2019 DSAG Investment Report: More information required on digitalization
Big Data, the Internet of Things, and Artificial Intelligence/Machine Learning are the top 3 digitalization topics for members of the German-speaking SAP User Group (DSAG). In these areas, SAP users have already launched or are planning to launch projects, according to the 2019 DSAG Investment Report*. When it comes to digitalization efforts within their companies, survey participants are more skeptical than they were a year ago. Many of those surveyed are planning to migrate Business Suite to S/4HANA. However, implementation is not running as quickly as expected and not many projects have been completed so far.
DSAG members continue to invest in IT in general. For 40 percent of those surveyed, IT budgets have risen by approximately 16 percent compared to last year. Budgets remained the same for approximately half of the respondents. Investment amounts do not vary by industry: retail, service, and manufacturing sectors are showing comparable trends.
Budgets are migrating to specialty departments
For 42 percent of companies in 2019, SAP investments saw an above-average increase of 27 percent. Still, this figure is 10 percent lower than in 2018 (37 percent). A new question in this year's survey was whether the budget for software-based business processes is provided and maintained by specialty departments, rather than IT. In 28 percent of cases, specialty departments are indeed responsible. This shows that, as a result of digitalization, responsibility for and expertise in modeling business processes are migrating to specialty departments, as is the relevant budget. In 41 percent of companies, the IT budgets remain with the IT department, as per the traditional division of labor.
Big Data is all the rage
In almost half of the companies, projects related to Big Data and the Internet of Things are either on the to-do list or have already kicked off. One-third of those surveyed are looking at Artificial Intelligence/Machine Learning, while Robotic Process Automation comes in fourth. Multiple responses were possible here. But not everyone is on board with these trends; almost one-fifth of companies are neither investing in these areas nor planning any relevant projects.
Disillusioned about digitalization
Moreover, companies have become more skeptical when it comes to evaluating how much progress they have made in digital transformation. Currently, 62 percent cite their progress as "not far." This represents a drop of 10 percent compared with the 2018 Investment Report. One explanation may be that companies now have a more realistic view of which projects they have up and running in this field and how complex they actually are. "There is a better understanding of these topics and, as a result, of which organizational and technical challenges lie ahead for companies in terms of their digitalization ambitions. Here at DSAG, we want to provide extensive support in the form of knowledge transfer and experience. But we also want to influence SAP to ensure they create suitable solutions," explains Marco Lenck, DSAG chairman. A further obstacle may be the uncertainty surrounding the cost of digitalization projects. "We need a flexible licensing model that is scalable in both directions and that's guided by business benefits" states the DSAG's demand to SAP.
Investments in SAP products: ERP and Cloud
In terms of the relevance of SAP products, one thing is clear: a lot of companies have already outgrown Business Suite. Main investments in the ERP solution fell considerably, for the third year running (2017: 33 percent, 2018: 29 percent, 2019: 10 percent). However, investments in S/4HANA are not growing at the same rate and remain at 14 percent.
Some of the newly released budgets are being used for cloud solutions. 16 percent of companies are planning medium to large investments in SuccessFactors; the same number as last year. Those investing in SAP Analytics Cloud climbed significantly by 6 percentage points to 9 percent. The number of medium-sized investments in the SAP Cloud Platform doubled to 8 percent. Investment in the planning solution Integrated Business Planning also rose to 8 percent. 12 percent of companies are making medium to large investments in C/4HANA, which includes solutions such as Hybris. Furthermore, DSAG members are investing in projects that cover the key areas Big Data, the Internet of Things and Artificial Intelligence/Machine Learning.
Planning underway but no breakthroughs yet
Like every year, members were asked about migrating Business Suite to S/4HANA. The figures show that companies have extensive plans in this respect. 5 percent aim to migrate this year, and 39 percent plan to in the next three years (+6 percentage points). A further 30 percent want to do it after this period (+10 percentage points). "All but one-quarter of companies have made the decision to migrate," says Marco Lenck, highlighting the results. "Despite this, the number of those having actually completed such projects remains stagnant at 3 percent." This could be due to the fact that businesses are currently starting projects that take longer or that they are doing Brownfield implementations where the complete conversion of one system to another is complex. It is also possible that they underestimated the amount of work involved.
Existing business processes remain in focus
Regarding investments in digitalization projects, DSAG member companies also differentiate between existing and new business models. The number of those focusing on existing business models has again risen (+5 percentage points) and is up to 90 percent. "Lots of businesses are busy with ERP and that means they are looking at existing business processes. This explains the high number of planned S/4HANA projects, since S/4HANA is often equated with digitalization," says Marco Lenck. Almost two-thirds of those surveyed consider investments in new business models to be important, an increase of 2 percent when compared to last year.
Conclusion: Support through information and education
The following demands and actions can be derived from the results of the 2019 DSAG Investment Report: companies need more information and education about digitalization in general. In particular, there is a lack of clear examples and Best Practices. DSAG will make this a focus of the coming year, as Marco Lenck highlights: "Together with SAP, we want to work on supporting DSAG members with valuable information and insights into the current licensing model, S/4HANA, C/4HANA, and other solutions they can use to achieve their digitalization goals." However, even if S/4HANA continues to grow in significance, Business Suite will endure: "SAP customers who are struggling to keep pace with the speed of migration may not be left behind, for example, through any thinning out of the functional capabilities of Business Suite," demands Marco Lenck. "There will still be a long transition period where both solutions are in use." In 2019, DSAG will continue to focus on the key trends Big Data, the Internet of Things, and Artificial Intelligence/Machine Learning, putting their members in a strong position to tackle digitalization.
*About the survey
In December 2018/January 2019, DSAG conducted an online survey about planned investments for 2019 among SAP user businesses in German-speaking countries. One person per company was surveyed. 244 CIOs and representatives from DSAG member companies in Germany, Austria, and Switzerland took part. Approximately half of those surveyed represent companies with between 500 and 2,500 employees.
The German-speaking SAP User Group (Deutschsprachige SAP-Anwendergruppe e. V., DSAG) is one of the most influential SAP user groups in the world. Its strong network comprises more than 60,000 members from over 3,500 companies, ranging from medium-sized businesses to DAX corporations, and representing all industries in Germany, Austria, and Switzerland. This gives the group unparalleled insights into the digital challenges facing companies in these markets. DSAG uses this knowledge to represent the interests of SAP users and to support members on their paths to digitalization. Further information is available at: