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SAP has been touting the growth in SAP S/4HANA implementations this year, and it seems poised to finally break beyond the hype in 2017. But is this growth real, and will the momentum really continue?
And, for all the noise about it, SAP S/4HANA represents only a part of the SAP story. The company is positioning itself as the core technology to drive digital business transformation in a variety of platforms, including SAP HANA Cloud Platform (HCP) and the SAP Business Network. SAP would also like to be the technology underpinning for the internet of things (IoT) and big data applications, but does it have the right combination of applications to make this happen?
It's often a fool's errand to make predictions, but it's always fun to speculate on what might be coming. We asked several experts to do just that for SAP in 2017.
S/4HANA -- let's get visible
Josh Greenbaum, founder and principal analyst, Enterprise Applications Consulting
SAP has placed some significant stakes in the road for next year, and they're going to have to work hard to execute on them.
IoT and machine learning, these new functions that they're putting a lot of interest in, are a focal point, but IoT is hard. It's hard for everyone to get the customers to move beyond proof of concept to actually do real big implementations, and SAP shares that challenge with everyone pushing IoT, so they're going to have to overcome that.
They need to continue the momentum on S/4HANA and get visible wins and visible implementations because that's another solid proof point.
The big question is how to follow through in 2017 on the platform story. They're pressing out the product side of HCP and microservices -- they've got a lot of pieces, and they've got a really strong API story -- now they just need the developers. This will be one of the biggest challenges for SAP; how do they take that platform and make its dream come true? And that means building an enormous ecosystem of developers, and particularly the nontraditional SAP developers; this isn't the ABAP gang, necessarily.
They need one strong voice in SAP that owns their internal and external message on cloud. I predict that they will try to consolidate the cloud message and make it more cohesive because they have to.
S/4HANA momentum steady, but slow
Vinnie Mirchandani, analyst and CEO, Deal Architect
When I wrote volume 2 of SAP Nation in 2015, I projected S/4HANA would not be fully fleshed out across ECC [ERP Central Component] and industry-specific functionality and be truly available in the cloud until 2020 at the earliest. Based on progress I saw in 2016, I still stand by that projection.
In the meantime, we will see a trickle of SAP customers look to implement S/4HANA. A far bigger number will instead adopt some of the nine strategies I had identified in SAP Nation to lower their burden -- ring-fence ECC with cloud solutions, move to third-party maintenance, look at private cloud infrastructure and so on. In 2016, I started to see hundreds of SAP customers try one or more of those strategies, so in 2017, I expect that trend to accelerate.
The year of HANA Cloud Platform
Holger Mueller, vice president and principal analyst, Constellation Research
For SAP, 2017 will be the proof point of S/4HANA, both on premises, but particularly in the cloud. Will SAP get customers to adopt the product? It should also be the year for HANA Cloud Platform. SAP executives have now warmed up to the product, so they need to talk about it and why customers need it.
On the SuccessFactors side, we will see more innovation on performance management, global support and, probably, payroll.
SAP will make more strides in 2017 for data as a service, so expect similar partnerships and offerings, like the one that SAP and the European Space Agency announced at SAP TechEd in Barcelona, Spain.
So, overall, I think big news would be more S/4HANA Cloud adoption, more large HCP deals, convincing references for Digital Boardroom and large adoption of SAP IoT. It will be a bust if there's little or no adoption of S/4HANA. Also, enterprises need to build more apps in house, so HCP is crucial for SAP.
Get aggressive on HCP
Jon Reed, analyst and co-founder, diginomica.com
SAP can certainly grow the S/4HANA number, but it's important to break it out. For example, on-premises customers who want to keep their customizations will potentially sign on to SAP S/4HANA on-premises version, or have already. At some point, SAP may hit the limit of those, but I expect they will get a fair amount of additional sales of those types of projects. Gradually, more of them will go live. They are big projects, but not totally disruptive, in that they don't involve the kinds of process change or standardization that moving to pure SaaS [software as a service] software would.
I think SAP has done the best job of answering the need of their largest and most heavily invested customers who want to keep going with on-premises, but want some of the digital and real-time capabilities SAP S/4HANA offers.
What will be interesting is seeing the types of new projects that come on. So far, a lot of the new projects are not classic, large enterprise customers. SAP badly wants SAP S/4HANA to be competitive for new customers and for customers purchasing line-of-business cloud solutions.
By Sapphire , we should have a good mile marker to see how SAP S/4HANA adoption is going outside of SAP's core customers. I would expect modest growth in those numbers this year, but [nothing] spectacular.
HCP growth will only happen if they get more aggressive. I like the Cloud Foundry/HCP pursuit a lot, but I think SAP needs to dedicate more resources there. At SAP TechEd in Barcelona, SAP would not even commit to when HCP would go GA [general availability] on Cloud Foundry, just saying, "sometime this year." That's not aggressive enough. SAP needs to get HCP in front of non-SAP developers, and the Cloud Foundry model is one example of pursuing an open source community.
SAP has to do much more work on HCP go-to-market, helping smaller partners and developers get apps to market. If SAP doesn't get more serious about solving these problems, HCP will become the new NetWeaver. Right now, I see a middle ground of gradual HCP progress, but [its] not fast enough for the market.
I think 2018 will be SAP's breakout IoT year; 2017 will be the year of grandiose IoT keynote pronouncements. But, offstage in 2017, SAP's investments in IoT [will] start to take hold in modest use cases that do indeed go live; a step beyond proof of concepts. I'm a fan of these modest use cases, as they help to prove the business value for customers, so I don't see "modest" as an insult. I prefer it to grandiose.
SAP Business Network enables digital transformation
Dana Gardner, president and principal analyst, Interarbor Solutions
SAP is positioning itself well to be a partner in the digital transformation business at multiple levels, and the Business Network will help to enable that, along with analytics and bringing predictability into business decisions. Better cloud utilization through SaaS and services integration is another. So when you look at Ariba, Concur, Fieldglass and all the major acquisitions that SAP has done to create business services and make them cloud or SaaS-enabled, having a common platform of HANA beneath them to better develop analytics and recognizing that this network includes ecosystem partner services as well is the big story for SAP in 2017.
The technologies have matured, and they are starting to target individual vertical industries and come up with more services and partnerships that target healthcare, government [and] manufacturing. You don't just rip and replace ERP, HR management, spend management, you transform it and progress it.
Unlike some vendors, SAP understands that there's a great variability in willingness and capability of adoption across the spectrum of their customer installed base. So they're going to have early adopters that will go all SaaS or do as much cloud as they can, but they also have a sizable portion of their installed base that wants to stick with what they've got, and they need to support that variability.
SAP has strong adoption instincts and is forward-looking, but they don't eat their children. They bring them along and allow them to adopt at their own pace, while letting them utilize many of the new technologies, so you can bring HANA capabilities for analytics, but you don't necessarily have to rip and replace everything to do it.
There are still some big question marks, especially around the relationship between SAP and some of the large cloud providers. Are they going to make partnerships deeper with IBM, AWS [Amazon Web Services], Google, Microsoft or all of the above? There's a lot of "cooperation," as they might compete with Microsoft on some things, but might be complementary on others.
What's the relationship with Hewlett Packard Enterprise (HPE), which has decided to get out of a lot of the software business that SAP may have competed with them on, and is a much more cooperative relationship now with the new spin off lean HPE and SAP?
So, 2017 will be an interesting year to see how SAP plays well with others and who those others are.
Read about SAP's $2.2 billion bet on IoT
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