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SAPPHIRE NOW Keynote Highlights: Transformation, Community, and Sustainability

SAP also announces RISE with SAP for specific industries, as well as enhancements to the Business Process Intelligence portfolio, SAP Upscale Commerce, and new capabilities in the SAP Business Technology Platform

by Robert Holland, VP and Research Director, SAPinsider

 

As it was last year, the 2021 keynote for SAPPHIRE NOW was a virtual event featuring CEO Christian Klein. Unlike last year, the keynote was co-hosted by SAP’s new Chief Marketing and Strategy Officer Julia White. With the company less than 2 months, White hit the ground running and made several product announcements during the course of the keynote, as well as interviewing SAP founder and Head of the Supervisory Board, Hasso Plattner.

Transformation, Community, and Sustainability

There were three key insights that Klein spent the first portion of the keynote focusing on, and these were emphasized at multiple points throughout the presentation:

  • The most resilient companies embrace technology to transform their business processes
  • We win together as a community
  • We must act now on sustainability: zero emissions, zero waste, zero inequality

When it comes to business transformation, Klein started by saying that calling something a transformation project doesn’t mean that it is. Not every IT project, and not every cloud project, transforms business processes. To fully embrace digital transformation, organizations must leave old business models behind. Klein emphasized that this must be powered by data and embedded artificial intelligence (AI), and that software must have the ability to map and understand existing processes capabilities. Klein said SAP has significant knowledge of underlying applications and so can easily map solution capabilities to existing process challenges. Using solutions from Signavio, SAP will release SAP Process Insights later this year to help organizations meet these transformation challenges. And with SAP Process Insights being integrated with SAP Intelligent Robotic Process Automation, the solution will introduce recommend improvements with corrective actions to fully transform business processes.

When it comes to Community, Klein stated that we are living in an interconnected world, and that many of the issues organizations face today stem from a reliance on global supply chains. To broaden this community, SAP plans to create the world’s largest and most comprehensive business network with SAP Business Network. The SAP Business Network will bring together the Ariba Network, the SAP Logistics Business Network, and the SAP Asset Intelligence Network connecting over 5.5 million enterprises. SAP intends to bring companies together by being able to discover each other based on criteria for quality certifications, sustainability, and diversity. Organizations will be able to access data from visibility providers to see the movement of goods, and track actual logistics carbon emissions. SAP also announced in the keynote that SAP will fast track the top 100 carriers and suppliers into the network for organizations who purchase the SAP Business Network.

One of the biggest topics for Klein’s keynote was that of sustainability. SAP wants to build sustainability into the way organizations do business, and will provide standard reporting and analytics on all sustainability metrics of the World Economic Forum. SAP wants to enable carbon footprint tracking across the entire business network, and White announced that SAP would announce several innovations around their sustainability portfolio. This includes SAP Product Footprint Management, and SAP Responsible Design and Production. SAP also intends to embed much of this reporting into existing solutions, ensuring that all SAP customers can ensure sustainability.

Klein summed up these topics from the keynote by saying, “We can reinvent how businesses run. We can reinvent how industries run by connecting to an industry-wide business network. We can reinvent how the world runs by making businesses sustainable.”

RISE with SAP and Innovation Announcements

The flagship RISE with SAP solution was also a major part of the keynote. Klein said that SAP plans to expand the offering beyond SAP S/4HANA Cloud since “customers want a holistic, modular, cloud ERP”. To this end, SAP will include both HR and procurement capabilities within the RISE solution, including a dedicated package for human experience management (HXM). In addition, White said that SAP knows that since each industry is different, there will also be RISE for SAP for industries. Starting with the retail, consumer products, automotive, utilities, and industrial machinery and components industries, the solution will provide “integration, extensibility, and analytics on the one data model”. These five industry offerings will just be the start, as SAP has experience with over 20 industries and plans to introduce more industry specific versions of RISE in the future.

Other solutions announced during the keynote included SAP Upscale Commerce, an online, no-code solution with built in AI to provide personalized offerings based on a 360-degree view based on customer sentiment and purchase data. Integrated with SAP S/4HANA, there will be capabilities to configure price quotes and links as well as revenue innovation management and predictive accounting. Everything from shopping to payment will be covered by the solution.

Also announced were new capabilities of the SAP Business Technology Platform. This will include SAP Analytics Cloud offering operational workforce analytics and planning capabilities as well as integration with SAP SuccessFactors solutions. SAP will also expand the capabilities of SAP Intelligent Robotic Process Automation to allow it to capture and automate user interactions and integrate with SAP Process Insights. And there will also be a new data marketplace for SAP Data Warehouse Cloud, which lets organizations connect to data providers across industries and lines of business to gain additional insights on their data and make better decisions.

Lastly, during the analyst call following the keynote Klein answered a question about SAP’s relationship with the hyperscale players, and his response was that their relationship has never been better. Klein stated emphatically that “SAP is not exclusive”. Whether you want to use Alibaba, AWS, Azure, or GCP, he emphasized that it is the customer’s choice. Klein also said that “on top of that it’s our platform”. Technical solutions that complement what SAP does is down to customer choice. He stressed that nothing has changed with RISE, as there is a clear definition of what the partnership looks like. White followed that up by saying “we have a good relationship with all the providers”.

What Does This Mean for SAPinsiders?

While the keynote focused on the high-level goals for SAP, the product announcements SAP made were very cloud focused. In addition, much of White’s discussion with Plattner focused on the cloud in addition to understanding and transforming business processes. Given the importance of the cloud to SAP’s future success, this should be no surprise to SAPinsiders. But what does this mean for you as an SAPinsider?

  • Leverage the ability to transform your business processes. While 2020 caused many organizations to accelerate adoption of cloud-based technologies, and a lift and shift to a private or public cloud infrastructure has helped provide scalability and flexibility, as Klein stated this doesn’t mean that the business has undergone a transformation. When moving to solutions like SAP S/4HANA, use the tools and technology that is available to ensure that you are streamlining and updating your business processes. Doing so has a much greater potential positive impact on your operations than implementing new infrastructure.
  • Explore the capabilities of the new SAP Business Network. SAP is looking to build the largest and most comprehensive global business network by merging their existing business networks. Whether or not you end up subscribing to the network, with the potential for over five and a half million member organizations, every SAPinsider should be at least exploring what the network offers and its capabilities for impacting your business. And with SAP offering to enroll your top 100 carriers and suppliers, this is the perfect opportunity to do so.
  • Educate your teams on how sustainability will fit into SAP solutions. SAP is committed to, as Klein said during the keynote, “chasing zero together”. What he means by that is zero waste, zero inequality, and zero emissions. No matter what SAP solutions you are using, sustainability will become a part of the software – if not today then certainly in the future. Ensure that your teams are educated about what this means, and what impact it might have.
  • Plan for the cloud. No matter where your solutions are running today from an infrastructure perspective, everything SAP is doing is focused on the cloud. There is absolutely a choice in terms of how and when you move there and what provider you use, but all of SAP’s major innovations moving forward will be in cloud-based applications. Even if you aren’t making any changes today, you need to educate your internal teams and prepare for at least some of your SAP applications to be running in the cloud.

