Clouds Loom as U.K. Firms Weigh SAP Transition Options

As the end of support for a legacy SAP system draws closer, U.K. enterprises need to decide whether the next step in their SAP journey should take place on premises or in the cloud, a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, says.

The 2024 ISG Provider Lens SAP Ecosystem report for the U.K. finds enterprises planning to move their SAP applications to the cloud are looking to providers for help optimizing their migration to S/4HANA. Enterprises with a strategic focus on digital transformation are opting for a greenfield approach, using the migration as an opportunity to realign with other digital imperatives.

SAP is pushing companies to implement S/4HANA as it ends support for its on-premises ERP Central Component (ECC) system at the end of 2027. SAP’s RISE with SAP program offers tools, services and software to help large enterprises make the transition more easily.

“Providers are well positioned to serve as trusted partners at this critical juncture,” said Anthony Drake, partner and head of ISG in the U.K. and Ireland. “They can offer holistic support and innovative solutions that empower enterprises in their digital transformation journey.”

Over the past few years, SAP has sought to modularize and simplify its solutions landscape, the ISG report says. Their aim has been to keep the core S/4 HANA ERP system clean by using cloud-based services provided by SAP Business Technology Platform (BTP) for additional functionalities, the report says. A growing number of U.K enterprises have recognized the long-term benefits of SAP BTP and consider it a strategic investment to future-proof their operations and enhance scalability, agility and innovation capabilities, ISG says.

Solutions like RISE with SAP can serve as catalysts in the transformation to S/4HANA by offering access to cutting-edge business processes while delivering a secure, future-proof, cloud-based platform, the ISG report says. With RISE, enterprises also can capitalize on the flexibility and agility inherent in a composable architecture, the report says.

Although SAP has tried to make a compelling case for cost-conscious U.K. enterprises to adopt it, many enterprise CFOs are still reluctant to invest in RISE, ISG says. According to the ISG report, this can lead to unsupported systems, resulting in exorbitant maintenance costs and operational inefficiencies.