SAP’s on-premises customers must confront significant scope and cost decisions while making the business case to move their ERP systems to the cloud and adopt a cloud operating model.
To incentivize customers running on-premises editions of SAP ERP Central Component (ECC) and SAP S/4HANA to make their move and remove the roadblocks commonly experienced by customers seeking to do so, SAP recently announced the RISE with SAP Migration and Modernization program.
A comprehensive set of resources, services, and financial incentives intended to serve as a guided digital experience for customers making the transition to SAP S/4HANA Cloud, this program could enable customers with on-premises implementations of SAP S/4HANA and SAP ERP Central Component (ECC) to reduce the cost of cloud migrations by up to 50%, according to SAP.
Giving customers access to credits (available until the end of 2024) that can be used to offset the costs of maintenance, cloud services, or cloud subscriptions, the program will also give customers access to the SAP S/4HANA Cloud Safekeeper service. Customers running older releases of SAP S/4HANA and falling into customer-specific maintenance as they upgrade to the latest version of SAP S/4HANA can opt for the service, which offers upgrade services, sandbox infrastructure, and business continuity for customers' current systems, via updates and patches, for two more years, giving them more time to upgrade.
And in an effort to standardize the migration journey, SAP has also announced that those migrating to the cloud—along with partners assisting with their migrations—will follow a defined RISE with SAP Methodology, with milestone checks and reporting supported by SAP services and specialists.
To shed further light on the RISE with SAP Migration and Modernization program, ASUG spoke with Maura Hameroff, SVP of ERP Product Marketing at SAP, who detailed the company’s path to this latest program, the importance of aligning business and technical layers when initiating cloud transformation, bringing partners along to establish a central RISE with SAP Methodology, and how customers might best utilize the financial incentives included in the program.
This interview has been edited and condensed.
Q: To set the scene for ASUG members, what customer feedback led SAP to move forward with the RISE Migration and Modernization program?
A: We started our journey, in terms of our strong commitment to the cloud, in June of last year, right before SAP Sapphire. And that journey has involved developing innovations and making sure our customers can take advantage of those innovations in the cloud. SAP is built on a tradition of success as a customer-centric company; we were built on the message of designing software for our customers. We carry that message with us to this day.
As SAP made a clear commitment to the cloud last year, customers provided very loud, clear feedback that they needed extra help from SAP to get to the cloud. The question is not whether they want to get to the cloud. It’s, “How do I get to the cloud, considering how I’ve previously worked with SAP and what I’ve invested in SAP to date?” Over the last year and a half, collaborating with our customers, we’ve been testing and piloting ideas related to how we can help them [move to the cloud.]
Throughout this process, it first became truly clear that whatever we did had to be different from an SAP ECC standpoint or an SAP S/4HANA standpoint. Our customers had quite different starting points, depending on what ERP system they were running.
If you look at an SAP ECC customer, it's a whole redevelopment of their business process, whole sets of modernizations need to occur, and they more quickly have clear visibility of the value of operating in a completely different way in terms of their business models.
For SAP S/4HANA customers, those customers have already bought into the new model from a business processes standpoint; what they need to take is that next step of truly running in a cloud-centric operational model, to take full advantage of how their business can run differently.
We’re currently lining up a series of customers for an event, and we are focused on specific business process changes that they have achieved, because of that holistic cloud transformation with RISE with SAP and across their environment; Mahindra Group, for example, can sell 100,000 cars in 30 minutes. That’s what we have to help SAP S/4HANA customers get to: a holistic cloud transformation.
We’re also focused on ensuring consistency to achieve results. In today's world, where resources are scarce and all companies are pressured in a macroeconomic sense and in their own industries with competition, you can't wait. You need to understand, in order to get a project approved, the CEO needs to understand how the company will operate differently as a result—not just the cost, ROI, TCO, and other traditional evaluations.
Lastly, even with a clearer view of what transformation is meant to accomplish, how the company will do things differently, and when, cost is a factor. It’s an investment. Those are the three elements that we considered:
- Where the customers are today.
- What they need in both of these journeys to get to their intended results, providing that clarity and transparency on when they're going to get those results.
- What additional support we could offer through incentives to offset the typical costs involved in migration
The RISE with SAP Migration and Modernization program is bringing this umbrella together across the company. We're not just launching a website. We're not just launching incentives. This is product engineering with customer success, services, and marketing, bringing together everything that the customer needs throughout their journey.