 



SAP Records Strong Q1 Performance

“Fastest Growth in Five Years” with Non-IFRS Cloud Revenue Up 13%

by Robert Holland, VP and Research Director, SAPinsider

 

While 2020 was somewhat mixed for SAP from a revenue standpoint, SAP announced yesterday that their first quarter of 2021 had been exceptional. Almost the first words used by CEO Christian Klein to describe the results were that this was “just an amazing start to 2021”, and that “this really confirms the strategy to drive business transformation to the cloud”. Overall, non-IFRS Total Revenue increased 2% at constant currencies, and non-IFRS operating profit increased 24% at constant currencies, but the big jump was in cloud revenue.

RISE with SAP Hits 100 Customers: Leads Cloud Success

While only launched at the end of January, Klein stated that “RISE is already a game changer” when it comes to both the product itself, and the positive impact that it is having on cloud revenues for SAP. Klein stated in the call that RISE was off to a “great start” with over 100 deals closed in Q1. SAP also saw an uptick in cloud renewals, as well as an increase in current cloud backlog by 19% at constant currencies. (SAP defines current cloud backlog as the contractually committed cloud revenue they expect to recognize over the upcoming 12 months as of a specific date.)

While cloud and software saw a 6% increase in non-IFRS revenue in constant currencies, most of this growth was attributable to non-IFRS cloud revenue growing 13% at constant currencies to €2,147 million. There was strong performance across all regions, though the most revenue growth was in EMEA and APJ. EMEA, led by a strong performance in Germany and Switzerland, grew by 24% in cloud revenue at constant currencies. And in APJ, the home region for SAP’s new Executive Board Member for Customer Success Scott Russell, there was an 18% growth at constant currencies.

Where SAP had less success was in the Americas. Although both Canada and Mexico were called out as having a robust quarter, cloud revenue only grew by 7% at constant currencies in the Americas, while total revenue dropped slightly indicating a slower than anticipated recovery in the region. With the US accounting for slightly over 80% of revenue from the region, the fact that there was a 2% drop in total revenue for the US compared to the same quarter in 2020 shows there is still some way to go. In fact, total revenue for the Americas lagged that of EMEA by nearly 5%, though cloud revenue from the region accounts for more than half of SAP’s total cloud revenue.

Providing an update on strategy, Klein said that SAP plans to deliver the Intelligent Enterprise in the cloud. There are two goals that SAP wants to achieve to make this strategy successful. The first is to take the customer base to the cloud in core ERP. The second is to establish the SAP Business Technology Platform as the key platform based on one data model which will securely support SAP and non-SAP applications in the cloud. Klein said that the first goal is the most demanding, but that RISE with SAP contains both these features and the success that it is already seeing will help customers transform the enterprise.

SAP S/4HANA Growth Continues

During the first quarter, SAP reported that SAP S/4HANA customers increased by approximately 400 to over 16,400. Klein also said that over 9,600 of these were live, a jump of around 900 from the 8,700 reported in January at the end of the previous quarter. What was interesting was that Klein stated that more than 50% of the additional SAP S/4HANA customers were net new. While this demonstrates that SAP has continued to grow their ERP market share since the launch of SAP S/4HANA by attracting net new customers and competitive replacements to the platform, it also indicates that there is still significant work to do migrating their existing enterprise ERP customer base – SAPinsider’s SAP S/4HANA Migration report published in March showed in increase in those with no current plans for SAP S/4HANA for the first time since we began tracking the metric.

The most significant growth area for SAP S/4HANA was that of SAP S/4HANA Cloud, which saw a 43% growth in revenue at constant currencies to €227 million. At the same time, the SAP S/4HANA current cloud backlog also increased by 43% to €1.04 billion with SAP having contracts in place for that revenue over the coming year. This growth in SAP S/4HANA Cloud was also apparent in SAPinsider’s State of the Market report, where over 27% of respondents implementing SAP S/4HANA said they were planning on using SAP S/4HANA Cloud. This is a significant jump from the just 11% who have already deployed SAP S/4HANA Cloud.

What Does This Mean for SAPinsiders?

The growth in cloud revenue in all regions shows that organizations are starting to plan for and implement increased spending in 2021 with a focus on the cloud and SAP S/4HANA. Some of this is likely to be plans deferred from 2020, but SAP is counting on the increase in cloud revenue continuing to increase across the year and they updated their outlook for 2021 based on the strong cloud performance this quarter. But what should you plan for as a member of the SAPinsider Community?

  • Lean more about RISE with SAP, especially if you are building your business case. While some CIOs that SAPinsider has talked to indicated that they thought RISE is more targeted at those who have not yet started the move to SAP S/4HANA, with SAP positioning RISE as a starting point for business transformation and a cloud journey, you should understand more about what it is and how it will impact you. SAPinsider is running a series of webinars in May and June on the topic, with the first one answering your questions.
  • Leverage SAP’s resources and toolsets to do your due diligence on the impact of transformation. SAP completed the acquisition of Signavio on March 7th, providing SAP with enhanced business process intelligence capabilities. This is already reflected by the fact that SAP Business Scenario Recommendations will evolve into Process Discovery for SAP S/4HANA Transformation. Explore how you can leverage these new business transformation options, Process Discovery is free for all users with an existing maintenance contract for example, and see how they can inform your own planning.
  • Evaluate how the SAP Business Technology Platform fits your needs and environment. More than just a rebranding of SAP Cloud Platform, the BTP includes application development and integration suites, SAP HANA and data management, SAP Analytics Cloud, as well as intelligent technologies like AI and ML. While you may already be leveraging some of these features, with SAP planning to have the BTP as the single data model for its customers, educating your teams on this functionality is very important.
  • Plan for a cloud future – prepare your skillsets and landscape accordingly. The share of more predictable revenue, the total of cloud and software support revenue as a percentage of total revenue, reached 78% this quarter and SAP is targeting a goal of 75% for the full year. To make this happen cloud revenue must continue to grow, and SAP’s focus on the cloud as the future is not changing. Whether or not your plans currently include the cloud, your future plans with SAP should include that environment and you must educate your teams around and their skillsets to make sure that you are ready for that move.


SAP Customers Plan to Reinvest in Teams, Skillsets, and Technologies

SAPinsider’s Early 2021 Research Looks at Companies’ Investment Plans, What Skillsets Will Become a Priority, and How Company Culture is Changing

by Rizal Ahmed, Chief Content Officer, SAPinsider

Many business and IT leaders who run SAP plan to reinvest in their teams and new technologies in the year 2021, according to SAPinsider research. We surveyed 352 members of the SAPinsider community between December 2020 and February 2021 about their budgets, investments, and teams. We also checked in with our executive community to learn about their upcoming plans for the year. The resounding consensus? Downsizing is out — growth is in.

