Enterprises have been slow to migrate to SAP S/4HANA, but that’s changing. As customers strategize their migration, important considerations must be made as the SAP S/4HANA conversion roadmap is operationalized. The opportunity for overspending – or savings – can be material.
SAP’s end-of-support deadline for its legacy application, ECC (the Business Suite version), is now 2027 – and that’s prompting many enterprises to start strategizing conversions to S/4HANA. While recent research suggests nearly 7 in 10 customers are still running ECC, nearly 60 percent of those intend to migrate to S/4HANA over the next three years.
Second, complexity and change within IT vendors’ licensing, subscription and pricing models is greater than ever. Part of this is a natural function of the IT vendor landscape where innovation, competitive pressures and an ever-present need to appease shareholders drive change momentum. But there has been acceleration and volatility in these areas as well and IT buyers are feeling the bottom-line impact.
The SAP S/4HANA conversion journey is a challenging one for customers. Capital cost is high and resource requirements are significant. But the writing is on the wall. SAP’s S/4HANA environment is the future of its business and at the core of its product roadmap. Customers that want to continue to derive value from their SAP estate must get on board – and quickly given the complexities that surround customers’ legacy SAP environments.
As companies determine their conversion strategy, they must overcome several obstacles:
How a company operationalizes its SAP S/4HANA conversion roadmap has significant bearing on cost. In order to keep spend in check, customers should do the following:
Incorporation of these tactics can lead to substantial savings and cost-avoidance. Recent NPI savings examples include:
For a ~10k-user estate negotiated a 5-year subscription at a cost equal to a 3-year subscription.
For a ~14k-user estate secured a 50 percent cost reduction in total contract value
For a ~50k-user estate negotiated a 24 percent cost reduction and secured flexible terms to mitigate cost increases during conversion roadmap
A license position assessment is the first step in eliminating overspending risk during SAP S/4HANA conversions. It captures the full scope of the customer’s SAP estate, which then feeds accurate baseline requirements into the customer’s SAP S/4HANA roadmap. From there, customers can negotiate using a clear picture of their projected spend and deployment schedule. This leverage typically leads to material savings in the form of lower pricing, higher discounts and more favorable business terms. It also uncovers any compliance issues in the customer’s legacy environment that can either lead to costly noncompliance fees, including indirect access, or give SAP leverage during negotiations.
NPI’s SAP S/4HANA license position assessment services pick up where most large SIs and Big 4 consultancies leave off. Whereas these organizations focus on developing a big picture conversion roadmap, we focus on “last mile” operationalization. We help customers determine a licensing and timing strategy that meets current- and future state requirements with maximum flexibility at the lowest possible cost.