Boston, MA – June 15, 2021 – UpperEdge, an independent third-party advisory company that empowers organizations to get the most value from their IT supplier relationships, describes how SAP clients embarking on transformational initiatives are being presented with a plethora of delivery models for realizing transformational outcomes.
Options include SAP RISE, working directly with a hyperscaler (e.g., Microsoft Azure, Google GCP and Amazon AWS), bundled SI solutions and other multi-sourced vendor scenarios. Current market dynamics are encouraging the consideration of these options but overwhelming the companies evaluating them.
“By introducing RISE, SAP clearly wants to reestablish account control. The departure of key executives over the past couple of years and the growth of Azure, GCP and AWS is challenging SAP’s position of influence and control,” said Len Riley, Commercial Advisory Practice Leader at UpperEdge.
”SAP also wants to gain a larger share of the wallet. For decades, SAP has created an ecosystem that has given rise to hundreds of complementary software and services providers and billions of dollars in market value. While they have certainly seen a share of the benefits, they would clearly like a larger piece of the pie,” Riley added.
There are three delivery scenarios an SAP S/4HANA customer can consider:
1. SAP RISE
The level of effort required to manage an SAP relationship is generally underestimated and the introduction of RISE only makes the evaluation of SAP offerings more complex. While SAP is trying to get companies to move to the cloud, customers must closely evaluate the pros and cons of converting from a perpetual to a subscription-based licensing model. On top of that, customers must determine if they are all in with SAP and if SAP if is capable of ensuring operational continuity for the infrastructure that underpins S/4HANA.
SAP is aggressively positioning RISE and backing away from traditional financial concessions associated with an ECC to S/4 HANA perpetual license conversion. There is still a lot of complexity in these agreements and there is still a lot to unpack, so it is important to understand where you were and where you are going contractually.
2. Hyperscalers
There are many dimensions and complexities that have to be thought through beyond simply comparing a hyperscaler’s offering to SAP RISE. There are adjacent and long-term implications associated with the selection of a hyperscaler, including impacts on existing relationships, migration services, run management services, financial incentives and contractual structures.
To adequately evaluate RISE vs. a hyperscaler, companies need to adjust traditional sourcing strategies and timelines to ensure an adequate comparison of solution options in the context of their broader IT strategy. In the end, where RISE has a general lack of commercial transparency and flexibility, the hyperscalers offer a series of commercial advantages over RISE, and a level of flexibility that allow companies to align and re-align models based on then-current priorities.
3. Service Providers
The service providers have responded to SAP and the hyperscalers with complementary service offerings, but in reality, there is a heightened environment of so-called “co-opetition” (collaborative/competition) and confusion that is challenging existing business models, sales strategies and partner relations.
While they’ve all had certain accelerators to help with the journey and the implementation from ECC to S/4, they’re doubling down on those accelerators, promoting them even more, and promoting their relationships and alliances, however, the partnership approach is entirely situational. Service providers are partnering with hyperscalers based on customer-specific dynamics and either fronting the solution or shadowing the hyperscaler on a case-by-case basis, which is contributing to evaluation complexities.
UpperEdge’s SAP Advisory Service has been enhanced to include an SAP RISE component in response to companies struggling with these alternatives and the accompanying questions:
- Is SAP RISE a viable option and how does it compare to traditional SAP on-premise license models?
- What are the benefits and the risks of hyperscaler solutions and why are many companies shifting to hyperscalers? What are the contractual commercial agreement structures that should be considered?
- How will the go-to-market strategies of SAP’s introduction of RISE as well as the disruption of the hyperscalers impact the service providers?
- What should be considered in the selection and negotiation of service provider agreements required to enable cloud strategies?
About UpperEdge
UpperEdge maximizes the value its clients receive from their key IT supplier relationships by helping them develop and execute fact-based sourcing, negotiation, and program execution strategies. Visit www.upperedge.com for more information.
