CIO Straight Talk - Issue 4 - 31
Where does SAP go from here?
SAP, one of the largest providers of enterprise application software, is at a turning point. Although the
company's enterprise software and software-related
services continue to be critical to the business operations of thousands of organizations across the globe,
the market for those services is mature, raising questions about SAP's future.
A global survey by HCL Technologies of 220 CIOs at
companies with revenues in excess of $1 billion
across industries indicated that the very proliferation
of SAP systems suggests an answer to the question of
where SAP, and its customers, are headed: the
consolidation of the numerous systems found at most
large companies. In many cases, this will involve not
only the integration of existing systems but the transformation of the IT infrastructure through the adoption of a single enterprise platform.
The survey, commissioned by HCL and conducted
by independent research company Vanson Bourne,
found that, on average, large enterprises are running
more than ﬁve separate instances of SAP, with nearly
39% of respondents reporting that they were running
more than six. The data showed that the average cost
per user (more than $1,500) for enterprises running
multiple SAP instances is 25% higher than for those
running a single instance. So consolidation could
create huge savings. In fact, across SAP's more than
22,000 large ERP customers, the potential annual IT
cost savings amount to more than $30 billion globally.
More detailed research of enterprises that had
made the move to a single instance found that for
every $1 saved in IT, the business expects to ﬁnd $3.4
of leveraged savings. This raises the total global
beneﬁts opportunity to more than $130 billion, on an
While these ﬁndings present a clear business case
for consolidating SAP instances, many companies
may run into substantial political and operational
hurdles, preventing them from achieving that Holy
Grail: the single SAP instance. One hurdle is the
seeming cost-effectiveness of integrating existing
SAP, as opposed to investing in a single consolidated
But such a move is unlikely to represent a savings
in the long run. That's because disruptive trends such
as cloud, in-memory, and mobile computing will
require the transformative creation of a single enterprise system.
Some 75% of respondents reported both that they
had implemented cloud services in some form and
that SAP technology played a signiﬁcant role in their
Similarly, more than three-quarters of those
surveyed said they planned to deploy in-memory
computing, with its tremendous potential to speed up
existing applications and enable previously unthinkable applications through the mixing of transactional
and analytical functions within a single application.
Some 80% of respondents said that SAP HANA would
play a major role in their in-memory initiatives.
SAP technology on-premise, on-demand, and
on-device. Certainly, having fewer instances of SAP
will make this journey a lot smoother for many organizations. With Business Suite now available on HANA,
the adoption rate is likely to be even higher.
In the case of mobile computing, more than 90%
said they were planning or already had a mobility
strategy, while more than half of those said that SAP
technology would be the cornerstone of that strategy.
Of course, the challenge for CIOs is how to pay for
these disruptive technologies. The study found that
the savings generated by the consolidation of SAP
instances could be applied to the adoption of such
technologies, which would likely create competitive
advantage for the future.
For details and the entire report of the survey, visit www.futureofsap.com.
35 CIO Straight Talk