Q: As I understand it, The RISE with SAP Migration and Modernization program is an expansion of what was previously available via RISE with SAP, with additional support, services, and a clearly defined methodology for transformation on top of the financial incentives.
A: Yes, it's absolutely building on what we had available before. RISE with SAP starts with the cloud solution; think of RISE as a bundle of cloud solutions and our managed infrastructure that brings together predictability, availability, and a service-level agreement (SLA) with tools, methodologies, support, and services.
On the note of tools, methodologies, support, and services, this is what we’re elevating into an entire program. What we’re adding is, first, full transparency: on what it takes, what the steps of migration are, and how you can easily start thinking about and planning your journey through a new digital experience for SAP ECC and S/4HANA customers.
We’re also bringing all of the tools, services, and methodologies that we have available into a defined RISE with SAP Methodology. It’s based on SAP Activate and the adoption framework, with four clearly defined steps. We’re also creating clarity through reporting, to help customers move from step to step. It’s no longer just up to the customer or the partner to figure it out; now, SAP is helping both customers and partners maintain clarity in terms of what they need to achieve, where they are in the process, and what it takes to get to [their destination.] That’s huge.
Secondly, SAP is now training and upskilling our partners to do the same through our RISE competency, which now requires training and upskilling on the RISE with SAP Methodology. Some of the elements of this were already in place, but we’re adding that next layer to make sure the entirety of the methodology is followed in projects; and we’re requiring more specific roles on the partner side to be trained to help the customer architect their journey.
Q: How will building the RISE with SAP competency to follow this methodology work from the partner side?
A: It’s an official competency. SAP today has a competency based on SAP S/4HANA Cloud, private edition. We're evolving this competency to be a RISE competency. We’ll do that by adding training and certification: training to the companies, certification to the individuals. We’re adding additional training and requiring additional certification, so that the partners can be upskilled into the RISE with SAP Methodology, and we can clearly say which partners are trained and capable of running the RISE with SAP Methodology for our customers.
Q: What customer feedback led you to proceed with bringing financial incentives into the new RISE program, and how did you specifically approach those?
A: The incentives cover three areas. As customers are moving, irrespective of whether they're moving from SAP ECC or S/4HANA, they’re not going to move their entire estate in one fell swoop. There are systems running in the cloud, and there are systems running on-premises, as they complete their move and transformation. Part of the incentives can be applied to maintenance costs, which burden customers in cases where they’re running parallel systems.
Secondly, transformation requires services. To lift-and-shift and start operating in the cloud without the proper business process transformation and evolution of your framework for operating in the cloud, it doesn’t happen automatically. Customers generally need help with services. That’s another angle that we’re hitting with the incentives.
And third, the more customers get to the cloud, the more they want to do in the cloud, so we’re adding that next layer. Depending on where the customers are in their journey, and where they have allocated their resources, those are the three areas that we have seen customers needing extra support in, whether it’s to support dual systems, to invest in services that they need to break through and modernize their business process, or an additional set of solutions that they want to run in the cloud. From a platform standpoint, the more customers start to develop their extensibility in the cloud, the more they consider CPEA credits or additional line-of-business applications. They might need to extend their HR capabilities, for example, or they might need to add more advanced finance solutions. The credits are developed for customers that are already in a more advanced stage of getting to the cloud and wanting more from the cloud.
The two design principles we used for the incentives are clarity and flexibility. In terms of clarity, this is your contract value; you get this as a one-time credit, and you have three areas where you can invest. In terms of flexibility, customers are in different ranges with what they need the most. Some customers have less complexity; in both the SAP ECC and SAP S/4HANA space, you see customers that started on a clean-core journey before even moving to the cloud. They’re going to be more interested in maintenance costs or in additional cloud solutions or services. Other customers that need more help will be looking at transformation services.
Q: As you said, SAP ECC customers and SAP S/4HANA customers will take different steps to initiate the RISE with SAP Migration and Modernization program. Can you detail what the steps are like from both of those starting points?
A: There are two layers: a business layer and a technical layer. On the business layer, all customers need to look at their business processes, mapping inefficient processes and opportunities for evolution. That is what makes the business case, answering the question of how efficiently or inefficiently you are running today, asking what opportunities there are for improvement. On the technical layer, you have to also assess your current environment, to understand the complexity of your extensions, of your dependencies, of what you have mapped. Those steps are valid for both SAP ECC and SAP S/4HANA customers. But the way you do it is quite different.
