The Renewable Enterprise, Cloud & DevOps: Preparing for the New Reality of SAP

Amid fast-moving market dynamics and SAP's plans to end support for SAP ECC by 2027, the adoption of SAP S/4HANA is on the rise, becoming the most widely adopted version among organizations worldwide.

Driven by fast-moving market dynamics - and further pressurized by SAP’s announcement of ending support for SAP ECC by 2027 – the adoption of SAP S/4HANA is on the rise as organizations across industries seek to create and operate a renewable enterprise. But what do these organizations need to do to prepare for a smooth transition?

S/4HANA transformation wave

As organizations move to advanced ERP versions and embrace agile approaches, it becomes essential for them to develop strong processes and capabilities to ensure efficient business operations. We can see strong evidence of this shift in our second State of Worldwide Business Assurance for SAP solutions report which reveals that SAP S/4HANA has become the most widely adopted version with 39.9% of the 501 surveyed organizations currently utilizing it, surpassing SAP ECC (33.1%). Furthermore, over 93% of organizations that haven’t moved to SAP S/4HANA have already started or plan to do so within the next 24 months.

So, we are witnessing a huge transformation wave towards S/4HANA. But as organizations increasingly prepare to shift their SAP platform, it becomes crucial to guarantee ‘business as usual’ operations during these transformations. Yet this urgent need to transition in a highly competitive, volatile, and demanding business environment is characterized by more complexities than ever.

Agile approach to react to new market dynamics

The pace and rate of change within the marketplace is accelerating faster than ever. Unplanned events – like the pandemic, energy crisis, climate change and natural disasters – have caused unprecedented disruption to global supply chains that demand fast and effective reactions. Old, monolithic ERP architectures are no longer fit for purpose as they are unable to cope with such fast-moving environments. So, we are seeing a shift towards the cloud as a more flexible, agile approach that is capable of reacting to the new market dynamics we face today.

The results of our survey further demonstrate this shift with 59.8% of the organizations now utilizing public or private cloud hosting for their SAP architecture, an increase from 41.9% in 2021. This shift towards cloud deployments is primarily driven by this need of speed and agility, but it also benefits from cost savings associated with cloud-based solutions, coupled with the elimination of the need for hardware investment and resources for managing infrastructures and databases.

Keeping the SAP core clean

Cloud platforms have the added advantage of enabling a clean SAP core which aids future innovation to happen at a much faster pace by leveraging technologies such as AI, IoT and blockchain to better connect with the external environment, and react to different scenarios. This approach also enables organizations to maintain their customizations and extensions within the framework, making it easier to implement future upgrades, further improving agility.

So, we are seeing that enterprise applications are becoming composable architectures, with a clean core, specialized applications around it and cloud native applications, all connected and dealing with much larger volumes of data, coming through cloud from the ecosystem external to the enterprise.

DevOps enables faster cycle times

In turn, cloud deployments are driving a shift in the preferred implementation approach. Previously, waterfall was really the only approach for ERP transformations. But what we are seeing now is a shift towards more agile and DevOps approaches with around half of the surveyed organisations adopting agile and DevOps for SAP Applications. These allow faster cycles of innovation and are generally a better fit with cloud applications.

Another clear trend we’re witnessing is that enterprise applications are also being updated more frequently than before. Our survey shows that 44.5% of organizations incorporate upgrades to their on-premise SAP applications on a monthly basis, and 44.1% do so every quarter. At the same time, only a minority of businesses undertake daily, weekly, biannual, and annual SAP upgrades. Keeping up with the regular upgrades released by SAP is critical for maintaining the security and stability of an organization’s systems. These upgrades are necessary to address issues related to downtime, loss of productivity, and security breaches.

Testing is critical to success

This new paradigm of composable architectures in cloud is also driving a new paradigm in testing. Firstly, ensuring end-to-end testing to prove the outcome of a business process that involves multiple applications is right, becomes the objective. Integration is a key focus area. Secondly, the ability to drive processes through events captured from the cloud ecosystem, brings much larger data volumes into enterprise applications. So ensuring the right performance becomes much more a common priority as well as building the right test data set. AI can help here.

Thirdly, the external access through the cloud makes security more critical to be able to preserve enterprise proprietary data. And finally, the increased frequency of updates makes the testing process a continuous exercise rather than a one-off, and testing automation becomes a must.

So, overcoming the new market challenges requires efficient end-to-end testing, integration strategies, and building strong internal capabilities around AI, cybersecurity, automation, etc.  Our survey reveals 41.3% of the respondents believe that an ideal solution is one that enables thorough end-to-end business process testing, ensuring seamless integration. Since organizations may not always have access to comprehensive testing skills and tools internally, they often rely on external partners or service providers, acknowledging their valuable contributions, such as additional technical expertise (49.1%) and enhanced process efficiency (45.5%).

Furthermore, a significant proportion (36.4%) believes that service providers play a pivotal role in ensuring uninterrupted business operations. Notably, 43% of respondents consider high quality testing as an ‘extremely important’ criterion for an efficient business assurance solution for SAP.

Find out more…

The State of Worldwide Business Assurance for SAP solutions – 2023 report aims to inspire you and your teams to develop an efficient and effective validation process for SAP implementation, transformation and testing. This in-depth assessment of the SAP environment provides a clear view of the developments and changes that are taking place currently, and are likely to continue in future. To help benchmark your own preparedness, including what measures can be taken to overcome integration challenges, read the report now.

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  • Elisabetta Spontoni
    Elisabetta Spontoni
    Global Head of SAP Operations and Group Offer Leader for "Digital Core with S/4" at Capgemini
State of Worldwide Business Assurance for SAP solutions -2023