Survey respondents from both studies show that organizations running SAP will increase budgets, investment, and skills in the year 2021. More than half of respondents to our State of the Market survey (63%) said that they are growing their budgets or keeping them the same. Only 16% said they currently have plans to lower their budgets, and 21% have not yet decided.

Our leadership survey found similar results in that 66% of leaders report that their budgets will stay the same or increase.

When it comes to the teams that play a critical role in supporting, implementing, and executing day-to-day operations of the SAP ERP system and associated SAP solutions, both studies show that over 90% of respondents expect their SAP teams to stay the same or grow in the coming year.

The upward trajectory could be driven by pressure on executives and leadership teams to not only maintain core skillsets, but infuse greater knowledge into its workforce around SAP S/4HANA, analytics, artificial intelligence, integration, and automation. These projects have become top priorities, and organizations need to staff accordingly (Figure 1).

Figure 1 – Skills that IT leaders will be investing in for the year (2021)

The Pandemic Confirms: Transformation is Critical

Most executives were exploring transformation and innovation projects before the pandemic, and the recent disruption only re-establishes the importance of these initiatives. Planning cycles have been dramatically adapted and shortened, putting pressure on organizations to provide constant and immediate views into customer demand and supply chains. A majority of IT leaders interviewed by SAPinsider said that visibility, agility, flexibility, and efficiency have become ‘must-have’ elements of their strategy and technology architectures.

The clarity of these business demands has emboldened leaders to prioritize their innovation agendas and push for change to support new business models and new processes. These areas represent the top two priorities and pressures identified in our 2021 CIO Perspectives Report — 62% of responding executives said that process efficiency was a top business priority for their organization in 2021, while 61% said that supporting new business models and products was a key focus (Figure 2).

Figure 2 — Top priorities for executives (2021)

Our research drilled down into the specific areas that organizations are looking to invest in, and not surprisingly revenue-generating processes such as sales and e-commerce received the highest responses. Core finance — particularly the processes that relate to working capital — as well as supply chain were not far behind (Figure 3). These processes represent the foundation of many companies’ ERP systems and strategy and were significantly tested during this period of disruption. The data shows that leaders and their teams will continue to balance innovation and operation as they evolve their strategic and tactical plans for 2021.

Simplification and automation were identified as two key focus areas related to business processes. Decisions about whether to move to SAP S/4HANA and the cloud have forced many organizations to fully examine the impact of existing, highly customized processes that are difficult to maintain and integrate. As a result, many executives are looking to leverage their current innovation and migration projects to reset user expectations and embrace more standard processes. These conversations are at the forefront of many IT and business agendas, and have fueled, in part, business process analysis and transformation being at the foundation of the recently introduced RISE with SAP offering.

Companies that may not be making massive moves to the cloud and SAP S/4HANA are still exploring ways to make their business processes more efficient and grow the availability of automation
solutions.

Figure 3 —Top functional investments (2021)

People Hold the Key to Transformation Success

People, enabled by technology, will drive innovation and success moving forward, and remote working and isolation have placed employee health, well-being, and motivation at the center of leaders’  priorities. Most executives that we interviewed reaffirmed that the current environment has tested their leadership skills and forced them to adapt their approach. In fact, issues such as hiring, retention,  motivation, training, and change management were among the top challenges cited by our executive community (Figure 4).

“A largely remote workforce is something none of us were prepared for, and in 2021, we are still a virtual workforce,” says Michele D’Alessandro, VP and CIO of Manufacturing IT at Merck & Co. “In 2020, productivity levels were really high, but it has been less than ideal in terms of human interaction,” she explains. “Work and home are so integrated that it’s difficult to draw healthy boundaries and it’s easy to get into a situation where neither situation is healthy.”

To manage through these challenges, many CIOs and other executives are adopting consistent practices of communication, health check-ins, and forming more committees comprised of director and mid-level workers and project teams to ensure there are opportunities to discuss challenges, share victories, and bolster morale in what will be a continued remote environment. Many are also investing in new technologies that facilitate remote working and communication.

As an example, Merck has adopted virtual reality technology in more than 50 locations and for 3,000 workers to enable specialized workers in areas like manufacturing and engineering to work remotely.

But it’s not just keeping employees happy that is critical — just as important is inspiring teams to embrace and lead change in order to keep projects moving forward, particularly those that impact core business processes. When it comes to progress, legacy people are just as dangerous as legacy systems. That is why many executives are getting their most experienced team members involved early on in process analysis and process mining initiatives.

Companies are also putting new user interfaces, mobile applications, and other key solutions in employees’ and users’ hands early so they can see and experience the potential benefits of innovation projects. In some cases, organizations are lifting boundaries around experimentation with new solutions so that innovation can be driven from the bottom up, not just top-down. This approach not only generates new ideas for the organization, but also inspires employees to serve as public advocates and cheerleaders for change.

Gone are the days of multi-year implementation projects to see tangible results. While those projects still exist for complex rollouts, many leaders are promoting more agile projects and methodologies that generate quicker wins and lessons learned. This enables users to understand the potential impact of new innovations more rapidly and provide feedback and ideas to improve the overall project.

Figure 4 — Top leadership challenges (2021)

Technological Innovation Starts with Core ERP and the Cloud

Most respondents to both surveys indicated that they are spending resources and time on SAP S/4HANA — even if it is only to do a thorough evaluation. Our State of the Market report shows that about one third of respondents are in the process of implementing or have already implemented SAP S/4HANA (Figure 5) and results from our CIO survey are similar: Over 40% are in the evaluation stage or building pilot projects while just over one quarter, 27%, are holding off any plans related to SAP S/4HANA.

Despite findings that most customers are not quite there yet, they see the impending reality of such a major transition. That is why SAP S/4HANA sits at the top of the list when it comes to investments in technologies and skillsets. More than half (51%) of CIOs and executives in our leadership study say that SAP S/4HANA will be their most strategic technology investment in 2021 while 48% say that SAP S/4HANA skills will be among the priorities for adding to their team.

Many leaders see SAP S/4HANA as a foundation for bringing agility, flexibility, and visibility to their core business processes. “We had an antiquated platform that was limiting our ability to do new and innovative things with SAP. For us to implement new functionality, it requires significant effort and testing just to do something new. We cannot support the level of innovation we want with that, and these limitations are driving us to build a new digital platform with SAP S/4HANA,” says Michael Mullis, CIO of Ingevity, a chemical manufacturing company based in South Carolina.

Likewise, the cloud further strengthens companies’ core. Our past research shows that almost two thirds of companies plan to run SAP S/4HANA on a cloud of some sort, but cloud investments will extend far beyond this approach.

