Cloud computing has been the direction of travel for many organizations for some time. Against an uncertain economic backdrop, organizations want to improve business agility and have the technological foundations to drive innovation-fuelled growth in areas like generative AI. Today, ERP vendors are responding with cloud-based offerings to help future-proof their customers.
For SAP users, the case for migration is also made stronger by the end-of-maintenance deadline for Business Suite 7/ECC 6.0 in 2027. Last year, 89 percent of UK & Ireland SAP User Group (UKISUG) members said they were already using or planning to SAP S/4HANA, and a significant number will be moving to the cloud in some way, whether it be public, private or a hosted on a hyperscaler.
But there’s plenty to work out first.
What to consider
Cloud migration isn’t just a case of lifting and shifting on-premises systems. It can present an opportunity to optimize what went before. Here SAP users should take a hard look at their current business processes and look at ways to do things more efficiently, perhaps through greater automation.
There are more also practical considerations to weigh up before starting cloud migration projects. How much time and resources will be required? Does the organization have the in-house skills to handle migration, or will it need to invest in reskilling or working with an implementation partner? Could SAP Cloud Integration Services help, or will the organization be better served moving existing Netweaver integrations over to the cloud? Are there appropriate archiving and data destruction policies and tools in place?
Overcoming complexity
There’s also an elephant in the room for many SAP user organizations considering moving to the cloud: customized applications and code. Almost three-quarters (72 percent) of UKISUG members said last year that existing customizations present a challenge when moving to SAP S/4HANA. Some organizations may have amassed years-old legacy apps and thousands of lines of custom code. They understandably see these assets as a competitive advantage, and worry about losing it when they move to a standardised cloud solution.
However, while these apps might still meet the needs of the business, will they continue to do so in the future? There’s a strong argument to say they actually restrict the ability of the business to adapt to new market requirements. Cloud migration might mean being forced to ditch legacy code, but on the other hand, it opens the door to greater agility – which in the long run should help the organization innovate and scale.
SAP and partners are increasingly offering solutions designed to help with these efforts, whether organizations are deploying SAP S/4HANA on a greenfield site, converting an existing SAP system via a brownfield strategy, or taking a hybrid bluefield approach. The SAP Signavio portfolio, for example, helps organizations to analyze their current processes, benchmark them against industry best practices and then reconfigure them as required for the future. In addition, there is a collection of both SAP and partner technologies and capabilities through the SAP Business Technology Platform, that can easily help to manage and extend the customization.
The bigger picture
Another key point to remember is that cloud transformation is about more than technological change. Fundamentally, it demands an overhaul of skills, roles, and processes – an overwhelming prospect that many organizations try to avoid for as long as possible. Driving this people-focused transformation isn’t easy. It requires everyone from the boardroom down to buy-in to the cloud vision and what it could achieve for the organization.
It’s somewhat reassuring, therefore, that SAP has recognized the scale of the challenge for many organizations – offering extended support from 2027-2030 for an additional fee. Its cloud extension program has also been further developed to offer more flexibility in how and when they migrate. SAP Preferred Success promises to allow customers to use current maintenance spend to reduce incremental spend for cloud transformation. Meanwhile RISE with SAP and GROW with SAP offer a range of transformation services, business analytics and partner expertise aimed at de-risking and accelerating cloud migration. Over a quarter of UKISUG survey respondents (28 percent) said in 2022 that they were using or planning to use RISE with SAP – mainly to simplify and accelerate their cloud journey.
Every journey is different
However, there’s no one-size-fits-all when it comes to cloud transformation. Beyond data governance and compliance considerations, organizations need to weigh up the overall impact of moving to the cloud on their overall SAP running costs. Will they need to upskill or acquire new skills to manage their new SAP environment? The potential business wins are well understood by now, but a cost-benefit analysis will yield different results for every end-user organization.
To find out more on this subject we recently spoke with Rob Geddes, head of customer engagement success, Cloud Success Services UK&I at SAP, as part of our SUGTalks podcast series.
