In 2015, SAP released a new version of its ERP, S4/Hana. Hana is a large-scale data processing technology developed by SAP that was launched in 2013. This technology uses in-memory computing, which allows it to locate and process data significantly faster than other standards. Taking advantage of this new technology, SAP remodeled its ERP so that all the benefits offered by Hana’s in-memory processing could be used.
Since the launch, companies that acquire SAP for the first time opt for the new version and customers still in the previous version (ECC) structure migration projects to S4/Hana. The version change is spurred not only by the advantages offered by the new version of the system, but also because SAP has planned to end technical support for the ECC by the end of 2027 (source: https://support.sap.com/en /release-upgrade-maintenance/maintenance-information/maintenance-strategy/s4hana-business-suite7.html). That is, entities that use the previous version of SAP and that do not migrate by 2027 will lose support from the creator company and will have to look for third-party services (There is an option to contract additional support for an additional 3 years, until 2030).
According America’s SAP Users’ Group (ASUG) in 2021, only 31% of companies with SAP installations in North America have already migrated to the S4/Hana version and another 22% have started migration projects (Asug Insights Spotlight , 2022). This means that nearly half of the current SAP installations in the region still need to be migrated to S4/Hana before support ends.
Added to this is the fact that an average of 40% of S4/Hana license sales have been destined to new SAP customers, which means a significant number of implementation projects to be carried out in addition to the necessary version migrations.
It is important to explain that an implementation or migration of SAP version in a large company is not a simple project, which can be executed in a few months. Without considering the preparation phase, definition of adoption strategy and project planning, most migration projects take around 6 months. However, some projects can reach 18 to 24 months. Added to this are the high investment amounts spent on the initiative, which need to be made possible in advance.
To warm up this market even more and guided by the growing tendency of companies to change their technological platforms to the Internet, SAP has launched several products and services “On Cloud” in recent years. A version of your ERP, your database and your integration solution between different systems are examples of technologies that already have versions in the Cloud and adoption is growing strongly. The market for SAP On Cloud products and services in 2022 is estimated at USD 443 million and is forecast to reach USD 7 billion by 2032, with annual growth of around 31%.
In opposition to this context of growing demand for SAP projects in the coming years, the scarcity of qualified professionals to execute these projects is a concern of companies that use, or plan to use, SAP solutions. In the survey published in “The Centiq State of SAP Hana Report” for 2019, 94% of business leaders surveyed named SAP skills as their top concern. In a recent survey promoted by America’s SAP Users’ Group (ASUG), 49% of respondents highlighted the lack of skilled labor as a problem, while 25% pointed to this shortage as the main reason for postponing projects to adopt new technologies from the company.
To meet the demand for specialized labor in adoption projects for its solutions, SAP created an ecosystem of partnerships with consulting companies, which are responsible for training and offering the necessary technical knowledge in the technologies. Companies such as Deloitte, Accenture, Capgemini, NTT Data and many others (in addition to SAP itself) hire and train consultants specialized in SAP solutions and market this knowledge to entities that wish to adopt them. SAP also offers free and paid training programs, in addition to certifications that attest to specific knowledge in its technologies. There are multiple training programs in conjunction with educational institutions around the world and financial incentives for training offered to its commercial partners.
However, as it is an extremely robust platform that aims to meet the needs of multiple industries in the most diverse locations around the world, developing knowledge in SAP solutions is something that requires time and a lot of experience in different projects. The training guarantees a general knowledge about the resources offered by the systems, but only the experience of projects in different companies and industries is capable of teaching how to apply such resources in different contexts. A consultant specialized in an SAP module (example: Supplies) needs to unite the knowledge of the technical functionalities that the platform offers and the business processes related to the subject. Thus, you will be able to correctly understand the demands of companies and configure the SAP system to meet them. In addition, this specialist is expected to be able to identify opportunities for process improvements in SAP customers and propose changes based on their experience in other companies. Acquiring such a capacity is not possible in a short period of time.
In summary, the context of the SAP market in the coming years is one of strong demand driven by the need to migrate customers still in the ECC version, since SAP support ends in 2027 and by the growth in sales of licenses for services and products on cloud. Added to this is a growing shortage of specialized labor, which cannot be easily resolved by the training time required for this type of professional.