Our “State of the Market” report shows that in the year 2021 companies will invest in a variety of cloud solutions including SaaS (53%), private cloud (35%), platform-as-a-service (31%), infrastructure-as-a-service (30%), and hyperscaler solutions (26%). Suffice it to say, many companies will be using a mix of solutions and operating in hybrid environments. Many leaders are adopting a cloud-first strategy to simplify their environments, but also to provide flexibility and speed when it comes to infrastructure and resources. This strategy will require new skillsets around cloud and integration.

Figure 5 — Companies current plans for SAP S/4HANA (2021)

The Triple “As” of Technology and Skills Investment

Operations are critical, but so too are visibility and intelligence, and these are enabled by analytics. According to our State of the Market Report, 42% of respondents will increase or significantly increase their investment in analytics. The past year has demonstrated why it’s important to have visibility into all aspects of the business so that companies can react, make decisions on the fly, and model new scenarios in real-time.

Respondents also plan to invest in the cloud (39%), robotic process automation (33%), integration (32%), and artificial intelligence (32%). Operation efficiency and leveraging data to make processes and analytics more intelligent are clear imperatives for most organizations.

Executives and their teams are likewise prioritizing the acquisition of talent and skills that support these technologies. The top in-demand skills include analytics (42%) followed by cloud and infrastructure (24%), and artificial intelligence and machine learning (20%), according to our State of the Market study.

What Does This Mean for Executives?

Accelerate the transformation of your core. Cloud and SAP S/4HANA are not just options but priorities for those that are sticking with SAP ERP. Even if you do not move right away, advance your knowledge and understanding of SAP S/4HANA and its impact on process, architecture, and overall functionality.

Focus on your people and culture when it comes to change. Most leaders acknowledge that strategy and technology mean nothing if you do not have buy-in from all levels of your organization. Successful leaders are getting their people involved by helping them understand the technology and its potential impact. Many are putting early pilots in their hands and giving them free reign to use and experiment.

Fail quickly and often so that you can learn. Agile methodologies for pilots and running projects are ramping up for many early adopters. This type of innovation environment allows companies to experiment and learn without wasting a lot of time or significantly impacting existing operations. Start small with areas that can show quick wins and tangible results. Leverage the cloud to quickly roll out applications and experiment with new technologies.

Aggressively expand your skills across the three “As”. In addition to cloud and SAP S/4HANA, analytics, artificial intelligence, and automation are important to delivering increased value to your business as well as supporting innovation. As many leaders discuss transformation, business processes are at the core of that discussion. It is not just about efficiency, but intelligence and visibility. These technologies offer a way to unlock critical value at the process level.



Video Q&A: Dave Maloney Provides an Overview of the SAP Business Technology Platform

By Robert Holland, VP Research – SAPinsider

In 2020 SAP started talking about their Business Technology Platform, which featured prominently in CTO Juergen Mueller’s TechEd keynote. But what is the SAP Business Technology Platform? Is it a rebranding of an existing solution? Is it something new? And how does it help existing customers?

Dave Maloney, NA Vice President, Business Technology Platform joined me recently to provide an overview of the SAP Business Technology Platform, and what it means for SAPinsiders.

 

For more information on the topic, see the article that Maloney references during the conversation on Demystifying SAP’s Business Technology Platform.

MEET THE EXPERTS

David Maloney SAP
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Dave Maloney is the North American Vice President for the SAP Business Technology Platform and is helping to lead SAP’s transformation to the Cloud. Dave is focused on helping customers get more from their investment in SAP by leveraging the Business Technology Platform across line-of-business applications. Accelerating Cloud adoption & renewals is Dave’s measure of success – including SAP Store, Solution Extension & Solution Integration partners.
Dave started his career as an engineer – from remediating hazardous waste sites to supporting the design of US Embassies but quickly migrated towards software through the utilization of Geographic Information Systems. He subsequently joined a string of successful software startups from Pivotal Software to Blue Titan (which became Akana, Rogue Wave and is now Perforce).
Dave joined SAP as part of the Product Lifecycle Management team with a focus on what is now SAP Enterprise Project and Portfolio Management. He was tapped to lead the go-to-market for the product but, when SAP acquired Business Objects, was enlisted as part of the integration team. Dave was a founding member of SAP’s first Center of Excellence for Data & Analytics and was instrumental in driving the adoption of BusinessObjects analytics & reporting. When SAP’s in-memory database “HANA” launched, Dave moved into the Southeast Region and was responsible for HANA and SAP’s Data & Analytics portfolio at strategic accounts.



SAP Pre-Announces Q4 Financial Results and Executive Board Changes

Customer Success Head Adaire Fox-Martin and CMO Alicia Tillman to leave SAP

by Robert Holland, VP Research, SAPinsider

 

After a relatively poor performance in Q3, particularly in the area of software license revenue, SAP pre-announced much better performance in Q4 on January 14. While the complete results will not be released until January 29, importantly for SAP these numbers indicated a 26% increase in IFRS operating profit for the quarter, and operating profit reaching the high end of their revised outlook range for the year. These positive financial numbers were followed a day later by the announcements that Adaire Fox-Martin, head of the Customer Success board area, and CMO Alicia Tillman, would be leaving SAP.

A New Board for the New Cloud Era

Over the last two years, SAP has made significant board-level changes with the goal of creating a team that will drive and accelerate the cloud transition of the organization. While these changes have been extensive, including Fox-Martin there will have been seven board members leave in the last two years, SAP has created a younger and more focused team. Combined with the realigned board portfolios, Fox-Martin leads all customer facing organizations within the company, SAP streamlined the focus and responsibilities of their entire Executive Board. Fox-Martin is leaving SAP for personal reasons and will depart the company at the end of January.

Continuing the choice of selecting board members geared to support the transition to a primarily cloud-based revenue focus, Fox-Martin will be replaced by Scott Russell who currently serves as President of SAP Asia-Pacific and Japan. Something that CEO Christian Klein emphasized about Russell when announcing the change was the growth that he has led in cloud-based revenue in the APJ region. This is something that he will be expected to continue to push to new levels as the new head of the Customer Success board area. He will have significant shoes to fill though as Fox-Martin deftly handled many challenges during her time on the Executive Board and will be a significant loss to SAP.

In addition to Fox-Martin leaving SAP in January, CMO Alicia Tillman will be departing the company at the end of February. Tillman, who has been CMO since August of 2017, indicated that she is leaving SAP to “pursue her next ambition”. While not part of the Executive Board, Tillman has done much to grow SAP’s brand awareness and accelerate digital marketing during her time in the role. She will be replaced by Julia White who will join the Executive Board as Chief Marketing and Solutions Officer. Continuing the choice of cloud focused board members, White brings enormous experience to the role as she currently leads product marketing for Microsoft Azure. Before moving to that role, White led product marketing for Office 365 during the transition to the cloud.

In speaking about her move to SAP, White said “SAP is going through a critical transformation. It has a unique opportunity to help redefine how successful businesses run, and the leadership team has made bold and courageous commitments to accelerate their cloud innovation to this end. I am excited to contribute to that journey and thank the Supervisory Board for their confidence in me.” Bringing in someone with a focus on cloud-based marketing is critical for SAP’s continued success in the cloud space, and as they seek to make the majority of their revenue cloud-based.

