DSAG, the German-language user group held its Jahreskongress 2023 this week at Messe Bremen, and also released the DSAG Investment Report 2023.
This week IgniteSAP will be sharing some insights from the report and providing a short digest of some of the prominent themes of the keynote speeches.
The DSAG Investment Report is a summary of a survey conducted among DSAG members from Germany, Austria and Switzerland in January and February of this year. These members are representatives of various industries including: mechanical engineering, equipment and component manufacturing, the public sector, the consumer goods industry, healthcare and wholesale trade.
According to the findings of the report budgets for IT and SAP are rising, S/4HANA on-premise usage remains high with Business Suite remaining the preferred solution, and satisfaction with SAP’s strategy and cloud pricing policy could be improved.
S/4HANA is expected to gain in relevance for companies and SAP’s Business Technology Platform (SAP BTP) is still gaining approval.
The IT budgets of 54% of the companies contributing to the survey are increasing, with 26% remaining the same and only 15% decreasing compared with last year. 52% of respondents said their budgets for SAP were increasing, 31% said they were remaining the same and 15% said they were decreasing.
This continuing upward trend demonstrates confidence among companies after weathering the last few years of disruption. DSAG Chairman Jens Hungerhausen added that these budgets are increasing due to full project pipelines and the need to meet maintenance deadlines for legacy products.
5% of companies surveyed said that they were “very far” along with their digital transformations and 39% said they were “far” along their transformations. 52% saw themselves as not very far along. According to Hungerhausen this indicates: “companies set other priorities during the pandemic and may have initially postponed planned digitization projects due to the existing uncertainties”.
The survey found that SAP Enterprise Resource Planning, or SAP Business Suite, was currently used by 79% of respondents, S/4HANA On-Premise by 41%, S/4HANA Private Cloud by 8%, and S/4HANA Public Cloud by 3%.
28% of those surveyed planned high investments in S/4HANA and 38% expected medium investments in S/4HANA. This is due primarily to the need for companies to move to S/4HANA by 2027 “or 2030 at the latest” when legacy systems will no longer be maintained. Jens Hungerhausen pointed out that though 2027 sounds far away “the effort involved in such a migration should not be underestimated. Companies need strong partners with sufficient resources at their side.” DSAG added that projects will face an additional challenge finding available partners leading up to 2027.
24% said they expect to make high and medium investments in SAP BTP solutions which will lead to increased spend, including subscriptions. 17% said they will be investing in SAP SuccessFactors, and 9% in SAP Customer Experience. DSAG said that it is good that the first migration services are being developed to convert existing architectures to BTP Integration Suite and others but that development costs, quality assurance and use of services without productive reference are too high.
38% of respondents said that within the BTP platform, they were making high and medium investments in data and analytics, and 17% said they were investing in application development, automation and integration modules. Only 3% of companies surveyed said they were investing in AI BTP modules. The development of SAP Datasphere has been designed to meet the need of companies for ways to integrate and analyze SAP and non-SAP business data in response to requests by DSAG and others.
When asked about SAP’s cloud pricing policy 5% said they were satisfied, 20% as neutral, and 26% did not respond. Hungerhausen commented that: “The planned annual price increase for SAP cloud services has caused a lot of criticism among DSAG members. We are convinced that reliable mechanisms for price development are needed. This is another reason why these values are like an echo of a reaction from SAP customers already shown last year. A recurring annual increase in prices makes it more difficult for companies to move to the cloud.”
DSAG said it has told SAP it expects a holistic regulation of price increases that benefits all companies and does not support unregulated annual increases of all SAP services. This was raised earlier this year during the keynote speech at DSAG Technology Days event when DSAG asked SAP to hold back from a 3.3% price increase to cloud services in maintenance mode.
Participants were also asked if they were satisfied with SAP Strategy for their respective industries. In reply, 22% said they were satisfied, 39% neither satisfied nor dissatisfied, 23% dissatisfied, and 10% very dissatisfied. According to industry, there was a notable trend towards satisfaction in the high-tech and electronics sector, as well as the public sector and consumer goods industries, with a trend towards dissatisfaction in the healthcare, and chemical industry, among others.
