Data is the life blood of any business enterprise.
There, I said it. And you may hear me say that again in the narrative below.
Valuable data and insights are delivered to me, to you, to us, as ASUG members each year in the form of ASUG research studies. This year, we have a trove of trends, and abundant points of comparison, to collect and consider from the 2022 ASUG Pulse of the SAP Customer study. Below, you’ll learn what I found to be most remarkable in this year’s research as well as a few reflections from lived experiences. Let’s get to it.
Technologies Advancing Digital Transformations
In the 2022 results, participants were asked what technologies will greatly affect their digital transformations in the next two years, with multiple choices allowed. Data analytics/dashboards came in first, at 67%, followed by cloud at 64% and automation at 53%.
Now, as previously noted, data is our life blood; gaining insights into that data through analytics is paramount. As organizations achieve digital transformation progress, leveraging the data they have and harnessing the power of that data through AI/ML are low-hanging fruits that can provide short-term value while teams work on a longer-term strategy to standardize systems.
Meanwhile, the cloud is a key digital transformation accelerator. The ability to migrate to applications that offer shorter implementation times—which, in turn, helps accelerate value capture—is a key CIO opportunity. There is no magic pill, but the cloud does provide efficiencies of scale, maintenance, and implementation.
For instance, in a previous role I accelerated improvements and visibility in the planning space by migrating to SAP Integrated Business Planning … ahead of our SAP S/4HANA implementation. This provided greater insights into demand globally while we worked to move the company to a single SAP S/4 instance. Taking advantage of the cloud solution and ultimately implementing a hybrid cloud architecture effectively moved the company’s digital strategy forward.
Premise down, Cloud up
Speaking of SAP instances, the Pulse report shows that while more respondents still run their SAP instances on premises than elsewhere, the use of on premises is decreasing, down 13% in just a year. With the increase of cyber threats and hardware obsolescence, it makes sense that on premises SAP hosting has declined. Over time, more companies will shift to the cloud or a hybrid environment. The economies of scale and potential cost savings drive migrations to these models.
The research also indicates that a small number—12%—plan to keep systems running on premises, while 37% said they plan to use a hybrid approach of on premises and cloud. (Interestingly, another 30% said they are unsure of plans at this time.)
To me, that small respondent percentage—those planning to keep their environments on premises—is accurate. The pull of hybrid or full cloud is too strong for many CIOs to avoid. Over the years, I’ve embraced a hybrid environment, with my core SAP system hosted on a private cloud, while also using some cloud-based SAP solutions. In time, I anticipate migrating my SAP environment to a third-party public cloud offering.
Yet, there are still issues, to be sure: skill sets, the talent to support the newer approaches, and resource/investment allocations—where to invest dollars over time. People resources who understand how to operate and run workloads efficiently and securely in the cloud will be more in demand. Organizations will need to shift the resource profile. Additionally, from a cost, speed-of-hardware obsolescence, and cyber perspective (i.e., the required frequency of patching), leveraging a cloud provider that has the scale and resources to do this is a no brainer. The challenge for CIOs will be to move away from capital expense (capex) to operating expense (opex) and to work with CFOs through that transition.
The 2022 ASUG Pulse study probed cloud migration challenges, asking respondents about expectations if they are in planning mode, as well as experiences if migrating to the cloud. What rose to the top in each circumstance? Data migration, followed by cost concerns; integration of on premises and cloud-based systems; lack of in-house knowledge to manage migration; and security issues/risks. I agree on all counts, even though I have not yet moved my SAP workload to a public cloud provider, so I have not experienced these challenges.
The change in cost model that I noted above—from capex to opex—is an internal organizational challenge and mindset shift to overcome. Once the migration is complete, I would be more concerned with unplanned downtime for applications that support my most critical, time-sensitive business processes, along with ensuring data (data is our life blood) and system security. I also would be concerned with the potential complexity of a multi-cloud environment and the lack of in-house knowledge to manage the migration and support going forward.
COVID-19 Was, and Is, a Challenge…
Now, as we may have a sense of hope that the pandemic’s worst may be behind us, the Pulse points related to the impact COVID-19 had on technology initiatives aligned with what I’ve seen. The highest percentage—57%—said they were proceeding with planned initiatives despite the pandemic; another 29% said they had delayed initiatives, and 13% reported that they are planning/starting something new.
In my organization, we stayed the course with our global rollout of SAP S/4HANA through the pandemic and implemented at the height of the pandemic. We clearly had to adjust how we did everything, from testing, change management, training, and on to end-user communications to account for more remote work. A number of organizations in similar situations found ways to adapt to these circumstances. In our organizations, and really anywhere in the world, we learned to adapt to a pandemic that forced remote work, which prompted new ways of doing business, and accelerated technology adoption that we’d once thought would still be years away.
James A. Johnson II is CIO of James Hardie Building Products Inc. and an ASUG Board Director.