Walldorf, 10.12.2020 - A sharp fall in revenue and shrinking IT budgets are acute consequences of the coronavirus crisis for companies. This was one of the findings of a survey conducted by the German-speaking SAP User Group (DSAG) among its members in Germany, Austria, and Switzerland. Despite this, 81 percent of survey participants said digitalization was unstoppable – even if the requirements around it are changing. The areas in urgent need of action are efficiency increases in existing processes, as well as the development of new, digital business models and services. When it comes to the digitalization of core processes, trust in SAP has grown significantly.
"Looking ahead to the long-term future: safeguarding sustainable success" is the slogan of DSAGLIVE, DSAG's virtual offering for its 21st Annual Congress. In business terms, planning for the long-term future is more important than ever in the time of coronavirus. How is the unprecedented global pandemic affecting companies; what is its impact on IT budgets; and what are firms' current needs when it comes to digitalization?
Companies forge ahead with digitalization
According to an online survey conducted by DSAG in summer 2020, 74 percent of participants have seen their revenue decrease or decrease significantly, while just 19 percent have not seen any impact on revenue. However, 7 percent state that they've seen their revenue improve or improve significantly. In terms of the impacts of COVID-19 on IT budgets, 22 percent of those surveyed are expecting a decrease of more than 20 percent. But it's clear that companies' digitalization needs have also increased as a result of the pandemic. 81 percent of those surveyed either completely agree or partly agree with this statement. This is also reflected by the progress companies are making with their digitalization efforts: 61 percent are making good or rapid progress on this front, while 34 percent are making slow progress. This paints a much more positive picture than reported in the 2020 DSAG Investment Report, where just 35 percent considered themselves to be far along or very far along in their digitalization journey.
The increased focus on digitalization is also benefiting DSAG members' S/4HANA projects. 50 percent of those surveyed are forging ahead with and/or accelerating their S/4HANA projects. 43 percent are delaying them or pushing them back indefinitely. "The train has left the station; companies now see how important digitalization is and are tackling the matter accordingly. However, they are also having to cope with falling revenue and huge decreases in IT budgets at a time when their digitalization needs are growing," says Marco Lenck, Chairman of the German-speaking SAP User Group, describing the current dynamics.
Small increase in approval of SAP product strategy
There was only a small change in DSAG members' perception of SAP's product strategy versus last year: 31 percent rate the SAP product strategy and road maps as completely or mostly resilient and trustworthy, which is up 7 percent from 2019. 42 percent partially agree with the statement, which is a decrease of 3 percent versus last year. Meanwhile, 27 percent of respondents said they do not agree or agree a little. "This is a small improvement on last year. It shows that something's been done and we're headed in the right direction. But this isn't yet reflected on the market to its fullest extent. SAP needs to communicate its ready-made solutions along the road map more effectively," says Marco Lenck.
Improvements needed in process efficiency
When asked about the biggest digitalization need arising from the coronavirus crisis in the context of SAP, 72 percent cited improving the efficiency of existing processes. When asked about the areas most affected by digital transformation as part of last year's DSAG Annual Congress survey, efficiency increases came out on top, with 62 percent citing it. Meanwhile, the development of new, digital business models and services remained in second place this year, selected by 36 percent of those surveyed. Only 24 percent viewed it as important to have a flexible relationship with customers and partners as part of a platform strategy. "It's understandable that efficiency improvements remain a top priority. I see it as a clear reaction to falling revenue and shrinking IT budgets," explains Marco Lenck. Nevertheless, in its statement about coronavirus, DSAG indicated that companies that want to safeguard their future success over the long term should not only digitalize their business processes – they need to change their business models.
Furthermore, the Chairman seemed disappointed that only one-quarter of respondents consider the flexibilization of customer and partner relationships to be important. "Coronavirus has shown that's it incredibly important to be able to respond rapidly to new requirements. But this doesn't seem to have hit home with everyone. We see it as our responsibility, as well as SAP's, to continue to educate our members on this," explains Marco Lenck.