Companies were asked how much they budgeted for each employee’s training. The survey found that 21% spent between 1,000 and 1,999 euros, 18% between 500 and 999 euros, and 17% between 2,000 and 4,999 euros, 12% less than 500 euros, with a 4% minority of companies spending 5000 euros or more.
Responding to a question about areas for planned investment, of those companies surveyed 88% said cybersecurity was most important, followed by 68% who said they were investing in automation of processes. DSAG said they had been working with SAP to develop a security dashboard which will show where security gaps exist in a company’s IT landscape.
The motto for this year’s DSAG Jahreskongress was “Wonderfully Changeable: Creating New Perspectives Together” and of course had a heavy emphasis on the influence of AI technology SAP, though in the DSAG Investment Report only 12% of the companies surveyed said that AI was a top area for investment.
Keynote speakers also talked about the need to raise awareness of sustainability. In the report it was noted that just below half of respondents gave the topic low or no importance, despite the need to prepare for government legislation on corporate sustainability reporting compliance. DSAG called on SAP to make the “green ledger” a feature of all SAP environments, something which SAP has been rolling out over 2023.
DSAG representatives at the Jahreskongress also repeatedly drew attention to a perceived need among their members for SAP to give greater importance to on-premises solutions. While DSAG concedes that SAP is developing on-premises solutions further, they point out that access to innovations like AI is denied them. SAP has previously pointed out that AI solutions require massive amounts of computing power which are not available to all customers in their on-premise SAP landscapes.
Jens Hungerhausen said: “We support the use of the cloud and know that innovations today must be provided primarily on cloud technology. But what is important here is the freedom for each individual company to be able to decide for itself how it uses these innovations”.
The user group has previously said that all SAP S/4HANA innovations and services should be available in both cloud and on-premise, and has said that according to their members there is a persistent trend towards hybrid architectures with modular ERP.
Regarding S/4HANA transformations, DSAG asserted that SAP has a duty towards empowering their partners to provide even better support for migration projects in order to meet the 2027 deadline.
Hungerhausen said: “Collaboration between SAP, partners and customer companies is essential so that companies are prepared for the future and all the challenges that lie ahead” and also “user companies and partners need a clear strategy that guarantees the smooth integration of cloud solutions into existing SAP landscapes. But it is also essential to ensure that the data from the cloud solutions can be kept in your own country.”
One the first day of the DSAG Jahreskongress, Jens Hungerhausen said: “This year, we’re bridging the gap and asking how companies, DSAG, SAP and the entire ecosystem can actively shape change together.”
Hungerhausen and SAP CEO Christian Klein were on stage during the day in Bremen and both spoke about innovations in the SAP landscape. DSAG used the opportunity to express its openness to cloud innovations, but insisted that companies need to have the freedom to choose when they migrate their operations to the cloud.
Jens Hungerhausen spoke of how changes in world affairs and economic conditions were affecting the SAP ecosystem. He also discussed how DSAG was setting up an advisory board.
“Around one-third of DSAG member companies are Partners. This makes them an essential part of our DSAG community. They are active in many DSAG committees and are often both SAP users and providers of SAP-related services and solutions, and to give more weight to the interest of the more than 1000 Partners organized in the DSAG we will set up a partner Advisory Board tomorrow. This will be to the benefit of the SAP ecosystem towards SAP. We want to be the voice of the partners and we want to lend more weight. The partner Advisory Board will consist of six partner representatives. They will cover the entire partner spectrum from small to large, as well as service and solution providers. The partner Advisory Board will be… for all stakeholders in DSAG and vis-a-vis SAP the task will be to identify, prioritize and formulate the relevant topics in the SAP ecosystem from the partner perspective, in order to then work on these topics in close coordination with the DSAG office in a constructive dialogue with SAP.”
For his part Christian Klein acknowledged the shared challenges and used the phrase “we leave no one behind” several times in the course of his presentation, but while he avoided saying directly that legacy SAP systems were a thing of the past, he also said: “we’re not standing still either”. Klein repeated SAP’s assertion that some innovations can only work in a cloud environment and not in on-premise.
