Walldorf, October 15, 2024 – The digital transformation continues to be the number one challenge for user companies, SAP and partners. Accordingly, the motto of this year’s annual congress of the German-speaking SAP User Group (DSAG) is “The triad of the future: users, SAP and partners as drivers of transformation”. What is required of each individual, what role do cloud and on-premises systems play and how can artificial intelligence (AI) exploit its potential? A recent AI survey* conducted by DSAG and the Americas SAP Users‘ Group (ASUG) provides an interesting picture of the mood and reveals potential for improvement.
In the triad of the future, SAP, users and partners agree that the “Miraculous Change”, which was the focus of the last annual congress, can still only be successfully shaped together. Accordingly, the DSAG Annual Congress 2024 will be held under the motto “Triad of the future: users, SAP and partners setting the pace of transformation”. A harsh tone is needed, as a look at the DSAG Investment Report 2024** paints a similar picture to last year.
Around half of those surveyed still state that they are not very far along in their digital transformation. And a recent DSAG-ASUG survey on the topic of artificial intelligence (AI) confirms the picture. According to the survey, only 11 percent of respondents can easily keep up with the pace of change on a technical, social and/or economic level, 59 percent can keep up to some extent and 24 percent cannot keep up.
SAP partners as mediators
Companies must be supported by DSAG, the user companies, SAP and the SAP partners to the best of their ability in meeting the associated challenges. “The partners play an important role in this triad, for example by supporting companies and organizations in their digital transformation with tailored services and solutions. They also help to improve business processes and make them more efficient. And last but not least, they develop and drive innovations in close coordination with SAP and the ecosystem,” says Jens Hungershausen, DSAG Chairman of the Board. The partners are active in many DSAG committees and are often both SAP users and providers of SAP-related services and solutions. This makes them key intermediaries between SAP and customers. From the partners‘ point of view, this requires even closer cooperation with SAP. “It is important that SAP involves them even more closely in decisions relating to the solution portfolio and its implementation. Better communication with and support from SAP is key here,” summarizes Jens Hungershausen and adds: ”Not least so that the partners themselves can manage their own change and transformation to the cloud and pass on the expertise they have gained to their customers.” With the Partner Advisory Board, DSAG offers a suitable forum and platform for channeling the interests of the partners.
Users and the cloud
The cloud is a key driver of digital transformation. “From DSAG’s point of view, the cloud and cloud enterprise resource planning systems (cloud ERP) are the right way forward for many use cases and industries. The use of the corresponding solutions undoubtedly has great potential,” says the DSAG Chairman of the Board. However, DSAG also believes that on-premises systems will remain highly relevant for some time to come, e.g. in industries with high process complexity or due to legal or data protection framework conditions or individual requirements. For example, the cloud offering in public administration must meet the sovereignty requirements set by the public administration for certain specialist processes and take into account the applicable legal framework conditions. “Cloud solutions will be increasingly used in the coming years and will become an integral part of the IT infrastructure. But this will require suitable cloud solutions. The future will therefore continue to be hybrid,” Jens Hungershausen is convinced.
Accordingly, companies need clear answers to questions such as how they can utilize the added value of the cloud and the flexibility of the operating model. In terms of investment protection, it must also be clear which costs are associated with increased cloud use or may also be incurred through the use of downstream services. Furthermore, innovations must not only be made available in the cloud. “SAP needs clear perspectives based on a well thought-out strategy, especially for products that will be phased out by the end of 2027, in particular SAP ERP Central Component (SAP ECC),” says Jens Hungershausen.
Need for discussion with on-premises
SAP is currently offering companies solutions for digital transformation that are intended to accelerate the migration of user companies to cloud ERP. With the “RISE with SAP Migration and Modernization” program, SAP is responding to a request from DSAG to accommodate on-premises customers in particular, who have already followed SAP’s strategy towards S/4HANA, when it comes to cloud migration. According to the DSAG Investment Report 2024, some of the member companies surveyed do not yet see SAP’s S/4HANA cloud strategy as suitable for their company. Just under half said this. However, it must be taken into account here that the survey was partly conducted before the launch of the SAP program. Nevertheless, there is still a need for discussion. “The discrimination of on-premises customers when it comes to innovation, the perceived pressure to switch to the cloud and the increasing dependence on SAP are just a few examples,” says Jens Hungershausen.
