Facing Today’s ERP and Cloud Challenges

⇨ Explore the options available to SAP ERP customers in today’s market.

⇨ Understand the best way to start planning for the move to the cloud.

⇨ Learn about how to best prepare for the future.

The landscape for SAP customers has changed significantly over the past year. While there have been questions about the upcoming end-of-maintenance of core SAP Business Suite solutions and how and when to move to SAP S/4HANA, new concerns have been added to the equation. These include finding the right time to determine future ERP plans, choices available to customers given SAP’s statements about cloud ERP, identifying a secure and cost-effective way to move to the cloud, managing cloud costs effectively, and using automation to streamline cloud environment administration.

To discuss these questions, Robert Holland, Vice President and Research Director at SAPinsider, sat down with Eamonn O’Neill, Co-Founder and CTO of Lemongrass Cloud. The discussion centered on the options that organizations have when moving to the cloud, how they should consider the move and what they can benefit from an infrastructure transformation, how to make cloud investments more effective, and when is the right time to start a cloud journey.

Today’s Cloud Environment

For today’s SAP customers, the cloud environment is not easy to navigate. Not only are there multiple options for running SAP ECC and SAP S/4HANA, SAP has also released new capabilities in SAP Business Technology Platform (BTP) in addition to new line of business capabilities which organizations must navigate simultaneously. These make it difficult for customers trying to understand what they want to accomplish by moving to the cloud and when they want to move. But one of the most important things to understand is that not everything needs to be done at the same time.

The most pressing need for most customers is the ERP system. If organizations are not running SAP S/4HANA, what are the implications? For those already on SAP S/4HANA, what is the next step? O’Neill emphasizes that many customers are evaluating the available options and trying to determine the best path forward. For example, customers running SAP ECC need to know that, if they are not on Enhancement Pack 6, they need to at least move there by the end of 2025. Beyond 2025 is the end-of-mainstream maintenance in 2027. Moreover, some customers may already have plans which are underway, but those intending to wait until after 2027 will end up paying for extended maintenance so they can run SAP ECC beyond the end of 2027.

According to O’Neill, this comes down to creating a road map for the future: “There are several time-driven decisions that have to be made and a number of different options when it comes to the path to follow. The advice I always give is to not do everything at once. Sit back, plan out the options, and then make a weighted decision to help drive next steps. This is also applicable to the decision regarding the move to SAP S/4HANA, the type of deployment to use, and the role RISE with SAP plays. We see customers moving to SAP S/4HANA as part of the move to RISE with SAP while others are choosing a cloud-native deployment of SAP S/4HANA. Each is a valid option, but this is why taking the time to make the right choice is important.”

Building a Cloud Roadmap

When building a roadmap, there are multiple different aspects to consider. The first is the business processes or the available core capabilities. O’Neill advises customers not on SAP S/4HANA to look at the scope and assess if any new capabilities will help drive the business case for SAP S/4HANA. What this means is to have a discussion around functional capabilities, whether remaining on SAP ECC or moving to SAP S/4HANA, but having a similar discussion for integration.

Any long-time SAP customer is familiar with SAP NetWeaver, which provided the means to develop and deploy applications along with an integration layer. This allowed organizations to perform data and process integration. However, SAP BTP is now the means to achieve this integration, but it is important for organizations to consider when to switch from SAP Process Orchestration to SAP Integration Suite. Those using third-party or cloud-native integration capabilities must determine whether this fits into the overall enterprise architecture. And although an organization’s SAP team might focus on taking a linear approach, taking a step back and looking at the broader enterprise and its architecture can prove beneficial. However, AI complicates the picture.

“No discussion of this topic is complete without talking about AI,” states O’Neill. “AI is evolving so quickly. SAP announced Joule as their proposition in the area, but there are new AI capabilities every day and every week. This is where it is important to think of the broad approach to a topic like generative AI and how it fits into the SAP space. There are the architectural discussions that are required, the operating model, and then the more technical focus. How do you run SAP? How do you manage it? How do you manage the environments? How do you keep it up to date and reduce downtime? These drive a different discussion around the team that does the management, how well that management is done, and where automation fits in the picture.”

O’Neill views automation as a critical aspect of cloud operating models for customers. However, while moving to the cloud is the first step, organizations need to understand what running in the cloud is like in addition to leveraging cloud capabilities within the operating model. Overall, organizations need to have broader architectural discussion but should also put significant effort into finding the target operating model they are going to move to as they run in the cloud. Successful use of the cloud is only possible by doing this.

Defining the Move to the Cloud

O’Neill encourages organizations moving to the cloud to define the objectives they want to achieve before the move. This is important as the objectives will steer the migration project and dictate the organization’s operating model. While in the past organizations explored moving to the cloud to attain additional capacity and performance, today, the goal is on increased security, improved uptime, higher quality of management, and cost optimization. However, defining what success looks mapping these goals is also important. For example, an initial goal of minimizing data and cost may shift to optimizing costs and expenditures in the future.

O’Neill stresses, “Spending money in the cloud can be good because it generates value. You don’t want to turn everything off and you want to make sure that people get access to the cloud capabilities when they need them. But it is also important to make sure things are switched off when they are not used or needed. From a financial control perspective, it is not enough to decide that one cloud provider is cheaper than another. That’s just the start. For example, FinOps is an ongoing everyday activity that isn’t just a centralized team. It also includes all the people who are provisioning and procuring on behalf of the company every time they establish a system.”

Security has also evolved significantly in the last five years. O’Neill emphasizes that organizations are becoming sophisticated with the DevSecOps approach and are building security into all components deployed in the cloud. However, security also needs to be considered at all levels. Organizations typically have a centralized security team, but security  is also important to developers and those who deploy systems and manage them in the cloud.

One of the biggest advantages of cloud is reducing downtime. While most organizations focus on reducing unplanned downtime, O’Neill emphasizes the advantages of using automation to manage planned downtime. One of the biggest benefits is in applying immutability concepts to the SAP landscape which allows changes to be made without disrupting the business. This aligns to the need for organizations to define their concept of success, and what they want to achieve from moving to the cloud. O’Neill emphasizes that organizations should broaden their perspective of cloud and view it as more than just a data center and that transitioning to the cloud should be more than replacing on-premise systems.

Making the Most of Cloud Environments

According to O’Neill, organizations that successfully transition to the cloud are those who adopted new capabilities early in their cloud journeys. This starts with educating teams and ensuring they are familiar with concepts, however, as organizations adopt new capabilities, they can influence other outcomes. For example, if an organization automates the build and maintenance of an SAP landscape, it will result in better security because that will be built into the pipelines. It will also be more cost-optimized because of scheduled stops and stats for the landscape based on a specific defect definition and will have a cleaner system.

“By going back to capabilities like automation from the very start, organizations can get the outcomes they want to achieve much more readily. This is also true for areas connected to management – FinOps and SecOps. If an organization sets up SecOps and FinOps teams, they will manage those outcomes more effectively. Having these teams will also help prevent issues that organizations often face when they neglect these areas. But the bottom line is that organizations need an operating model, people in place, and clear roles for them to do, and processes and tools to back them up. These are the most important enablers for getting the best from any cloud investment,” states O’Neill.

Although cloud is new for many companies, starting with less critical workloads should be the first step to success as this allows an organization to ramp up their internal teams and let them to get up to speed with cloud knowledge and capabilities. The sooner an organization becomes familiar with the cloud, whether through a proof of concept or some other evaluation, the quicker they will realize the benefits.