With over 232,000 customers in 188 countries, it is perhaps no great surprise that SAP landscapes in businesses around the world are more fragmented and diverse than you might first imagine. Recent research conducted on behalf of HCL found that, on average, large enterprises first implemented SAP seven years ago and are running more than five separate instances. Of those organizations, 88% are running at least one instance of SAP R/3 4.7 or older.
ERP customers have a clear case
Also not surprising was that the average cost per user for enterprises running a single instance of SAP was more than 25% less than for those enterprises running multiple SAP instances. Apply this savings to SAP’s more than 22,000 large enterprise ERP customers, and the potential annual IT cost savings amounts to more than $30 billion globally.
But the direct SAP operational cost is not the case put forward when SAP implementation projects are recommended at board level. Rather, it is business factors such as working capital reduction, headcount savings, facility rationalization, consolidated procurement leverage, transaction volume reduction, improved order fill-rates, and more, that carry the business case. 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 $3.40 of leveraged savings, taking the total global benefits opportunity to more than $130 billion on an annual basis.
Next page: A clear business case is not always enough
The business case for consolidation seems clear, but often there are political and operational hurdles that can hamper companies from achieving it. Sometimes, there may simply be higher priorities in the business and the focus for IT is, instead, put on improving integration and standardization across systems.
CIOs and IT departments remain under pressure to drive down costs and improve efficiencies, and consolidation is a great way to achieve these goals. However, a new challenge is presenting itself, one directly related to the emerging importance of disruptive technologies.
The future of SAP
In today’s global and increasingly competitive markets, the business is looking to IT to shift from being an enabler to a differentiator, from a cost center to a profit center. IT must become a source of competitive advantage. Key to success will be the adoption and effective application of disruptive technologies. SAP has bet its future on analytics, in-memory, mobility, and cloud, fueled by a combination of acquisitions and investments. The feedback from the market already suggests this is a bet well placed.
For SAP customers, SAP HANA promises to be a game-changer. In-memory computing will have a major impact on global enterprises; accelerating existing applications and business processes, allowing them to quickly crunch large and disparate data sets, and shifting their focus from retrospective insight to real-time analysis and optimization. In our survey, four out of five CIO’s expect SAP to play a role in their in-memory strategy. With the SAP Business Suite now available on SAP HANA, we expect adoption to increase even further.
Enterprise mobility has already had an impact on how companies do business by mobilizing existing processes as well as creating new ways to work. In fact, 51% of our respondents in North America have already broadly deployed mobile solutions within their business. As the world’s largest mobile business platform provider, SAP is well positioned to capitalize on this technology as adoption increases yet further with nine out of ten global CIOs currently planning or implementing a mobile strategy.
Emphasis shifting from CAPEx to OPEx
Additionally, 73% of enterprises have already implemented cloud in some form. As businesses place greater emphasis on shifting from CAPEx to OPEx, and with the flexibility and scalability that on-demand services from the cloud offer, the importance of cloud to SAP customers will further increase.
Next page: Taking the next step
Savings should be invested in emerging technologies
The case for the consolidation of existing SAP landscapes is compelling, especially when combining IT cost savings with the leveraged business benefits that can be achieved. We would argue that the savings achieved should be invested in the adoption and application of disruptive technologies as a source of competitive advantage. While these technologies are yet to fully mature, and therefore might be considered risky, these risks can be managed. In fact, the greatest risk is to do nothing at all.
This article’s author, James Riley, is Global Head of Innovation at HCL Enterprise Application Services