It’s no secret that moving some – if not, all – IT solutions to the cloud profoundly impacts how businesses consume data and technology, automate business processes, and optimize operations. But what’s often surprising is the need to adapt IT service organizations to support the everyday use of cloud applications as part of an enterprise software landscape.

One of the most deeply impacted IT areas is the Customer Center of Expertise (COE). Widely adopted by SAP customers, this organization is responsible for the governance, functions, roles, responsibilities, competencies, processes, tools, and other aspects necessary to optimize the value of SAP solution investments. This includes adapting industry standards, such as ITIL processes, to the specific needs for a rapid expansion of existing technology in the cloud.

By its nature, the Customer COE is designed to cover operations support and maintenance of all SAP-related solutions, including enterprise resource planning (ERP) solutions such as SAP S/4HANA. However, elements of a cloud application consumption model have steadily increased over the years and are expected to continue growing. In response, many businesses have opted to transition their path to the cloud with a hybrid landscape, which is requiring the Customer COE to adapt its function to handle both on-premise and cloud solution environments.

Emergence of Hybrid Landscapes

Why is a hybrid environment so appealing during a cloud migration, conversion, or implementation? The reasons come down to three factors: readiness to increase innovation budgets, less willingness to invest in long-term projects, and doubt about the need to upgrade the existing IT infrastructure. Meanwhile, the bar of employee and customer expectation is only getting higher with demands for mobile apps that provide always available, fast, and intuitive access to information and intelligent capabilities, such as instant querying and response.

Meanwhile, market research indicates that ERP solutions will remain a significant share of the total cloud investment.* The high adoption rate for cloud-based deployment models contributes to the market growth for ERP software, while the COVID-19 pandemic accelerates this trend’s urgency.

The reality of enterprise IT landscapes will be undoubtedly shaped by these trends in the short and mid-term. Like most IT software landscapes, combining on-premise and cloud software may reach a point where critical challenges arise, including:

  • Heightened risk in information security
  • Expansion of data protection requirements
  • Need to integrate new applications into both IT landscapes
  • Adoption of new development approaches, including agile, DevOps, scrum, bimodal, and data meshing

Such implications for a hybrid architecture intensify IT’s potential for losing the ability to manage IT landscape management and related activities such as testing. This threat only amplifies the importance of ensuring their business and technology processes run well and keeping strict attention and control over all associated activities for IT service organizations.

What This New Environment Means for Customer COE

Despite the widespread hype about cloud adoption, the on-premise usage model is still sufficiently useful. This realization is fueling a new balance within the Customer COE organization, transitioning from an on-premise landscape to a hybrid environment with an increasing share in cloud investments.

This digital transformation phase requires IT leaders to adapt their operations for Customer COE – from keeping the lights on to integrating the cloud, managing service-level agreements, and driving innovation and digitalization proactively.

It does not matter which application usage model is used for a specific IT solution. The business still expects the same IT service level it has always experienced. Therefore, the formal functional model of Customer COE remains the same, but the responsibility for performing the services and the composition of roles changes does not.

Discover how SAP adapted the concept of the Customer COE organization to help companies accommodate their functions to the requirements for hybrid landscapes by visiting us on sap.com and reviewing our guide library.

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Vladimir Sukhanov is a principal business consultant and IT Transformation practice lead for Business Transformation Services at SAP CIS.

*Cloud Enterprise Application Software Market Outlook: 2023,” Allied Market Research, September 2017, retrieved March 4, 2020; “Global ERP (Enterprise Resource Planning) Software Market Expected to Grow at USD 49.03 billion and CAGR of 7.45%, Segmented by Deployment (Cloud, On-Premise), Function (CRM, Sales, Accounting, Others), Organization Size (Large Enterprise, SME), Vertical (BFSI, Retail, Manufacturing, Aerospace & Defense, Others) — Forecast till 2023,” Market Research Future, September 2020, retrieved March 4, 2020