments. should not be
underestimated.
This is where the
biggest project
risks lie.

67%

46%
39%

IT or SAP Specialist Top management

organization departments
Companies for which S/4HANA is relevant, n = 76
© PAC - a CXP Group Company, 2016

Fig. 5: Drivers for S/4HANA investments

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CONCLUSION AND OUTLOOK
From PAC’s perspective, the study results lead us to believe that SAP
users are divided into two camps regarding S/4HANA.
For some the new SAP product generation is of strategic importance
for the transformation of their business processes and enables them to
support new business models as well as the development of their SAP
landscapes. Their aim in making the introduction is to transform their
SAP-based processes step-by-step or even to create a completely
new implementation.
Another group of companies sees S/4HANA simply as the next SAP
release that must be introduced whether they like it or not. They are
mainly interested in the technical migration of their present systems
to S/4HANA. They are not convinced that the new application system
can offer them any added value. For 25 percent the system’s
introduction as of now remains completely out of the question.
Although the number of initiated and planned S/4HANA projects is on
the rise, it seems that companies are still feeling quite unsure. Even
those that would like to transform their processes are wondering what
costs would be involved. Companies require external support both
during the planning and implementation stages, in particular where
new issues, such as the introduction of the new general ledger and
the migration of SAP databases to SAP HANA are involved.
In PAC’s opinion, the biggest challenges on the road to S/4HANA
won’t be technical in nature. The transformation of SAP-related
processes and the organizational changes associated to it will be far
more demanding and risky. These challenges can only be met
successfully, if the IT or SAP organization, specialist departments and
senior management all pull together.

OUTLOOK
SAP users, SAP partners, and SAP itself are currently going through a
transformational phase that feels slightly different for each of them. It
is clear, however, that S/4HANA will play a role for all of them.
SAP customers will try to find the right time to switch and expect
support from both SAP as well as SAP partners in making that
decision.
SAP partners must develop not just their problem-solving expertise
regarding S/4HANA but also explore process and business
transformation models. SAP partners are expected to not only
implement S/4HANA quickly and cost-effectively but also to guide
and support transformation projects while involving IT and specialist
departments.
SAP must ensure that customers can assess both the technology itself
and S/4HANA’s innovation potential with reference to their own
situation. In addition to many other considerations, reliable roadmaps
(also for industrial solutions) and more flexible pricing models are
among the demands users are quite rightly making. Where customers
feel forced to introduce S/4HANA because it is prescribed by the
product strategy, rather than being convinced by the added value it
offers, the software group absolutely must act to improve this
perception.

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APPENDIX
DISCLAIMER, USAGE RIGHTS, INDEPEN-
DENCE AND DATA PROTECTION

The creation and distribution of this study was supported by

BearingPoint, Cognizant, SNP AG und T-Systems.

For more information, please visit www.pac-online.com.

Disclaimer

The contents of this study were compiled with the greatest possible
care. However, no liability for their accuracy can be assumed.
Analyses and evaluations reflect the state of our knowledge in
October 2016 and may change at any time. This applies in particular,
but not exclusively, to statements made about the future. Names and
designations that appear in this study may be registered trademarks.

Usage rights

This study is protected by copyright. Any reproduction or

dissemination to third parties, including in part, requires the prior
explicit authorization of the sponsors. The publication or dissemination
of tables, graphics etc. in other publications also requires prior
authorization.

Independence and data protection

This study was produced by Pierre Audoin Consultants (PAC) in

cooperation with KuppingerCole. The sponsors had no influence over
the analysis of the data and the production of the study.

The participants in the study were assured that the information they
provided would be treated confidentially. No statement enables
conclusions to be drawn about individual companies, and no
individual survey data was passed to the sponsors or other third
parties. All participants in the study were selected at random. There is
no connection between the production of the study and any
commercial relationship between the respondents and the sponsors
of this study.

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ABOUT SNP PREMIUM SPONSOR

SNP enables companies to use dynamic IT solutions in order to create

successful digital transformations and to take advantage of market
opportunities. Solutions and software developed by SNP make it
possible to merge previously separate IT landscapes, support M&A
projects and carve-outs as well as encourage the development of
new markets beyond the home market. With SNP Transformation
Backbone® SNP offers the world's first standard software that can
automatically analyze and implement changes in IT systems. This
Co nta ct :
creates clear quality advantages for customers, as it significantly
J oe rg Pe tzho ld
reduces both time requirements and the costs involved in Ma rke tin g D ire cto r
transformation projects.

SNP AG employs more than 650 employees in Europe, Africa, Asia and Tel : +4 9 6 22 1 6 42 5 -2 70
F ax :+4 9 6 2 21 6 4 25 -2 0
the United States. In 2015 the company with headquarters in Mo bi le: +49 17 2 7 2 95 9 09
Heidelberg achieved a turnover of around 56 million euros. Customers jo er g.p et zhol d@snp -ag .co m

are globally-operating companies from industry, the financial sector

and service environment. SNP AG was founded in 1994, has been
quoted on the stock exchange since 2000 and listed in the Prime
Standard of the Frankfurt Stock Exchange (ISIN DE0007203705) since
August 2014.

For more information visit www.snp-ag.com.

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ABOUT PAC

Founded in 1976, Pierre Audoin Consultants (PAC) is part of CXP

Group, the leading independent European research and consulting
firm for the software, IT services and digital transformation industry.

CXP Group offers its customers comprehensive support services for

the evaluation, selection and optimization of their software solutions
and for the evaluation and selection of IT services providers, and
accompanies them in optimizing their sourcing and investment
strategies. As such, CXP Group supports ICT decision makers in their PAC - CXP Gro up
digital transformation journey. Ho lzstr . 2 6
8 04 6 9 Mu nic h, Ger many
Tel . : +4 9 (0 )8 9 2 3 2 3 6 8 0
Further, CXP Group assists software and IT services providers in
F ax : +4 9 (0 )8 9 7 1 9 6 2 65
optimizing their strategies and go-to-market approaches with in fo -ge rmany @pa c-o nli ne. co m
w ww. pa c- o nli ne. co m
quantitative and qualitative analyses as well as consulting services.
Public organizations and institutions equally base the development of
their IT policies on our reports.

Capitalizing on 40 years of experience, based in 8 countries (with 17

offices worldwide) and with 140 employees, CXP Group provides its
expertise every year to more than 1,500 ICT decision makers and the
operational divisions of large enterprises as well as mid-market
companies and their providers. CXP Group consists of three branches:
Le CXP, BARC (Business Application Research Center) and Pierre
Audoin Consultants (PAC).

For more information please visit: www.pac-online.com

PAC’s latest news: www.pac-online.com/blog

Follow us on Twitter: @PAC_Consultants

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