SAP customers are not buying into the "run simple" message the company has been touting, according to a new report...
from Nucleus Research Inc.
The report claimed six out of 10 SAP customers would not buy the same application from SAP if they had to do it again. The same number would not consider any future SAP applications for all markets, except ERP. In SAP's core ERP market, nine out of 10 customers said they would not consider a future invest in S/4HANA and indicated they may evaluate other market opportunities as they wean off of SAP ERP.
In a statement received via email, SAP rejected the report as flawed.
"SAP participates in a wide range of analyst reports and evaluations every year, the vast majority of which reflect SAP as a clear leader based on our products and demonstrated customer success. We did not participate in this particular report and do not plan to respond to the wide array of flaws we believe are evident in its approach. With more than 300,000 customers worldwide and consistent growth as publicly reported in recent quarters, we reject the premise of the report."
Nucleus, a Boston-based independent business technology research firm, based the report on direct interviews with 40 SAP customers across a variety of applications, as well as analyzed data from more than 200 recent deals where SAP was involved as a competitor. The customers who were interviewed were SAP reference customers and SAP customers from Nucleus Research's database, according to Rebecca Wettemann, Nucleus' vice president of research.
The people interviewed were, by and large, involved in managing strategy around SAP-related purchases. Interviewing began in January 2016.
"Whenever possible, we talked to the person that SAP quoted in their own reference story, and this typically was a CIO or senior-level person," Wettemann said. "We asked them, 'Would they buy the same solution again from SAP knowing what they know now?' And we also asked them, 'Would they consider an investment in HANA or whatever the next generation is, for example, Cloud for Customer or Cloud for Analytics?'"
The report indicated SAP is going to have a very tough time both moving existing customers to HANA and attracting net new customers. "I don't think it's unique for the traditional players in the field to have a challenge moving customers to their new strategy; we saw Oracle challenged in the same way," Wettemann explained. "I think SAP's marketing around 'run simple' leaves existing customers who would never think of SAP as something 'simple' at a loss, and I think that they have trouble reconciling that with what is a complex solution and potentially a risky and disruptive strategy for the company."
The report broke out various market areas for SAP products -- ERP, CRM, supply chain, analytics, human capital management, and content and collaboration -- and graded SAP's performance in each area. The grades ranged from a high of C for ERP down to an F for content and collaboration, with SAP receiving an average overall D grade.
Past problems lead to future reluctance
Technical problems with implementations, support issues and poor partners have been at the core of much of the discontent. In evaluating SAP ERP, the report said 80% of customers experienced "significant technical problems during implementation and serious support issues when problems arose after go-live."
Nucleus reviewed 45 ERP deals and concluded that SAP was shortlisted just twice and selected in none. Further, nine out of 10 existing customers said they have no interest in moving to S/4HANA. SAP's focus on the cloud may not fare any better, as 90% of existing customers also expressed no interest in upgrading their applications to SAP HANA Cloud Platform.
The reluctance to move to S/4HANA or the cloud is not necessarily a problem with the ERP software itself, as the report indicated the majority of existing on-premises customers are eventually satisfied with SAP ERP once it is in production. However, because most customers experienced difficulties in getting the system operational and had to correct issues after going live, it makes them reluctant to undertake the process again. The majority of S/4HANA adopters have been either greenfield customers or SAP partners, rather than existing customers, the report said.
All pain, little gain
SAP must do much more to convince its customers that S/4HANA is worth the investment, Wettemann said. "They don't want to go through that pain and suffering again; they think that SAP can say simple, but it's going to have to do a lot more to show that it can bring that simplicity to the products so that it is less risky for customers," she said. "Because this isn't like Y2K, where you had to do something, this is moving to a next generation, and a lot of folks are going into a holding pattern. Some said, 'We'll wait and see, but we're not jumping on the S/4 bandwagon.'"
Wettemann said while ERP deployments are invariably complex and challenging, SAP is compounding the problem with poor partners and lack of support.
"One thing that came out of talking with reference customers was that the challenges they had often came because the implementation partner wasn't up to the job or support that SAP wasn't willing to supply, and that's not a theme that I hear very often from customers of other systems," she said. "Across the board, the prevailing theme was that you were kind of on your own if you had challenges with it, and I know SAP has made investments in services to reduce the risks and challenges for customers. Considering that it's an application that's critical to their business, that's concerning, obviously."
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