Challenged by market forces
From this critical vantage point, bolstered by over ten years of industry experience, my observation is that the SAP world is at a critical crossroads. The persistence in delayed SAP S/4HANA migrations has resulted in a distinct imbalance between the supply and demand for good transformation specialists. As we draw closer to the 2027 deadline where existing SAP solutions face retirement, the industry will find the situation deteriorating and sharks entering the market to leverage this predatory opportunity. In the wake of this, the initial hesitation to conserve outlay will inevitably lead to ruined reputations and damaged margins further down the line.
This is not a statement made lightly; it is an opinion informed by my many interactions with IT companies, MSPs, ERP players, and S/4HANA specialists. It is important to remember that the original 2025 deadline had already made waves, fostering uncertainty and anxiety. In fact, in all of my detailed conversations about SAP S/4HANA migrations, I have always stressed that by 2022 there will not be enough SAP consultants in the world to carry out the number of ongoing HANA migrations.
Many organizations have come around to my way of thinking over time, as research has corroborated a massive shortfall in SAP consultants leading up to the 2027 deadline, with over 54% of experienced SAP consultants planning retire within the next 10 years, while 52% have no real experience with S/4HANA. While this much needed dose of reality has brought some clarity to the current state of affairs, the landscape of the market has changed radically in the interim. Market estimates show that over 61% of SAP clients still need to migrate to S/4HANA and we’re seeing companies preparing budgets for the next year as they consider these migrations.
But there is one flaw– these budgets are based on the current year’s prices. Tomorrow is going to be radically different. While some people are starting the work now and looking for the best price, there is a severe inflationary factor which is going to bite soon. A major reason for this cost spike is simple, that while they were delaying or processing their SAP business cases, the challenge shifted from “should we move to cloud?” to “how can we transform?”.
Adapting to the new normal
Currently, there is a concerning shortage of proven and capable migration specialists. Furthermore, even fewer SIs will have a bench of S/4 specialists ready and waiting to dive right on to new client projects. This situation isn’t likely to change as an increasing number of companies seek out this talent and, given the nature of markets, these clients won’t want to wait. So, they will begin to offer higher salaries to consultants in order to attract their talents. This is an inevitability in the open market, one that can’t be denied– and it’s coming to an SAP migration near you.
I suspect that in two-years anyone who can even spell S/4 or HANA will jump on the market opportunity and begin offering migration services with just the barest of competencies. Given the acute needs and overall urgency in the market, trying to engage quality services at lower prices will only lead to longer project life cycles with limited outcomes. In fact, the burden is on companies to separate the wheat from the chaff, if they wish to avoid detrimental outcomes– both from a price and reputational point of view.
This is a risk no company can afford to take. Even with greenfield S/4HANA implementations, the need to integrate cloud services will become essential and such a leap can’t be experimental this late in the game. All this, with the inflationary pressures on wages, further makes it a zero-error scenario where assessing the credentials of new entrants becomes more critical. The only choice left for enterprises is to fast-track their migration strategies and find a reputed strategic services partner who has future-ready capabilities and a proven track record for sustainable solution implementations.
Engaging future-ready transformation partners
The time for decision-making is long past and the only way forward is to migrate now. For organizations to kick-start their S/4HANA migration journey, the real challenge is finding the right transformation partner. They need to look for multi-dimensional technology specialists. Such experts can help enhance the outcomes from their S/4HANA migrations by enacting roadmaps that are quick to launch, automation-enabled, backed by skilled talent, and capable of delivering a simpler customer experience.
Such a solutions partner needs to deliver a migration platform that can schedule, execute, and manage digital business process with robust automation tools and ensure a seamless orchestration of workflows. This will help businesses not only to ensure an optimal total cost of ownership, but also to benefit from advanced technology infrastructure and intuitive user experience. The partner would also need to put aside any issues they have with RISE, with SAP as well, and that could be even harder to do. I will discuss why this exists in my next blog post.