A Strong Microsoft Connection

Although White is the latest board member to join SAP from Microsoft, she is not the first. Last September, SAP announced that Sabine Bendiek would join SAP as Chief People Officer and labor director. In addition to her HR-focused role, it was also announced that Bendiek would assume the responsibilities of Chief Operating Officer in mid-2021 from CEO Christian Klein. Before moving to SAP, Bendiek was the Managing Director of Microsoft Germany and oversaw a 50 percent increase in cloud revenue for the organization, as well as leading the transition of the business to the cloud within the region. While there is a constant exchange of executives among technology firms, two Microsoft executives joining the SAP board in senior roles is somewhat unusual.

While SAP has been refocusing and rejuvenating their Executive Board, they have also continued to grow their relationship with Microsoft. In October 2019 SAP announced a new strategic partnership with Microsoft that would position Microsoft Azure as the key cloud platform to support SAP S/4HANA. By mid-2020 this led to 47% of SAPinsiders considering a public cloud implementation of SAP S/4HANA indicating that Microsoft Azure was their platform of choice. The SAP S/4HANA relationship has been followed by a constant stream of announcements expanding the relationship, with the most recent being that SAP and Microsoft would partner to run Supply Chain and Industry 4.0 in the cloud.

What Does This Mean for SAPinsiders?

While the improved performance in Q4 will be positive news to many customers who rely on SAP for their day-to-day business operations, SAPinsiders must also look at the bigger picture around what is happening at SAP. The shift to the cloud will not only continue but will be accelerated with the addition of board members like Russel, White, and Bendiek, who have experience in driving the cloud business. But there are also questions that SAPinsiders should be asking and SAP will hopefully be clarifying in the coming days:

  • What will happen if I don’t move to the cloud? Although SAPinsider research shows that 99% of SAPinsiders are now running at least some solutions in the cloud, many of these are not yet enterprise solutions. And while the cloud is becoming a more common choice for most, many are looking at private cloud and not public cloud options. With SAP’s accelerated push to the cloud, organizations that do not make the transition may well be left behind. While SAP won’t abandon that revenue, they will almost certainly charge higher maintenance fees for those that remain on-premise in the future.
  • Will Microsoft Azure become the new de facto standard for the public cloud at SAP? SAP currently supports each of the major public cloud providers – Alibaba, AWS, Google Cloud, and Microsoft Azure. This seems unlikely to change in the short term, but SAPinsiders should pay close attention to moves and announcements on the SAP side and ask their account managers about what SAP has planned.
  • Will there be deeper integration between SAP and Microsoft solutions moving forward when it comes to Microsoft Azure and SAP’s full suite of cloud and on-premise offerings? While SAPinsider expects continued collaboration announcements between SAP and Microsoft over the course of 2021, there is no information currently available about what form these might take. However, SAPinsiders should pay close attention to any announcements to determine how it might impact their existing systems and future projects.
  • What is the impact on SAPinsider’s current investments in Google Cloud Platform, AWS, or other hyperscalar environments? Given that many SAP customers have investments in other providers, SAP will likely continue to support those existing investments. As for the previous question on whether other cloud options will be cut short, this is something that SAPinsider will continue to provide updates on and members of the SAPinsider Community should pay close attention to.
  • What’s next for SAP? SAP has announced RISE with SAP, an event which will occur on January 27th at 10 am US Eastern Time. RISE with SAP will share “technologies, insights, and process experiences” along the path to becoming an intelligent enterprise. SAP has not yet provided details on what this will entail, but it will no doubt continue SAP’s to emphasize path as a cloud-focused organization.

 



Why Greenfield is an Option You May Not Have Considered—But Should

Nearly half of those moving to SAP S/4HANA have indicated that they are planning on performing a system conversion, but is a new implementation a possibility they hadn’t considered?

By Robert Holland, VP Research, SAPinsider

SAPinsider research found that 47% of those who are moving to SAP S/4HANA currently plan on performing a system conversion, while 41% plan on a new implementation. However, many organizations make this choice because they believe that their existing ECC system may be too complex, or have too much customization, to allow them to perform a new implementation. But this may not necessarily be the case.

Deployment Choices for SAP S/4HANA

Any organizations running older SAP enterprise ERP systems are in the process of determining whether they will make the transition to SAP S/4HANA, and if so when and how that will happen. Given that this is essentially a migration to a new product, there are many changes that have to be planned for and understood. From a cost perspective the most significant is the potential need for new infrastructure and operating systems to support the new platform, but 61% respondents surveyed by SAPinsider indicated that the main action they were taking in preparing their business case for SAP S/4HANA was in understanding how SAP S/4HANA will affect specific business processes and KPIs. And when it comes to doing the deployment, organizations want to ensure that they are deploying SAP S/4HANA with the approach that minimizes cost.

But having this understanding of how SAP S/4HANA will impact specific business processes and KPIs can be an extremely complex task. While those with existing SAP ECC systems may have custom code that has been developed over the course of many years, knowing which code is actively used can be extremely difficult to determine. This can be further complicated by custom tables as these may need to be recreated in the SAP S/4HANA system. While 40% of survey respondents say they plan to only preserve operationally necessary customizations to the core, many organizations find it easier to pursue a system conversion, or brownfield transition, than spend time and resources identifying exactly which code is required in a new system. To gain a better understanding of some of the complexities facing those considering a move to SAP S/4HANA, SAPinsider sat down with solution experts from Gekkobrain about the transition to SAP S/4HANA, and the trends that they’re seeing from customers around the world.

Using Automation to Understand Customizations

According to Gekkobrain’s Development Lead, Anders Mygind, having an automation tool that can help users understand exactly which customizations are in use in their existing SAP ECC system can have a significant impact on the timeline of an SAP S/4HANA migration. “We had one customer in Indonesia who was able to reduce their SAP S/4HANA timeline by 70% by using our tools,” said Mygind. It’s very important for anyone looking at their existing system to understand what is happening in their systems so that they can better scope the project. “It’s critical for customers to understand the scope of the business process, but forensically that can be difficult,” said Mygind. But determining what has happened historically, where processes have been used, and for what reason is very important when examining code customizations. Being able to view this information so that business users can then indicate which processes need to be moved into SAP S/4HANA significantly streamlines the transition.

Once multiple ERP systems come into the picture, and many organizations are looking to consolidate multiple ERP systems into a single SAP S/4HANA instance, this adds complexity as customizations from multiple systems may need to be included. Further complexity can be added by line of business teams acquiring tools to streamline operations, for example automating data-intensive processes, especially if those business users are using their own logins to authorize any changes. The result of this is that organizations don’t want to take the risk of leaving anything behind and so opt for a system conversion. “The end result for some customers is that they end up running SAP ECC in SAP S/4HANA rather than running the new functionality of SAP S/4HANA,” said Mygind. If organizations cannot simplify what they have and focus on moving only business critical customizations, they won’t be able to fully leverage the new features of SAP S/4HANA.

