SAP’s Cloud-First Approach: Implications for Finance Leaders

⇨ All SAP innovations will be channeled through SAP's public and private clouds, primarily via programs like RISE with SAP.

⇨ Organizations heavily invested in on-premises solutions, especially S/4HANA ERP, now face the possibility of missing out on advancements.

⇨ Achieving seamless integration between cloud and on-premise SAP and non-SAP solutions is vital for efficient data flow.

SAP’s recent shift toward a cloud-centric innovation strategy sparked concerns within the SAPinsider community, particularly among finance leaders who have significant investments in on-premise SAP solutions like SAP ECC or SAP S/4HANA. While SAPinsider’s Robert Holland previously explored key aspects of this strategic change for the general SAP community, here we consider the impact for finance leaders. 

Cloud-Centric Innovation 

SAP’s new approach is straightforward – all innovation will be channeled through SAP’s public and private clouds, primarily via programs like RISE with SAP. The goal is to deliver innovation faster and more efficiently, aligning with the prevalent industry trend of favoring cloud solutions for agility. 

On-Premise Exclusion 

The most pressing concern is the exclusion of on-premise SAP users from these new innovations. Organizations heavily invested in on-premises solutions, especially S/4HANA ERP, now face the possibility of missing out on advancements in areas such as generative AI and SAP Green Ledger technology. 

AI and Automation as Business Drivers for Finance 

Recent SAPinsider research highlights the significance of AI and automation for finance leaders. These technologies are essential drivers of business transformation. A substantial 37% of respondents recognized the role of new technology adoption in enabling intelligent automation. AI-driven innovations gain more relevance considering SAP’s shift. 

Real-time insights are a game changer in finance. Over a third of respondents prioritize real-time reporting and analytics as a primary business driver for intelligent automation investments. Quick access to financial data empowers finance leaders to make informed decisions in a rapidly evolving business landscape. 

Data integration is crucial for finance operations. Achieving seamless integration between cloud and on-premise SAP and non-SAP solutions is vital for efficient data flow. A third of the SAPinsider finance community recognized the importance of this integration to support finance transformation initiatives, given SAP’s cloud-centric strategy. 

Challenges for Finance Leaders 

Finance leaders face a series of challenges arising from SAP’s messaging shift: 

• Investment Concerns: Organizations heavily invested in on-premise SAP solutions like S/4HANA are concerned about the future value of their investments. The exclusion from future innovations raises questions about the return on investment for existing on-premise systems. 

• Transition to the Cloud: To access SAP’s latest innovations, finance leaders may need to consider migrating to SAP’s cloud solutions. However, this transition comes with hurdles, including data migration, system integration, and associated costs. 
• Cost Considerations: Shifting to the cloud may entail additional expenses, such as subscription fees, migration costs, and potential increases in maintenance payments. Finance leaders must assess these costs against the expected benefits of cloud-based innovations. 

SAP’s move toward a cloud-centric innovation strategy has significant implications for finance leaders. While aligning with industry trends, it presents challenges for those heavily reliant on on-premise solutions. Finance leaders must carefully evaluate their options and strategies to make informed decisions that align with their organization’s objectives and financial stability. Embracing AI-driven technologies and pursuing seamless integration are pivotal to finance transformation initiatives. This strategic reassessment is essential to ensure that finance operations remain competitive, efficient, and aligned with evolving technology trends. 

What does this mean for SAPinsiders? 

Future-proofing alignment with SAP’s cloud-only strategy. SAP’s shift toward a cloud-centric innovation strategy means that finance leaders must assess how current or future finance transformation plans align with SAP innovation’s strategy. If their strategy heavily relies on on-premise deployments, they may need to revise their approach to ensure it aligns with SAP’s cloud-focused vision for future innovations. 

Ensure access to advanced technologies. To remain competitive, finance leaders must have access to advanced technologies such as artificial intelligence (AI), machine learning, and real-time analytics. SAP’s cloud-only strategy may limit the availability of these technologies for on-premise users. Finance leaders should consider how to complement SAP’s strategy by exploring partnerships with vendors who can provide advanced technologies on-premise or through hybrid solutions. Assessing the capabilities and offerings of existing vendor partners will help finance leaders make informed decisions about technology adoption and integration. 

Confirm your SAP BTP strategy for finance operations. Finance leaders should seek clarity from SAP and implementation partners on how they can leverage SAP BTP to support their business specific finance transformation roadmap. This may include exploring how BTP can facilitate data integration, automation, and the adoption of advanced technologies, even in on-premise or hybrid environments.