Platform strategies gain ground
Even if the flexibilization of customer and partner relationships does not seem to play a huge role for many of those surveyed, most recognized the importance of a platform strategy. 58 percent of respondents are forging ahead or accelerating their efforts in this area; 24 percent are delaying it or rethinking a related project. Just 19 percent don't see it as an issue or are pushing it back indefinitely. "It's good to see that, despite their different priorities, a majority of companies are still pursuing a platform strategy. This is a step in the right direction, because issues such as integration, capability for expansion, the development of new business models, and driving forward innovations can give companies a decisive competitive edge," notes Marco Lenck.
Those who do tackle a platform strategy are spoiled for choice when it comes to providers. In terms of collaboration with customers and suppliers, 72 percent of respondents consider SAP very or extremely relevant, followed by Microsoft at 37 percent and other providers with 22 percent. When it comes to the flexibilization of supply chains, 65 percent rate SAP as very or extremely relevant, followed by Microsoft at 19 percent and others at 15 percent. "I find the high approval of SAP and Microsoft in these areas, with just 22 percent rating other providers, to be remarkable. I would have expected other providers to be further ahead when it comes to collaboration with customers. It shows that SAP can differentiate itself from its main competitors in these areas as well," comments Marco Lenck.
SAP unchallenged in product development
The same ranking was also seen in product development, although the actual numbers were considerably lower, with SAP selected by 33 percent, followed by Microsoft at 26 percent and other providers at 23 percent. 77 percent of respondents consider SAP very or extremely relevant for financial and payment processing, followed by other providers at 17 percent and Microsoft trailing far behind at 6 percent. "This finding is logical. Financial processes have been one of SAP's core competencies for decades now. Lots of companies grew up with this and have embedded these processes in their businesses," explains Marco Lenck. However, SAP missed out on the top spot for environment and sustainability: 16 percent of respondents consider other providers very or extremely relevant here, followed by SAP at 14 percent and Microsoft at 11 percent.
Huge progress thanks to reliable planning
SAP is also once again in pole position when it comes to HR processes, with 66 percent of respondents citing SAP, ahead of Microsoft with 9 percent and Google with 3 percent. "The fact that customers can run the on-premise solutions SAP Human Capital Management (SAP HCM) for HR and Travel Management for travel expense management integrated in S/4HANA safeguards planning reliability and definitely plays a role in the high percentage of respondents who selected SAP," says Marco Lenck.
Sustainably winning, in terms of SAP, means that a product is only as good as the way it can be implemented in the company, ideally quickly and easily. The facts are on the table, now SAP has to show what it has fundamentally changed in the processes. In many areas, SAP enjoys a high level of trust among DSAG members. We still see potential in SAP's product strategy and a major communication task. With the SAP Road Map Ex-plorer and the integration strategy, important steps are being taken to give customers orientation. We continue to maintain a good and constructive dialog with SAP in this regard. Especially the product and integration strategy needs solutions now. SAP has promised to work on this. These actions must now be followed by results.
*Scope of survey
Over the summer, DSAG conducted an online survey among SAP user companies in German-speaking countries; specifically among CIOs and representatives of DSAG members in Austria, Germany, and Switzerland. Almost half of those surveyed are from companies with between 500 and 5,000 employees, while nearly one-third are from companies with 5,000+ staff. Overall, 262 CIOs and representatives of DSAG member companies took part in the survey. One contact per company was questioned.
The German-speaking SAP User Group (DSAG) is one of the most influential user groups in the world. Its extensive network is made up of more than 60,000 members from over 3,700 companies, ranging from mid-size firms to DAX-listed corporations, and representing every major industry in Germany, Austria, and Switzerland. Thanks to its extraordinary reach, the group has unparalleled insight into the digital challenges facing companies in these markets. DSAG uses this knowledge to represent the interests of SAP users and help pave the way for its members to a digital future.