This has led to a trend that Gekkobrain is seeing where many organizations don’t think that they have a choice when it comes to their SAP S/4HANA transition. “Customers I’ve spoken to don’t think that they have a greenfield choice as it’s just too difficult and has too much risk, especially when they’ve done so much customizing on their SAP system,” said Mygind. They believe the only option open to them is a system transition where they upgrade everything and then try and eliminate some unused pieces. But a new implementation is something that may not only be possible but could, in fact, be preferable. Frequently referred to as a greenfield deployment, this is where organizations perform a new installation of SAP S/4HANA and then take a small number of customizations into their new system. Having an automation tool that helps determine which customizations are being actively used within their existing ERP deployment, and which are critical from a business process standpoint, can open the doors to possibilities that SAPinsiders may not have previously considered.

What Does This Mean for SAPinsiders?

The move to SAP S/4HANA is one that has been considered since the product was first released in 2015. Now that the features in SAP S/4HANA are causing more organizations to evaluate that transition, what steps should you be taking to make sure that you are prepared?

  • Determine the scope of which processes and customizations need to be part of the move to SAP S/4HANA. Understanding and identifying the processes that are used in day to day activities is a key task of any move to SAP S/4HANA, and is the main reason why IT and business teams working together is the top requirement when planning any transition. Without input from business teams, it will not be possible to correctly identify which processes are needed from each system, and which can be safely ignored. Both teams must work together to understand what processes exist, and which must be part of any move.
  • Educate your teams as much as possible about tools that can be used to scope your SAP S/4HANA transition. To get started on the move to SAP S/4HANA there are multiple free solutions available to help scope your project. This includes resources like SAP Readiness Check, OpenSAP courses, the SAP S/4HANA Movement Program, and material available through SAP S/4HANA Enterprise Support. All of these will help your organization effectively plan at the enterprise level for your transition to SAP S/4HANA, as well as provide a high-level understanding of what you need to do in the project.
  • Evaluate automation solutions to help accelerate your move. While free tools provide a starting point in scoping your move to SAP S/4HANA, they may not include all the detail you need—especially around customizations. This is where automation solutions like Gekkobrain for SAP HANA and SAP S/4HANA Migrations can help as they readily identify exactly what is required for the move and thus reduce the overall scope of any deployment. While the same result can be achieved through a manual effort, having a tool that can build a model of the way your system functions based on data within the system and then present that in a graphical manner is much easier.
  • Consider whether a new implementation may be a viable option. Even though more organizations making the move to SAP S/4HANA are considering a system conversion as their deployment method than are planning a new implementation according to SAPinsider research, taking the time to understand whether it is possible to reduce the customizations being moved into SAP S/4HANA and pursue a new implementation approach can offer significant advantages. The most important advantage is that the system will be more streamlined from the start, allowing for the performance and efficiency improvements in SAP S/4HANA to be fully leveraged. Even though this evaluation may take longer in the short term, determining whether a new implementation is achievable can offer long term advantages.

About Gekkobrain

Based in Denmark, Gekkobrain creates tools that help organizations find, analyze, and visualize custom and transaction code without the need for manual intervention. Gekkobrain’s product for simplifying SAP S/4HANA migrations, Gekkobrain for SAP HANA and SAP S/4HANA Migrations, is an SAP Certified App and is available in the SAP App Center



License Compliance in the Transition to SAP S/4HANA

License audit is a task that many SAPinsiders spend months preparing for, but may still not fully understand users’ actual product usage. This is critically important when moving to SAP S/4HANA as making the wrong license decisions will have a significant cost impact.

By Robert Holland, VP Research, SAPinsider

In order to ensure that they are fully compliant from a license perspective, many organizations err on the side of caution in their SAP user license estimates simply because they do not have enough insight into what users are doing across different systems. As there is a significant variation in cost of different SAP license types, with the default professional license being the most expensive, understanding usage and assigning the right license type before moving to SAP S/4HANA offers considerable cost saving opportunities.

Staying Compliant with SAP Licenses

As SAPinsiders move to SAP S/4HANA, they should be aware that this is not an upgrade but a new product that they must license from SAP. And as with any new product, organizations must ensure that they understand the usage implications of making that move as they can be expensive. At the same time, SAP customers should also remember the findings of the lawsuit between SAP and Diageo which resulted in a £54 million finding against Diageo based on API access involved in integrating data with Salesforce. Since SAP licenses are based on variable metrics like users or type of users, or amount of memory used, incorrectly stating usage can result in license or maintenance fee surprises.

As SAP can be aggressive in performing license audits, it is incumbent upon SAPinsiders to be able to manage their licenses well and defend any position that they take in an audit. But for enterprise organizations this can result in months of preparation for an audit if they want to ensure that they are providing the correct information. Not only does this require an extensive use of resources within the IT area, even if all the preparation is done correctly the usage data may still not be completely accurate. And in a transition to SAP S/4HANA, having the most accurate information possible can offer significant cost savings.

Given the complexities involved in understanding licenses, and particularly what type of license different end-users require, many organizations are looking for third party applications to help address this need, particularly SAP certified applications that are available in the SAP App Center. One provider of applications that help organizations manage their SAP licenses is Snow Software. SAPinsider recently spoke with solution experts from Snow Software about managing licenses of SAP solutions, the move to SAP S/4HANA, and the trends they’re seeing from customers across the globe.

Managing Licenses During the Move to SAP S/4HANA

According to Snow Software’s Telma Rafael, customers who come to Snow Software want a greater ability to manage their SAP licenses. “Customers want to manage their licenses well and defend their position. They want to reduce the risk of digital access licensing fees since SAP has extended the digital access program,” said Rafael. Licenses must be in place for organizations to allow other non-SAP systems access to SAP data. This access can be licensed either through digital access or by licensing indirect access by user. SAPinsiders can choose which metric to use, so it is critical to have accurate information on which to base this decision and avoid costly mistakes.

Having a tool like Snow Optimizer for SAP® Software means that organizations can ensure that they have the actual usage data for each user and each system that they access. These tools can help prepare for audits in a matter of days rather than months. “We can also configure alerts and notifications so that system tells them when there is an issue so that they can be proactive with licenses,” said Rafael. With organizations moving to SAP S/4HANA, understanding exactly how many users you have and in what ways they are accessing your existing ERP systems will then have a significant license impact. Since for many SAPinsiders the one of the main drivers of their business case for SAP S/4HANA is around the increasing cost of maintaining highly customized environments and older technology, the last thing organizations want is the transition to SAP S/4HANA to result in an increase in spend. This is why understanding usage and licensing within your SAP solutions is so critical for that move.

What Does This Mean for SAPinsiders?

