SAP’S S/4HANA DEADLINE TO BE A MAJOR BOON TO SAP SERVICES FIRMS
SAP’s ECC vs. S/4HANA
ECC is SAP's previous generation of SAP's Enterprise Resource Planning (ERP) software introduced in the late 1990s. ECC brought together various business processes and functions into one integrated system, allowing businesses to break down silos and have a unified view of their operations. ECC gained huge success throughout the years as there were over 440,000 customers over 180 countries. ECC generated ~$16.5 billion of revenue in 2021.
However, as technology advanced and business needs evolved, it became clear that a new system was needed. This led to the development of SAP S/4HANA, the successor to ECC, released in 2015.
S/4HANA is a complete reinvention designed to harness the power of modern technology and meet the needs of today's businesses. One of the key upgrades is that S/4HANA adopts a cloud-based database, which allows for real-time analytics and faster processing speeds. S/4HANA also boasts a simplified data model which reduces data redundancy and improves system performance. Additionally, S/4HANA is designed to integrate more seamlessly with new technologies like AI and machine learning, providing businesses with the tools they need to stay competitive in the digital age.
Currently, S/4HANA system has over 20,000 subscribers worldwide and is generating over $4 billion of revenue, making up only around 10% of SAP’s total revenue. SAP plans to discontinue supporting ECC by 2027, forcing any of its customers who require updates and support to migrate to S/4HANA. Therefore, more and more companies will be migrating to the S/4HANA, and revenue it generates will surge to over 20% of SAP's total revenue by 2025.
SAP Consulting Partners are critical in upgrading from ECC to S/4HANA
SAP Consulting Partners are independent firms that provide consulting services for SAP products and solutions e.g. ECC and S/4HANA. They are Subject Matter Experts (SMEs) who offer a range of services including system implementation, process improvement, and managed services. Businesses that use SAP Consulting Partners for s/4Hana migration can save an average of $2 million and can expedite their timeline by up to 50%. Since the transition from SAP ECC to SAP S/4HANA is not just a simple software upgrade; it's a significant business transformation that impacts many aspects of a company's operations, SAP Consulting Partners play a significant role in minimizing costs and speeding up the transformation process.
SAP Consulting Partners also play a crucial role in risk mitigation, preventing potential disruptions and data loss that could occur during the transition. Moreover, SAP Consulting Partners offer customization, tailoring the transition process to align with each business's unique needs and strategic objectives. Furthermore, they provide essential training and support to help users adapt to the new system and leverage its advanced features effectively.
The migration from ECC to S/4HANA presents a huge market opportunity to SAP Consulting Partners, as SAP will stop supporting the ECC system by 2027. Hence, more and more businesses have to put migration to S/4HANA on their nearterm agenda. An estimated 20,000 enterprises will be migrating to the S/4HANA system in 2023 alone. According to SAP, the current global install base of customers for ECC is around 440,000, which means a lot more business will demand the ERP migration assistance in the coming future. Moreover, the global market size of ERP system integration and consulting market is estimated to grow by nearly $11 billion from 2022 to 2027 at a CAGR of 9.34%. Not only do large multinational corporations use ERP systems, 65% of small businesses are also taking advantage of ERP systems. Hence, there’s a tremendous market opportunity for SAP Consulting Partners that have capability to support this transition.
Conclusion
The transition from SAP ECC to S/4HANA represents a significant business transformation, requiring deep expertise, careful planning, and robust support. This presents a substantial opportunity for SAP Consulting Partners as businesses turn to these service firms for their knowledge, risk mitigation strategies, efficiency tools, customization abilities, and training support. Therefore, SAP's push for customers to move from ECC to S/4HANA is set to be a boon for SAP Consulting Partners, driving demand for their services and positioning them as essential partners in businesses' digital transformation journeys.