There is an even split for large enterprise customers of SAP ERP systems between on-prem and the public cloud - the German vendor's preferred upgrade path - according to NTT Data, a major global SI and partner.
Abhijit Dubey, who became CEO of NTT Data's $18 billion business outside Japan in June, said the company was "agnostic" about whether SAP clients see their upgrade path in public cloud, private cloud, or hybrid cloud.
"At the end of the day, it all comes down to economics, quality, and risk. The answer is a little bit different depending on the client's starting point of the architectural complexity and the data that they have," he told The Register.
However, a significant number of larger enterprises were opting to remain on-prem in a private cloud, he said. "Especially the larger enterprise space, with lots of complexity, absolutely [that's true]."
SAP has other ideas. The German software giant has stoked controversy by stating that "innovation" on its S/4HANA ERP platform would only be introduced in the public cloud edition. Private cloud and on-prem installations of the up-to-date ERP system would not get the same innovations, the vendor has maintained.
"Our new innovations will not be available for on-premises or hosted on-premises ERP customers on hyperscalers," CEO Christian Klein told investors last summer.
In the public cloud, SAP is promising "innovation" based on its AI offering, Joule. At SAP Sapphire 2024, the vendor announced Joule's inclusion in S/4HANA Cloud, extension development environment SAP Business Technology Platform, low-code tool SAP Build, and SAP Integration Suite. SAP Ariba and SAP Analytics Cloud will get the tool next year. However, some large enterprises are yet to be convinced that this should be part of their upgrade and future platform strategy, Dubey said.
"Among the large enterprises, it is pretty balanced between staying on-prem versus going to the cloud. In the mid-market segment the cloud works better."
SAP has set a deadline of 2027 for customers to move off its legacy platform, ECC, before mainstream support ends. It is to offer extended maintenance until 2030 at a premium of two percentage points on their contract. Earlier this year, representatives of German-speaking users said they fear a significant number will fail to meet the 2030 cut-off when extended support ends.
Meanwhile, Gartner found in October last year that only 33 percent of SAP users relying on its legacy ECC ERP system have bought or subscribed to licenses to start their transition to S/4HANA.
Dubey said a "vast majority" of users had not yet made the switch away from the legacy platform. "If you're not starting now, you'll probably find it difficult to meet the deadline," he said.
As SAP users on the older platform struggle to migrate to a new one in time for the support deadline, it is bound to create skills bottlenecks in the market, Dubey said.
"We have had isolated cases where we've been delayed because of talent availability, but not at scale. [That] is not to say that as the demand curve gets steeper, which it likely will the next 12 to 24 months, that this will continue the same way or not. But it is a top agenda item for us. We always talk about this internally. If we sign up to do [a project] then it's our commitment to deliver it on time, on budget, and on schedule."
NTT Data has been "very proactive and aggressive" in securing the workforce skills it needs to support ECC to S/4HANA migrations.
The question for users is that, as the large consultancies and systems integrators of similar size to NTT Data all do the same, whether there will be any affordable talent left for anyone else in the market. ®
https://www.theregister.com//2024/08/28/sap_on_prem_cloud_split/
Created by Tan KW | Aug 28, 2024
Created by Tan KW | Aug 28, 2024
Created by Tan KW | Aug 28, 2024
Created by Tan KW | Aug 28, 2024
Created by Tan KW | Aug 28, 2024