by Pierce Owen, Vice President of Research, SAPinsider SAPinsider recently conducted a survey of its audience for the its "SAP S/4HANA Migration Benchmark Report," which explains how and why SAP S/4HANA adoption has progressed globally over the course of the past year. Based on the findings of the survey, this research brief examines the differences in the migration progress and trends between organizations based in North America and those based in Europe, the Middle East, and Africa (EMEA).

Implementing SAP S/4HANA and Cloud Infrastructure

The full benchmark report shows that the share of SAP customers that have gone live with SAP S/4HANA has more than doubled over the past year, with those in EMEA going live at a faster rate than those in North America in 2019. In both North America and EMEA, approximately 13% of SAP customers currently use SAP S/4HANA, up from 8% in North America and 5% in EMEA a year ago (see Figure 1). [caption id="attachment_20167" align="alignnone" width="640"] Figure 1 SAP S/4HANA adoption progress[/caption] When it comes to 2020, however, the survey results show that SAP customers in North America will likely take the bigger step forward. Almost one quarter (23%) of North American respondents work for organizations that have started the process of implementing SAP S/4HANA but have not yet gone live, while only 9% of EMEA-based respondents are in the same category. If these groups start using at least one instance of SAP S/4HANA before the end of 2020, that will mean more than one-third of North American SAP customers, but less than one quarter of EMEA customers, will be using SAP S/4HANA within one year. One North American IT professional planning to implement SAP S/4HANA in 2020 shared, "We currently use pretty much every module on SAP ECC, but the older solutions can't take advantage of all the tools we need to innovate within our company. If business users come to us looking for solutions, we can't deliver because we're not on SAP S/4HANA yet. Some people say it's a technical upgrade, but there's a lot of functionality. It makes financial close easier and simplifies logistics and analytics. It'll be much easier to create visualizations for business users." As they prepare for their SAP S/4HANA migrations, both North American and EMEA-based SAP customers have employed strategies to adopt best-practice business processes and cleanse data to minimize the SAP HANA footprint and any downtime during the migration. Since a migration to SAP S/4HANA requires table and data changes — such as converting vendors/suppliers and customers to "Business Partners" — these changes and other types of data cleansing represent a critical preparation step. Customers in both regions also differ significantly in their attitude toward cloud infrastructures. Almost half (45%) of North American respondents said they will deploy or have deployed a cloud-based infrastructure to host their instances of SAP S/4HANA versus only 21% of respondents in EMEA (see Figure 2). This aligns with SAPinsider's research on "SAP S/4HANA in the Cloud," which found that EMEA-based customers were almost twice as likely to be running their existing ERP systems in an on-premise environment when compared to those located in North America (65% versus 36%, respectively). EMEA-based customers were also much less likely to be using a hybrid environment when compared to North American customers (8% versus 31%). Although not as pronounced, there was a significant difference in the number of EMEA-based customers operating in a hybrid model with a hyperscale environment compared to North American customers (10% versus 18%). [caption id="attachment_20168" align="alignnone" width="638"] Figure 2: Top strategies for SAP S/4HANA migration[/caption] An experienced North American IT professional following a hybrid approach for running SAP S/4HANA said, "We have implemented a hybrid cloud model to maximize performance, compliance, and privacy governance." significant difference in the number of EMEA-based customers operating in a hybrid model with a hyperscale environment compared to North American customers (10% versus 18%). An experienced North American IT professional following a hybrid approach for running SAP S/4HANA said, "We have implemented a hybrid cloud model to maximize performance, compliance, and privacy governance."

Adoption Inhibitors

SAP customers in EMEA cited several inhibitors to adopting SAP S/4HANA at higher rates than North American customers. For instance, 46% of EMEA-based respondents said they did not know enough about SAP S/4HANA's capabilities, 43% reported that customization in their current ERP system makes migration too complex, and 41% indicated that they struggled to find the business value of SAP S/4HANA. North American respondents selected these inhibitors at rates of 38%, 33%, and 35% respectively (see Figure 3). [caption id="attachment_20169" align="alignnone" width="638"] Figure 3: Inhibitors to SAP S/4HANA adoption[/caption] The first and third inhibitors — knowledge of SAP S/4HANA and understanding its business value — are linked. To build an effective business case, leaders from both IT and the lines of business (LoBs) must understand the relevant capabilities of SAP S/4HANA. In response to their lack of knowledge and difficulty with formulating the business case, a higher share of EMEA respondents plan to use SAP Business Scenario Recommendations. More than a quarter (28%) of EMEA respondents said they plan to use the tool versus just 11% of North American respondents. This tool (free for those with SAP maintenance contracts) analyzes SAP customers' current ERP setup and provides custom insights on how business processes and system usage could improve with SAP S/4HANA. It makes recommendations for each LoB to help build the business case, which emerged as the top migration challenge for those that have already started implementing SAP S/4HANA. It also serves as the first step in analyzing the impact SAP S/4HANA can have on business processes. For customizations, SAP offers several free tools — such as SAP Readiness Check, Custom Code Lifecycle Management, and Usage Procedure Logging — to manage and test custom code. Unfortunately, the initial release of SAP Readiness Check did not always deliver value. One EMEA-based respondent said, "We used SAP Readiness Check version 1. The report was quite faulty, but we are preparing to try SAP Readiness Check v2." SAP attempted to solve the issues found in version 1 with version 2.0. As a result, respondents in EMEA have shown a little more hesitancy in committing to SAP S/4HANA. Slightly less than half (49%) of those in EMEA said they would migrate at least 81% of their ERP instances to SAP S/4HANA versus 55% of those in North America. What Does This Mean for SAPinsiders? Based on our research, the following considerations can help EMEA-based SAP customers better plan their SAP S/4HANA migration:

• Make time to learn about and educate decision makers on the capabilities of SAP S/4HANA to help build the business case. Respondents that have already started implementing SAP S/4HANA ranked building the business case as their biggest challenge and learning about and educating decision makers on SAP S/4HANA functionality as the second biggest challenge to their migration. These two go hand in hand: To build an effective business case, leaders from both IT and the LoBs must understand the relevant capabilities of SAP S/4HANA.
• Confront custom code issues up front and with an open mind. SAP offers several free tools — such as SAP Readiness Check, Custom Code Lifecycle Management, and Usage Procedure Logging — to manage and test custom code.
• Leverage free SAP tools to prepare for an SAP S/4HANA migration. SAP Business Scenario Recommendations helps SAP customers analyze the potential business impact of SAP S/4HANA while SAP Readiness Check helps them assess the effort needed for a system conversion.
• Reconsider cloud infrastructure. Whether SAP customers go with the on-premise or cloud version of SAP S/4HANA, cloud infrastructures have shown they can improve ERP performance and lower total cost of ownership (TCO) while increasing agility in deploying and managing ERP instances.

Following this strategic guidance should help SAP customers better plan for their SAP S/4HANA migration. Pierce Owen, VP, Research, SAPinsider, can be reached at Pierce.Owen@wispubs.com.