Digital transformation and artificial intelligence
Another topic that is increasingly becoming the focus of companies is artificial intelligence (AI). According to the latest DSAG-ASUG survey, only 7 percent see themselves as experts in AI and 8 percent in generative AI. In addition, 54 percent of respondents are currently learning a lot about AI and 48 percent about Generative AI. The result shows that the development of expertise is in full swing. The need for information is great and there is still a lot to be done at all levels and by all those involved in the user, SAP and partner environment. “We as DSAG will provide our members with the relevant information via the relevant committees,” summarizes Jens Hungershausen.
Added value and viable business cases
Looking at SAP, it is clear that they are actively working on adapting the AI solution portfolio to the far-reaching changes in business, government and society. The roadmap already includes the gradual integration of AI functions into business processes under the name SAP Business AI. However, the fact that the focus is primarily on the cloud provides material for lively discussions between DSAG and SAP about the integration and use of the corresponding results in the on-premises systems as well. The Generative AI Hub in the SAP Business Technology Platform (BTP) enables access to large language models such as those from Amazon Webservices (AWS), Google or Microsoft. The advanced algorithms and AI models can come from the partners, while SAP continues to contribute the company-specific business data. SAP has announced up to one hundred use cases for artificial intelligence by the end of 2024. “It will be exciting to see to what extent this announcement can be realized. After all, there needs to be clear added value in the form of viable business cases for each of these use casesWe are in very close contact with SAP in this regard,” says Jens Hungershausen.
Transparency, clarity and data are important
According to the ASUG-DSAG study, there are several relevant factors for companies and organizations considering an AI project. Transparency and clarity about where AI is used and what data it is based on is very important and important for 92% of respondents. Appropriate pricing models are very important and important for 86 percent of respondents. The fact that AI solutions can be embedded in existing systems is very important and important for 85 percent. The possibility of being able to use AI independently of the SAP operating model on site is considered very important and important by 65%. “Being able to act independently of the SAP operating model is essential in light of the fact that SAP had promised to provide innovations for S/4HANA consistently and over the long term with the maintenance extension until 2040,” comments Jens Hungershausen. And what applies to the S/4HANA Private Cloud must also be available for S/4HANA On-Premises with the same scope of services.
The bottom line is this: SAP must communicate the existing and planned possibilities for using AI even more transparently. Reference architectures, best practices guides and standards for integration scenarios and technologies, including uniform regulations for the integration of AI models in SAP applications and data usage, must be developed and made available accordingly. One thing is also clear: despite all the emerging possibilities and the associated euphoria, human intelligence will continue to be a central factor in the interaction of AI models. Jens Hungershausen summarizes: “The digital transformation is happening and user companies, SAP and partners need to get to grips with it. The field is prepared, much is already possible and much is in the making. It is up to us to shape the transformation successfully.”
What it needs from SAP
- Companies need clear answers, e.g. on how they can utilize the added value of cloud solutions and on the flexibility of the operating model.
- Clear perspectives are needed, especially for products that will expire by 2027. New solutions that may be migrated to by then must be appropriately mature.
- What applies to the S/4HANA Private Cloud must also be available for S/4HANA On-Premises with the same scope of services. On-Premises customers must not be disadvantaged by innovations exclusively for the cloud products.
- Existing and planned options for using AI must be communicated even more transparently.
- Appropriate and transparent pricing models based on the maturity level and scope of AI functionality are just as necessary as the provision of AI innovations for all S/4HANA customers, regardless of the operating model.
- Reference architectures, best practices guides and standards for integration scenarios and technologies, including uniform regulations for the integration of AI models in SAP applications and data usage, must be developed and made available.
*Survey basis DSAG-ASUG survey
The DSAG-ASUG survey “Use of Artificial Intelligence” was conducted among DSAG members in the period from August 13 to September 13, 2024. The responses from 246 participants were evaluated. 73 percent of the companies are headquartered in Germany, 11 percent in Austria and 10 percent in Switzerland. 6 percent in other countries. Among the company divisions that took part in the survey, IT was in the lead with 64 percent, followed by management with 8 percent, finance and HR with 4 percent each and research and development with 3 percent.
**Survey basis DSAG Investment Report 2024
In the period from January 23, 2024 to February 13, 2024, 228 people took part in the survey. Only one person per member company was surveyed. These were CIOs, CC managers or contact persons exclusively from user companies. In terms of industries, the top five were dominated by mechanical engineering, equipment and component manufacturing with 12%, followed by the public sector with 11% and the chemical industry with 7%. The automotive industry and the high-tech and electronics industry each accounted for 6 percent of participants. 44 percent of the companies employ 500 to 2,499 employees. 73 percent of the companies are headquartered in Germany, 13 percent in Austria, 9 percent in Switzerland and 4 percent in other countries.
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