Whether or not organizations are moving to SAP S/4HANA now or at some point in the future, taking control of the licensing of your SAP systems can offer significant cost savings and avoid time consuming and expensive preparations for SAP audits. To understand and control costs in their own SAP systems, SAPinsiders should:

  • Examine your current plans for understanding and controlling SAP usage. Any organization running an enterprise ERP likely has hundreds or thousands of users of that system. Understanding exactly what access those users need, and what systems they are using, is a key step towards preparing for any potential SAP license audit and minimizing licensing and maintenance costs. SAPinsiders should look at how they are currently achieving these goals, and whether they will be sufficient to support a move to SAP S/4HANA.
  • Plan for time to understand licensing and usage when building your SAP S/4HANA business case. Many organizations are still trying to determine if and when they will perform their transition. Regardless of when the actual move may occur, ensuring that you have a good understanding of your software licenses and usage going into that move has the potential to offer significant cost savings in commercial negotiations. Plan for sufficient time to gather this information.
  • Fully prepare for SAP license audits. As 2020 is a challenging year for many organizations, it is more important than ever that you ensure you are prepared for an SAP license audit. Take the time to stay on top of which users are connecting to which systems, check whether they are actively accessing the system, and what level of access they need. This is particularly important as many users permissions are being changed on systems to allow them to perform roles that they may not have done in the past due to remote working environments and the difficulty of assigning tasks to those they are not personally interacting with.
  • Evaluate solutions that can help manage licenses and reduce costs. The maintenance savings that can be gained from using license management tools is only part of the ROI around using license management tools. Other areas involve the reduction in the time staff need to prepare for audits, allowing them to be assigned to more critical tasks, but also the benefit of end-users having the right access they need to the systems they use—something that they may have to wait days for if the appropriate license has to be found and assigned to them. These savings can, for an organization running an enterprise ERP system, cover the cost of a solution, so they are worth evaluating for inclusion in the organization’s SAP landscape.

About Snow Software

Based in the San Francisco Bay Area, Snow Software produces solutions that help organizations understand and manage their technology consumption. Snow produces the only native SAP asset management solution, Snow Optimizer for SAP® Software, which is an SAP Certified App and is currently available in the SAP App Center



Christian Klein Talks to SAP’s North American Customers

SAP’s 2021 Focus Remains the Cloud and the Move to SAP S/4HANA

by Robert Holland, VP Research, SAPinsider

 

Understanding that many customers are anxious about SAP’s Q3 revenue announcement, SAP CEO Christian Klein took the time in early November to speak directly to North American customers and answer questions about what the announcement means for them. At a high level, Klein focused on the fact that SAP is planning on staying true to the core principles of the move to SAP S/4HANA and transformation into the cloud, but he also acknowledged that there are challenges along the way and that SAP is committed to helping customers address those challenges.

 

Customer Transformation and Integration

The number one priority for SAP coming into 2021 is that of transformation, both in terms of moving to the cloud and in moving customers to SAP S/4HANA—something Klein mentioned several times during the call. But what Klein described was a “transformation of customers” and how SAP wants to invest in making customers successful. He acknowledged during the conversation that 2020 has been a challenging year, with many customers and partners under financial duress. But Klein emphasized that SAP has been working with these customers by doing things like extending payment goals. SAP also reorganized earlier in 2020 to put the entire customer-facing organization into one board area in an effort to have all the ways in which customers interact directly with SAP managed by a single organization under Adaire Fox-Martin. To tie everyone in the company to this customer focus, SAP’s 2021 bonus plans will also be directly connected to customer success.

When it comes to the cloud, Klein emphasized that SAP’s goal is to triple cloud revenue by 2025. He said that there has definitely been an uptick on the adoption curve that he hasn’t seen before, particularly when it comes to the ERP customer base moving to the cloud—though numbers from SAPinsider research suggest that less than 10% of those deploying SAP S/4HANA are running SAP S/4HANA Cloud. Part of this cloud focus will also involve the Industry Cloud which will offer specific features for each industry, building on SAP’s history of innovation and expertise in that space. Klein mentioned that SAP is working with co-innovation partners during the development process, as well as using partner solutions on top of Industry Cloud to extend what SAP offers.

Talking about SAP S/4HANA, Klein indicated that SAP continues to focus on expanding its core business with SAP S/4HANA being a key growth driver. One thing that Klein mentioned more than once in the conversation was that, for many organizations, the biggest challenge in transformation is not how to apply the technology, but how to redesign business processes to use that technology. The topic of working to improve architecture and TCO is something that Klein mentioned multiple times. SAP is looking for simplification in the stack, which very much acknowledges that today’s landscape is complex and signifies that organizations need a clearer and less complex path towards deployment if that is to be successful.

Related to that clearer path for success is the topic of integration. This was something else that Klein returned to several times during the discussion, and in discussing it he acknowledged that while SAP is improving SAP to SAP integration, they are also working on new APIs to open up integration with non-SAP solutions. This integration complexity is connected to the challenges that Klein acknowledged organizations are facing as part of the migration process. Along with redesigning processes and making the data model work, getting all the SAP systems within an organization integrated, and then ensuring that they can also integrate with third party applications, are issues that SAP is looking to both solve and prove the value of to customers.

SAP wants its customers to move forward, but in talking to North American customers Klein admitted that the environment in 2020 has not been conducive to that move. Part of this has been the global pandemic which has impacted everyone to at least some degree, but the need to improve the business model and make integrations work has been another barrier. As a whole, the SAP audience is highly customized and change is not easy. SAP is looking to help customers make these changes with industry specific cloud and by improving solution integration and the data model that is behind everything. However, they also know that they not only need to do better with making the move to the future possible, but also make it achievable.

 

What Does This Mean for SAPinsiders?

Klein did not reveal anything unexpected in this tightly scripted conversation, but rather emphasized that customer success remains a focus for SAP in 2021. SAP will also continue to push the move to cloud-based solutions, with SAP S/4HANA being a central part of that transition. However, SAP has acknowledged that customers face challenges in taking these steps, particularly around integration where they will focus resources and efforts. SAP knows that they must solve their existing issues and prove their value to customers for their strategy to be successful.

To be prepared for 2021, SAPinsiders should:

  • Look for better integration options both between SAP products and with non-SAP solutions. Integrating solutions like SAP SuccessFactors, SAP Concur, and SAP Ariba with SAP’s digital core has been a complex process that SAP has been working to improve. Klein stated that SAP Cloud Platform Integration Suite now offers two thousand APIs for on-premise customers with a focus on hybrid landscapes, and he said that SAP will expose further APIs in 2021. They will also work to make APIs available to integrate third party applications. Customers should keep pushing for these improvements and look for them to be more available to link their own SAP applications.
  • Expect to see more industry-specific solutions in Industry Cloud. While Industry Cloud has seen significant interest from SAP customers who are looking for SAP to provide cloud-based solutions equivalent to the available on-premise options, SAP knows that they need to make more progress on this topic in 2021. Where SAP cannot develop these solutions in house, they are looking to extend their capabilities through partner solutions. It is vital for SAP’s continued cloud progress that there is feature parity between cloud and on-premise solutions. This isn’t available yet, but SAP will be pushing increased cloud adoption ahead of this.
  • Evaluate how SAP is making a cloud move easier. The SAP audience is highly customized and is not easy to change, so SAP knows that it needs to find ways to make any transition both easier and more attractive. Working to improve the overall architecture in the move and reduce TCO will partially achieve this, but SAP is looking for other incentives to make organizations more likely to consider the move. Look for these changes and evaluate how they will impact your organization to determine whether these moves make sense for you.
  • Educate your teams on what SAP is doing. For SAPinsiders in EMEA, November 17-19 offers the opportunity to hear more from SAP about their 2021 strategy and direction at the SAPinisder EMEA Virtual event. The same week will also feature an SAP S/4HANA summit with sessions running later into the day to support a community members in the Americas. Attendance is free to registered users, so use this opportunity to learn more as you make your own plans for 2021.