On the business layer, if you’re in SAP ECC, you are going to be looking at service management for example very differently. In a traditional world, you're doing a service order for parts, for maintenance, for your service unit. In an integrated business process world, you're looking at them holistically; even if you're still charging customers separately, you're looking at them holistically, and you’re selling them together.
For example, you can sell an air-conditioning unit and service, which includes maintenance as well as the actual unit and service. The entire cycle of that business process, and bringing it all together, is different in the SAP ECC world. That’s where you have to look at, today, what are the processes you really need to see? What would they look like? How are they going to modernize our company? Where are we going to start?
In the SAP S/4HANA world, it’s slightly different. It’s about how much more efficient I can get. How many other systems I can connect with, to then be more efficient? Where else in the company and in the landscape can I connect to?
As another example, Mahindra was tasked with connecting their sales operations with their manufacturing operations, their billing, and their e-commerce operations, tying it all together. That's what you can do only in the cloud. And it’s not that everything was done on SAP at Mahindra, but RISE with SAP was at the center; they connected multiple systems they could have never done and run operations in real time they could never have run if their transformation were not done in the cloud.
From a technical standpoint, you have to look at whether you’re going to do a brownfield or greenfield migration, and that will rely on what type of extensibility and what technical debt you’ve built up over time. If you have already gone to SAP S/4HANA, you may have already looked at those aspects; you're going to be looking at the depreciation of hardware, depreciation of infrastructure, and how you do with high availability.
What you look at first will differ between SAP ECC and SAP S/4HANA. Business and technical layers run in parallel, but depending on where you are today and what you have developed, those are the types of decisions you’re going to be making.
Q: Last fall, SAP debuted the 2023 release of SAP S/4HANA and “premium plus” RISE and GROW packages that embed capabilities for generative AI and SAP sustainability solutions. As recently discussed on the Q4 earnings call, more than 50% of customers who’ve signed up for RISE or GROW since that announcement have opted for the premium editions. Can you talk about the RISE with SAP Migration and Modernization program in relation to those packages, and to what do you attribute the early success of those packages?
A: This is an evolution of that. With [the RISE with SAP Migration and Modernization program,] we’re connecting a digital experience with the depth of our technical tools and methodologies, and also adding financial incentives we piloted in Q4 [of 2023] with a handful of customers to try to figure out what it is customers actually need from an incentive standpoint to drive transformation. This program is an evolution and brings various elements together, and all of the elements of the program itself are based on work that we’ve already done.
Everything is based on customer feedback. The way we have designed the premium packages and how we’re going to advance them, that’s based on what customers tell us are the types of packages that they want SAP to provide to them. Our personas include finance professionals, IT professionals, and COOs; we take feedback from our customers in different personas, and then we look at the core of the products and what additionally can bring value. We design our packages with customer feedback in mind, and we look at entitlements that we see the customers need the most.
AI, for example, is no stranger to SAP. We started with automation, evolved into AI, and now we're adding generative AI to our solutions. The big differentiations that we have include the business knowledge that we have and how we guide with that knowledge in the products. In both RISE with SAP and GROW with SAP, the amount of automation, best practices, and guidance that we provide in the product has been tremendous. Now, with interaction through Joule and through other mechanisms, you can more easily access data from multiple parts of your system, bring it into context, and make action easy. That has been tremendous for our customers, who truly see how both their employees can run the business in a different way, how they can be faster and better to their customers.
Sustainability is near and dear to companies—and a requirement in several industries. The fact that we're combining financial data with green data, not just using averages but looking at real data in real time, is a key differentiation. Other solutions look at averages and do offline matching, but with our solutions we’re combining data and able to run scenarios. If you change where your plant is, or if you make modifications elsewhere, what is the effect? What is the financial effect of doing so, and what is the green effect of doing so? How is it going to look like in the period of a year? That is a huge differentiation for customers. Many customers are early in their journey, but the fact that we provide them with the tools to help guide them, even at this early stage, we see excitement about.
ASUG will continue to monitor the rollout of SAP’s RISE with SAP Migration and Modernization program to communicate and clarify its details for our members as more information is made available.