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A year in, Rise with SAP sees traction, but messaging still muddy

After a year, the returns on Rise with SAP are mixed. For some, it's just the right package to spur a move to S/4HANA, while for others, the simplified cloud model is not needed.

Nearly a year after its splashy debut, Rise with SAP has shown some positive returns, but many SAP customers may still be unclear on what value the program promises.

The crux of Rise with SAP is a simplified deployment model, where customers can deploy S/4HANA in the public cloud hyperscaler of their choosing -- primarily AWS, Google Cloud Platform or Microsoft Azure -- while having only one contract with SAP to maintain. SAP hopes that simplifying the migration from legacy infrastructure built before the data business boom will entice customers to build an intelligent enterprise centered on the digital core of S/4HANA Cloud.

SAP is selling this as "business transformation as a service," and customers interested in stepping back from managing complex IT infrastructures that include S/4HANA appear to be buying it. Indeed, where customers stand on Rise with SAP may depend on several factors, analysts said, including their organizational size and complexity, as well as their relationship with a public cloud hyperscaler.

Better messaging is needed

SAP claimed that the number of its customers moving to the cloud is growing steadily -- and attributed much of this to the Rise program. In October, SAP reported that 500 new S/4HANA customers were added in the third quarter of 2021, bringing the overall total to 17,500. However, SAP does not break down how many S/4HANA customers are on premises and how many are cloud-based, either in the public cloud or private.

Jan GilgJan Gilg

"Through Rise, we're clearly seeing the shift from on-premises toward cloud, and there are now more than 11,500 live [on S/4HANA] right now," said Jan Gilg, president of SAP S/4HANA.

Rise with SAP is targeted at both new customers and SAP's installed base of on-premises customers. The split between new and existing customers using Rise is about 50-50, he said.

"[Rise] definitely appeals to new customers, but on the other hand, we still have a pretty large installed base on ECC that we are working on to convert," Gilg said.

There are indications that SAP's messaging around Rise needs clarity. In a survey of 106 SAP customers published in November by the independent U.K. and Ireland SAP User Group (UKISUG), just one in 10 SAP organizations said it planned to use Rise. Fewer than half of the respondents, 44%, said they were either extremely or somewhat familiar with Rise, and 33% said that they had never heard of the offering.

Assessing the goals and successes of Rise with SAP after the first year is difficult, primarily because many SAP customers are unaware of what the offering provides, said Jon Reed, co-founder of Diginomica, an enterprise computing industry analysis firm.

Jon ReedJon Reed

"SAP has to overcome a lot in terms of the trust factor that they're committed to this and then getting across what it is. SAP has not done themselves any favors there," Reed said. "When they call it 'transformation as a service,' that sounds really cool, but what does it actually mean? It seems like SAP is pitching it as a solution to just about everything, and that may create some confusion, whereas a more narrowly focused message would help."

Cirque Du Soleil on the Rise

Some longtime SAP customers have received the message and are using Rise with SAP as the vehicle for a digital transformation.

The global entertainment juggernaut Cirque Du Soleil selected Rise as its vehicle to move off its SAP ECC system onto S/4HANA Cloud ERP system because the legacy ERP no longer fit the company's current size and expected business requirements.

Growing from 20 street performers in 1984, the Montreal-based Cirque du Soleil now has around 4,000 employees worldwide and has presented shows in 450 cities in 60 countries.

Elodie BonniardElodie Bonniard

The company was shut down in 2020 due to COVID-19, and it used the time to rethink its operating processes and devise a plan for growth after reopening shows in 2021, said Elodie Bonniard, SAP platform team lead at Cirque du Soleil and implementation team lead for Rise with SAP, during a media event in November.

There were several reasons why Cirque chose Rise, Bonniard said, including its continued reliance on SAP ECC, which it deployed in 2000.

"The way we built the system 20 years ago doesn't reflect the size of the company now," she said. "That means we need to redo our foundation and go to a system with fewer limitations that reflects our reality right now."