Simply Securing a System Is No Longer Sufficient

With SAP systems moving into the cloud securing those systems has become more critical than ever, but ensuring that those systems meet compliance regulations is now just as important.

By Robert Holland, VP Research, SAPinsider

Securing an SAP system used to involve checking access and process controls and ensuring that the most recent SAP Notes had been applied. Now it involves not only ensuring that the system itself is up to date but must address cybersecurity and compliance issues as well.

The Threat Landscape for SAP Systems

A few years ago, the most critical systems that SAP customers needed to secure were SAP ECC and SAP NetWeaver and the on-premise applications to which these connected. However, as organizations have started digital transformation projects, security and compliance have evolved as has the risk and threat landscape.

Organizations may now be in the process of migrating to SAP S/4HANA either on SAP HEC or with a public cloud provider, as well as consuming SAP Cloud Platform using Cloud Connector and utilizing data from solutions running though SAP SuccessFactors, SAP Ariba, or SAP Concur. And as they grow through acquisitions, or simply because they are running both SAP and non-SAP solutions, they may find they need to integrate solutions from Oracle, Salesforce, and Workday into their SAP landscapes. This complexity of applications, and the complexity of integrating these systems, also complicates the security landscape.

But even as organizations ensure that they are working to detect and control the risks in their landscapes, as well as defend them against potential intrusions, they also need to ensure that they are addressing increasing compliance requirements. To gain a better understanding of how this is impacting SAP customers,  SAPinsider recently spoke with Juan Pablo Perez-Etchegoyen, CTO of Onapsis, about security, compliance, and the trends he’s seeing from SAP customers around the world.

Making Your Systems Secure and Compliant

According to Onapsis’ Perez-Etchegoyen, the threat landscape for SAP systems is growing. For example, since the RECON vulnerability was addressed by SAP in July, there has been an uptick in sources exploiting that vulnerability across the internet. “Most of the time it’s not as simple as a patch, because the process of deploying the patch requires a downtime window which introduces a lot of friction with the business,” said Perez-Etchegoyen. This downtime window means that someone needs to decide when the system will be offline. And any mitigation can also have a different impact when they must be applied per node or per system, or when the weakness can still be exploited via user credentials. According to Perez-Etchegoyen, “because these are business applications the complexity levels require the right technology and focus to keep them secure.”

A big trend that Onapsis is seeing is that of not only keeping systems secure but ensuring that they are also compliant. “Regulators realize more and more the need to include cybersecurity as part of system control because in large enterprises SOX compliance is critical,” said Perez-Etchegoyen. He sees both regulators, auditors, and the compliance ecosystem really starting to pay attention to cybersecurity specifically when it comes to SAP applications. This is especially true when it is covered by some sort of compliance regulation. “Somewhere, these organizations will be covered by a compliance regulation, and so they’ll need to make sure that they have tools in place to measure that and ensure that they are meeting those regulations,” added Perez-Etchegoyen.

This is where having a security and compliance solution can make an impact in an organization. Onapsis’ offering in this space, The Onapsis Platform for Cybersecurity and Compliance, provides four main functionalities to assist organizations: Assessment, so that risks can be detected; Control, so that a risk can be prevented from being introduced; Defend, so that a user has the right visibility when risks are identified; and Compliance, which automates the compliance posture to address compliance needs. Any risks found can then be completely transparent to the end-user who can readily address the issue. This also extends to the cloud, where the data consumed in a cloud instance is still the responsibility of the customer. Even with SaaS applications like SAP SuccessFactors where patching isn’t an issue for the end user, there may still be data issues because of the complexity of services, modules, components, and customizations that organizations don’t have visibility into. And the more that any functionality is customized, the more difficult the application is to secure and ensure compliance.

What Does This Mean for SAPinsiders?

As organizations accelerate deployment of cloud-based technologies, something which 99% of the SAPinsider Community say they are already running, the security and threat landscape within an organization must be extended to include these new systems. At the same time, these systems must also follow compliance regulations like GDPR, SOX, and CCPA. What steps should you be taking to make sure that your systems and data are secure?

  • Determine your security and compliance plans before deploying applications in the cloud. “Adopting security and compliance policies when migrating to the cloud provides an acceleration of timelines,” says Perez-Etchegoyen. If these policies aren’t in place in the beginning, organizations will need to come back and implement them which causes delays. Having policies in place early helps ensure a faster and more secure adoption.
  • Investigate which regulations impact your organization and implement plans for ensuring compliance. With the growing prevalence of regulations for data and financial governance, organizations need to know exactly which ones impact them, and how they will ensure that they meet those standards. Given that these standards may come into play even if they only work with a vendor or have a customer in a region impacted by these regulations, knowing the extent of regulations and having plans in place to comply to those is very important.
  • Carefully examine your existing security tools to determine whether they will meet future needs. While most SAPinsiders ensure that their systems apply critical SAP Notes and patches, SAPinsider research showed that the top driver around enterprise security was a demand for a more holistic security strategy. In addition, a key action they were taking was that of building an integrated security strategy. Both these steps suggest that most organizations current security strategy does not fully meet their needs, so examining what they are doing from a security standpoint and what they will need for the future, particularly when moving to the cloud, is critical.
  • Implement training plans for internal security and compliance teams. Although solutions like The Onapsis Platform do not require every user to be a cybersecurity expert in order for the organization to gain significant benefit, ensuring that compliance teams and SAP security officers have the appropriate training can help provide a greater benefit for the organization. And while benefits will be gained in the security tools being used, they will also extend to the whole organization as they help SAPinsiders prepare for future regulation changes and compliance and security challenges.

About Onapsis

Based in Boston, Massachusetts, Onapsis protects mission-critical applications from SAP, Oracle, and Salesforce, and serves more than 300 of the world’s leading brands including 20% of the Fortune 100. Onapsis’ flagship solution, The Onapsis Platform for Cybersecurity and Compliance, is an SAP Endorsed App and is one of the first cybersecurity and compliance platforms to become an SAP endorsed app. It is currently available in the SAP App Center.