What Drives Deployment Decisions for Average and Late adopters?
Between the months of September and October of 2019, SAPinsider surveyed 217 members of their audience to help understand the progress SAP customers have made with the different types of SAP S/4HANA deployments. The results of that survey found a majority of respondents (66 percent) have yet to start deploying SAP S/4HANA, and 21 percent of respondents have started to deploy, but have yet to see any positive business results.
We want to focus on the average and late adopters now. What are the business drivers for SAP S/4HANA deployment, and what approaches do companies plan to choose going forward.
Before we dive into the data, we should first define the different types of adopters. These adopter types are:
- Early adopter. These are businesses who make technology deployment decisions based on utility and practical benefits. This group does not wait until the masses have released their opinions/data on a piece of technology. They lead the curve and help others make those decisions.
- Average adopter. These are businesses who share some traits with the early adopters, but tend to be more cautious before committing to the adoption of new technology. Average adopters tend to require a bit more hand-holding than early adopters.
- Late adopters. These are businesses who tend to be very slow to adopt new technology. Their tendency is to hold off until everyone else has adopted. This is typically done to avoid any pitfalls found by the early and average adopters.
From the report, there were eight issues driving the adoption of the latest release of SAP S/4HANA. Those issues are:
- Opportunity to re-engineer processes
- Pressure to increase business process efficiency
- Identify opportunities to improve processes and correct sub-optimal processes from previous ERP implementations
- Modernize and optimize as many processes as possible
- Re-engineer processes to better fit operational needs and increase process efficiency
- Recognize the importance of fully compliant systems
- Data cleansing
- Harmonize regional processes into a global template
From that list of issues, average adopters found opportunities to improve processes and correct sub-optimal processes from previous ERP implementations to be their biggest factor for adoption. And although nearly 60 percent of early adopters saw that issue as a primary driving force, only around 40 percent of average adopters viewed the issue as an inspiration for adoption.
Surprisingly, however, a larger percentage (50 percent) of late adopters responded that their number one driver was opportunities to improve processes and correct sub-optimal processes from previous ERP implementations.
The second issue driving average adopters is the pressure to increase business process efficiency. Around 20 percent of respondents (who claimed to be average adopters) claimed this as a key issue. In comparison, nearly 40 percent of early adopters responded that increasing business process efficiency was key. Late adopters barely registered the pressure to increase business process efficiency as an issue (coming in at around 10 percent).
Finally, the third most important driving force (coming in at around 20 percent) for average adopters was the need to harmonize regional processes into one global template. Late adopters saw this issue on an almost equal level, with around 15 percent of respondents.
But what is holding average and late adopters back from deploying SAP S/4HANA along with early adopters? Nearly one third of average adopter respondents claim their fear of disrupting business operations as one of the main drivers behind their lack of an SAP S/4HANA deployment strategy. This is in comparison to only five percent of early adopters who state that same claim.
This becomes an issue when a company becomes paralyzed by the fear of disrupting business operations. Clearly, it can be done (and done well), as proven by early adopters.
Another issue driving average and late adopters away from early deployment is the pressure to lower Total Cost of Ownership. There is clearly a perceived cost and risk of deploying a new ERP solution that prevents average and late adopters from moving forward with an SAP S/4HANA deployment.
All three adopter groups want to identify opportunities to improve business processes and correct sub-optimal processes from their previous ERP solutions. But how do they succeed with this plan? From the survey, three different strategies came to the surface. Those strategies are:
- New implementations
- Selective data transition
- System conversion
How did these strategies break down by group? Average adopters ranked the three strategies as follows:
- Selective data transition led with approximately 50 percent of respondents.
- System conversion came in second with approximately 45 percent of respondents.
- New implementations came in last with approximately 20 percent of respondents.
The response from late adopters was somewhat surprising. This group ranked the three strategies somewhat differently:
- New implementations led the way with approximately 50 percent of respondents.
- System conversions came in a close second with approximately 40 percent of respondents.
- Selective data transition came in last with 10 percent of respondents.
It is interesting to note that both average and late adopters so closely ranked system conversions as their second deployment approach (at 45 and 40 percent). Ken Todd, SAP S/4HANA leader and principal with Capgemini said, “If you’re utilizing a system conversion and not also taking advantage of the features that have been optimized for SAP S/4HANA, you likely won’t see much immediate value from the new system.”
It’s fairly easy to draw a conclusion as to why and how average and late adopters are approaching the deployment of SAP S/4HANA. But even with their hesitation, both groups understand that eventually a migration to SAP S/4HANA will not only be a inevitable, it will go a long way to improve business processes on every level.
To find out more of what the SAPinsider report uncovered about SAP S/4HANA deployments, Click Here to read the entire report. You’ll find plenty of information to help guide you and your business to the future of ERP.