Going to S/4HANA enabled Cirque greater capacity to manage increasingly large volumes of master data and better integration with cloud applications like SAP Ariba for procurement and SuccessFactors for human capital management via the SAP Business Technology Platform, Bonniard explained. Moving to the cloud was another key consideration.

"The Cirque Du Soleil IT team has a cloud mindset, so we want to do everything we can do in the cloud," she said. "The fact that SAP offered to manage our infrastructure in the cloud was a good argument for us [to make the case for Rise], and we wanted to reduce the risk of such a transformation."

Moving to cloud but not S/4HANA

Mark Dearnley, CIO at Inchcape, said that Rise with SAP appears to be one of the best programs SAP has provided in a long time.

Mark DearnleyMark Dearnley

Inchcape, an automotive industry marketing and distribution firm based in London, has run SAP ECC for many years, and early in 2021 decided to move to the cloud using Rise with SAP, Dearnley said.

Inchape works with about 30 automotive brands in 36 countries around the globe and has 15,000 employees. The company generated about $9 billion in revenue this year.

The company is not yet migrating to S/4HANA, but will run its existing ECC systems in a hosted cloud deployment until it's ready to move to S/4HANA, he said. The most important consideration is that Inchcape can move away from managing the SAP infrastructure.

"If you want to run the SAP operating system, this takes away the need to decide what layer you want to participate in," Dearnley said. "We made a conscious decision that we don't want to have to worry about the SAP infrastructure layer and the Basis layer and all that."

By separating out the infrastructure layer, Rise will help Inchcape's plans to roll out SAP systems to operations in various locations, he said.

"Part of the whole strategy around Rise is to say, 'We want somebody else to worry about that whole infrastructure up to application layer,'" Dearnley said. "We're setting up digital delivery centers in Colombia and the Philippines, and being on Rise allows us to drive much faster application development and rollout capability."

Startups a good fit for Rise

Smaller companies with simpler IT landscapes and fewer resources may be the ideal Rise with SAP users.

Rob SongRob Song

Electric Last Mile Solutions (ELMS), an electric vehicle startup, selected S/4HANA to handle its growth and future business requirements, according to Rob Song, CFO and treasurer at ELMS.

ELMS, formed in 2020 and based in Troy, Mich., manufactures electric vehicles and has its first model in production, an urban delivery vehicle.

When considering its growth projections and future business process requirements, the company evaluated several ERP systems before settling on S/4HANA, Song said.

"As we went through the evaluation process, the technology for S/4HANA really stood out," he said. "The in-memory database makes the operating speed significantly faster than competitors, and the embedded AI is another unique factor that made S/4HANA stand out."

While it plans to continue manufacturing electric vehicles, ELMS will also become a data business driven by its line of connected vehicles, which means that it will require mature analytical processing capabilities, Song said.

Rise with SAP was not yet generally available when ELMS began its S/4HANA implementation project in 2021, but it was the right offering when it became available, he said.

"We run a pretty lean company as a startup, and we need to operate efficiently," Song said. "We were quickly building the team at the same time as we were trying to implement the system, but to implement it properly, you need to dedicate a lot of in-house resources. So taking that into account, Rise was an obvious choice to go with for the implementation process."

ElectraMeccanica is another electric vehicle startup that selected S/4HANA as its core ERP system and Rise with SAP as the deployment method.

Kevin PavlovKevin Pavlov

ElectraMeccanica, with U.S. headquarters based in Studio City, Calif., makes customizable electric vehicles designed for single driver use, primarily through direct-to-consumer sales, said Kevin Pavlov, CEO at ElectraMeccanica.

The company's initial manufacturing facilities are in China, but it is opening a U.S. facility soon to handle projected growth, Pavlov said.