Cloud-based AI innovations were on display in a demonstration of how to use Co-pilot to guide employees and support them with a natural language interface. Klein has also pointed out elsewhere that AI works more effectively in Rise With SAP because it harmonizes data models.
“An on-premise architecture simply doesn’t have what it takes to do this: small data sets, data silos, lack of data governance all lead to poor AI quality. Effective, high-quality AI needs high-quality data in real time, in high volumes, with high levels of security, data science expertise, data governance, and harmonized data models: something that can only be provided via a cloud architecture.”
There followed presentations by SAP customers and partners including a section led by EnBW about their “selective Greenfield” S/4HANA transformation, and a piece by Stadtwerke Munchen in which Mario Ruger spoke about using SAP Analytics Cloud.
The second day at the Jahreskongress began with a keynote featuring DSAG Board member Thomas Henzler, who shared some of his thoughts about composable ERP and SAP licensing models.
He began by pointing out that on-premise was no longer shown on the SAP strategy model and that the diagram had cloud ERP at the center, which was concerning for those who still had S/4HANA on-premise systems. He said that he had experimented with a hybrid cloud system and found that it had many uses and was very viable, but there was not sufficient functional scope.
After pointing out some of the complexities of licensing and SAP contracts in their various forms, he said that the process of licensing needed to become simpler and easier for SAP customers. Henzler also said that with bundled licenses some customers were required to pay for components that they did not need, and that the technology and the contract needed to be decoupled but matched more closely.
He closed his discussion with an appeal to SAP to make their future strategy and product roadmaps more clear to customers and partners because they need to trust that SAP is going to support them in the future if they make large investments now.
DSAG board member Christina Grimm continued the keynote, beginning her presentation with a discussion of the exponential acceleration of transformation and the natural tendency of humans to be apprehensive of change.
“Transformation is always dealing with the unknown. Transformation as always meets resistance because otherwise it wouldn’t be real change. We need the mindset and the culture for that, and we need you to open up, and unfortunately transformation is never everyone’s favorite word… Human beings are enablers, but also obstacles and hinder us as technology representatives in our companies. We face the huge challenge to convince other people that this development of digital transformation is good. And the problem is we need to convince people who don’t know what they need to be convinced of.”
Christian Grimm spoke of the approaching 2027 support deadline and also of the new need for companies to prepare for compliance duties on sustainability reporting, and the need for SAP and its partners to build trust with their valued customers.
She asked SAP to make their user enablement strategy clearer, a sustainability roadmap that is scalable, and also to create simpler integration for Signavio,
SAP board member and head of SAP Product Engineering Thomas Saueressig led the next section of the presentation and began by reiterating how important the interaction between DSAG and SAP was for all those involved in SAP product development, and gave specific examples of SAP products that had been created in response to DSAG consultations.
He emphasized the need for change, and how we need to adapt to the accelerated pace of change, and how SAP itself was changing in response to changing circumstances:
“This applies to you as well as to us as SAP. It’s not that we are not changing, or that we are changing our strategy overnight. But of course, we are also adapting, we have to adapt our strategy. We have to react in an agile way to new circumstances, we cannot cling on to the past. This is something that we have to do with the idea of balance with the right kind of cooperation.”
The remainder of the second day keynote from the DSAG Jahreskongress consisted of a customer success story followed by a discussion of SAP AI with a demonstration of how Digital Copilot can be used to create complex documents like a product market analysis.
While there was a clear line of disagreement about the timescale for transformation projects between SAP and DSAG, this Jahreskongress showed that both parties are committed to work together to resolve the issues facing SAP system integrators and SAP customers.
This form of regular debate is highly constructive and has the added benefit of revealing disagreements before they develop into disruptions to transformation projects.
SAP proposes a change, DSAG puts forward carefully considered critique of those changes, and SAP combines this real-world experience and constructive criticism with their own research, creating adjustments to their own products, services and corporate strategy.
The continuously beneficial interaction between SAP and DSAG will be an integral part of the evolution of SAP for many years to come, helping all those that work in the wider ecosystem.
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