What is going on in the large SAP S4 clients

Last year I wrote an article about what I observed going on in the large clients in the SAP market in Europe, it was quite well received, but I guess it only starts to become useful when you start to look at trends and see how the market is changing.

?First I would like to make clear there are some massive caveats, I am not a professional researcher, this is all from my own personal knowledge and network, and at times I have had to make some sweeping judgements, for example when I have accessed an organization has completed the move to S4 I am sure there are still things to do, and there may be the odd part of the organization that has not moved yet, but in my judgement the exercise to roll in or upgrade is trivial.

?I used my findings from last year a few times at events etc., and I did realize when challenged that I had not really been clear on some classifications etc. so comparing last year and this year directly is not possible in all cases.

?I have tried to draw a few conclusions on what is going on I must remind myself that much of this is not to do with SAP and SAP S4 implementation approaches but the macro-economic situation and what is going on in individual companies, i.e. a company going through a massive acquisition may pause its S4 program for a while, or one that gets a new FD, so again the analysis is only really relevant when you look at trends.

?Also finally please remember this for organizations based in Europe that turn over more than €10bn-ish, I have excluded government, and there may be some private organizations where the turnover is a little opaque so have been excluded in error. These organizations by their nature will be complex and usually global so the SAP answer will tend to be more complex, a smaller simpler company will trend towards a simpler SAP S4 answer.

?So first things first, how many of the top companies do I know about, well this has gone up, in 2023 it was only 67% of those in my sample but in 2024 this has gone up and I am up around 80% I think this is simply due to curiosity, I would reflect that the ones I did not know about had been by and large less active in the market so maybe had not tendered for anything, or created a noise, this is certainly true of a few organizations that had simply done a brownfield upgrade with their existing partner or internal team. This has led for example to a higher percentage of brownfield this year (in reality this is because I did not know what they had done in 2023, not because they suddenly did it in the intervening period).

Of the ones I know about then Who has SAP

?As of last year, most large organizations in Europe had SAP, I can see no discernable trend that they are replacing it with anything else, in fact some 5% are putting it in for the first time and I know of at least one that is likely to buy it for the first time in 2024. Excitingly one is opting for S/4HANA cloud, and generally I would say I am beginning to see the larger firms looking at a Hybrid approach in some cases, and I suspect the penetration of S/4HANA cloud is going up (maybe I will count this is in 2025). The 5 % that don’t have it and probably never will tend to be in services, or retail, but it pretty much is you make something and sell things you will have SAP.

?Out of those who have SAP who is moving to S4:

?This is where I see quite a big change, in 2023 I thought 13% had not looked at moving in 2024 I can see that has reduced to 3% that means 75% of the people had not started are now underway, there are lots of implications of this, for resources etc., and the ones that have not started often have a pretty easy route to S4 i.e. they have a single instance and can upgrade at a time of their choosing. I think the largest clients drive a lot of the work for the SAP ecosystem so pretty much we must be approaching peak load. I think the issue that worries me are the number of programs that are paused, now that can be for many reasons, not all to do with SAP and partners, but I do think it reflects the complexity and speed at which some of the programs are going, and that some organizations are rethinking.

?Year to complete move to S4

??This has not changed all that much, but the years have rolled forward and I have include some of the brownfields I did not know about ( though I suspect they will optimize over the next few years) realistically some of the really huge and complex companies that have only just started or have paused will struggle to hit 2030, but I think will get the key components across. For the SAP Ecosystem I suspect you will have plenty to do until 2030

?What happening with Partners

?I do think this is significant, from a world of single partners being selected to do programs or maybe consortia, the world is opening up, organizations are realizing that one partner may struggle to do it all and have all the capacity, or maybe complacent unless challenged, and from what I can see approx. 11% of the total market changed partners in the last year, which I think is a lot. And further 15% added partners, this means that 26% felt unhappy with the way they were progressing and did something. If we think that these programs will last several years, that means there are opportunities for new entrants, though clearly a lot of the transitions occur from Plan to Design, or design and pilot to roll out, so it may slow down.

?Stage of project

??This has definitely moved along, ?I don’t know why I say the S4 wave is moving down the bus (mixed metaphor the makes no sense at all) but as we move from pan to template and deploy, the type of skills needed change, when I say no discernable plan I don’t mean its total chaos, what this reflects is there are a number of companies i.e. diversified industrial firms that really don’t have one single consistent SAP strategy and let their operating companies get on with it (which is absolutely fine), at some point when they are mainly on S4 I say they are complete and there is at least one that I feel has achieved this. I guess this means that there will be more support and roll out opportunities for partners and less for road maps, but then again a change of direction will lead to a new road map.

?Migration Type

?Finally, Migration type, this has changed from last year, but mainly because I have found out about more brownfields (I don’t think more have opted for it) and that I have assessed that more organizations have a very complex estate and do not choose pure, blue, green, brown and have a hybrid of the at least 2 approaches. I have also loomed Central Finance first into this category. All in all, those who started Green are still going that way, but I suspect some of the paused ones may change direction towards a new approach.

I hope this is useful please take it with a pinch of salt, and feel free to ask any questions.