ElectraMeccanica, working with the consulting firm PwC, previously called PricewaterhouseCoopers, conducted an ERP evaluation process before selecting S/4HANA. The prime consideration was a system that could integrate finance and accounting with manufacturing and logistics processes, and be able to scale with the company's growth, he said.

"We needed to bring together inventory control, logistics, accounting and finance under one umbrella," Pavlov said. "The company is growing very quickly and in order to meet the demands and functionality of the growth of the company, we need an infrastructure in place that supports that."

PwC introduced Rise with SAP, and Pavlov determined that it met the requirements needed to go forward.

"It helped us to make the decision to go with SAP and the S/4HANA architecture in the cloud," he said. "The fundamental contract is with SAP, and we contracted with PwC to be an intermediary to help with some of the negotiations. Other than making sure that the purchases and licenses are falling into our categories correctly, a lot of pain has been removed from our IT people."

Adidas goes to AWS cloud, but not with Rise

Rise with SAP may not be the best deployment method for every customer moving to S/4HANA and the public cloud. Sports apparel giant Adidas is moving off its legacy SAP systems onto S/4HANA and has "selected AWS as its preferred cloud provider for SAP workloads," according to an announcement from AWS.

The move to S/4HANA on the AWS public cloud infrastructure will enable Adidas to digitize core business processes, use data analytics and support new commercial models, like direct-to-consumer, the announcement said. The SAP S/4HANA environment will be integrated with AWS technology like machine learning and analytics, rather than with similar products from SAP, to improve supply chain processes, inventory and retail store merchandising.

Adidas did not comment further on the news. SAP issued the following statement: "While Rise with SAP has received positive market acceptance from midmarket and large enterprise customers alike, we recognize every customer's specific needs will differ. Our goal is to ensure our great customers like Adidas have the support and partnership needed from SAP to achieve success."

Joshua GreenbaumJoshua Greenbaum

Adidas' choice to deal directly with AWS raises the point that, while Rise with SAP may make sense for companies looking to step back from managing their infrastructure, it may not make sense for companies that already have a relationship with a cloud hyperscaler, said Joshua Greenbaum, principal at Enterprise Applications Consulting in Berkeley, Calif.

If you're an existing customer who's looking at making that migration, and are virgins in terms of the hyperscaler relationship … you'd be crazy not to consider using it.
Joshua GreenbaumPrincipal, Enterprise Applications Consulting

"If you are already doing business with a hyperscaler, you already have a contract, so you don't need a second contract," Greenbaum said. "But if you're an existing customer who's looking at making that migration, and are virgins in terms of the hyperscaler relationship, it's a good deal and you'd be crazy not to consider using it."

Diginomica's Reed agreed that Rise has more specific relevance to midmarket and upper midmarket organizations that don't have large IT departments or are not experienced in working with the cloud hyperscalers.

"They appreciate some of the simplification that SAP is trying to provide here with managing these relationships, and they would also appreciate some assistance with S/4HANA," he said. "Those types of customers can potentially benefit from Rise now. They should probably look at a range of options, but Rise can be relevant to them."

Part of the reason Rise exists is that it's SAP's attempt to show the equity markets that its cloud growth compares well to cloud competitors like Workday and Salesforce, he said. But the danger is that this might push customers to make hastier cloud moves than they need to, according to Greenbaum.

"Rise is actually trying to accelerate a process that for many customers needs to be slow and deliberate, because these are much more complicated implementations," he said. "So, to a certain extent, running fast into this is the equivalent of running with scissors -- you don't want to trip."

The goal doesn't have to include an S/4HANA migration, as customers like Inchcape can still get value from moving to a cloud version of SAP ECC, he said.

"You can get benefits like running faster in the cloud," Greenbaum said. "Most of these larger ECC customers simply can't move as quickly as SAP would like, and they're going to have to start staging incrementally."

Jim O'Donnell is a TechTarget news writer who covers ERP and other enterprise applications for SearchSAP and SearchERP.

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