Firms become more careful about
transformation projects due to economic worries, need for ROI, ISG
Provider Lens™ report says
Many SAP customers in the U.S. continue to pursue SAP S/4HANA
transformation, but at a more deliberate pace amid current
macroeconomic conditions, according to a new research report
published today by Information Services Group (ISG) (Nasdaq: III),
a leading global technology research and advisory firm.
The 2024 ISG Provider Lens™ SAP Ecosystem report for the U.S.
finds that S/4HANA transformation initiatives grew by between 10
percent and 12 percent in 2023, down slightly from earlier
forecasts. Uncertain macroeconomic conditions have caused
organizations to reassess such transformations, carefully
evaluating subscription terms as they focus more sharply on IT
return on investment.
“A wait-and-watch approach by many companies has slowed adoption
of S/4HANA, despite its potential benefits,” said Bill Huber, ISG
partner, Digital Platforms and Solutions. “Enterprises face long
implementation times, uncertain ROI, and often complex
negotiations.”
A majority of S/4HANA projects in the U.S. are greenfield
initiatives, but there was an exponential growth in so-called
bluefield implementations, in which organizations create a new
S/4HANA instance and selectively migrate processes and data over
time, the report says. This approach is most popular among large
enterprises, where it has delivered greater business value. RISE
with SAP, the company’s managed cloud offering for SAP ERP
migration, is most popular among midmarket organizations.
The average S/4HANA implementation time, though still several
months long, decreased by four to five weeks in 2023, thanks to the
increasing use of industry-specific solutions and automation tools
by service providers, which increase productivity, ISG says.
Manufacturing, healthcare, pharmaceutical and consumer packaged
goods companies continued to lead in adoption of S/4HANA, motivated
by the need to streamline production, optimize processes and
improve customer experience through digital transformation of
functions such as sales and customer service, the report says. Many
financial services, retail, telecommunications and public-sector
organizations remained skeptical of the benefits of the
platform.
As enterprises sought SAP outsourcing experts to help them
overcome the challenges of migration to S/4HANA, managed cloud
services grew in popularity for the second year in a row, ISG says.
Services and solutions around SAP SuccessFactors, including
employee experience management and payroll transformation services,
are also gaining momentum.
“Many organizations need to modernize HR functions as work modes
change, and providers can help them do this in a unified way,” said
Jan Erik Aase, partner and global leader, ISG Provider Lens
Research.
The report also explores other trends affecting the SAP
ecosystem in the U.S., including rising provider investment in AI
and generative AI (GenAI) and the growing importance of
partnerships between service providers and hyperscale cloud
companies.
For more insights into SAP-related challenges facing U.S.
enterprises, including shifting economic conditions and pressure to
quickly implement AI, along with advice for addressing those
issues, see the ISG Provider Lens™ Focal Points briefing here.
The 2024 ISG Provider Lens™ SAP Ecosystem report for the U.S.
evaluates the capabilities of 46 providers across five quadrants:
SAP S/4HANA System Transformation — Large Accounts, SAP S/4HANA
System Transformation — Midmarket, SAP Applications Managed
Services, Managed Cloud Services for SAP ERP and SAP SuccessFactors
HXM Partner Services
The report names Accenture, Capgemini, Infosys and Wipro as
Leaders in four quadrants each. It names Cognizant, Deloitte,
HCLTech, IBM and TCS as Leaders in three quadrants each and EY as a
Leader in two quadrants. Birlasoft, Eviden (an Atos Business),
Hexaware, Kyndryl, LTIMindtree, Navisite, NTT DATA and Tech
Mahindra are named as Leaders in one quadrant each.
In addition, Hexware and Kyndryl are named as Rising Stars —
companies with a “promising portfolio” and “high future potential”
by ISG’s definition — in two quadrant each. Alight, Hitachi Digital
Services, Syntax, Tech Mahindra and UST are named as Rising Stars
in one quadrant each.
Customized versions of the report are available from Hexaware
and KaarTech.
In the area of customer experience, Infosys is named the global
ISG CX Star Performer for 2024 among SAP ecosystem providers.
Infosys9 earned the highest customer satisfaction scores in ISG's
Voice of the Customer survey, which is part of the ISG Star of
Excellence™ program, the premier quality recognition for the
technology and business services industry.
The 2024 ISG Provider Lens™ SAP Ecosystem report for the U.S. is
available to subscribers or for one-time purchase on this
webpage.
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only
service provider evaluation of its kind to combine empirical,
data-driven research and market analysis with the real-world
experience and observations of ISG's global advisory team.
Enterprises will find a wealth of detailed data and market analysis
to help guide their selection of appropriate sourcing partners,
while ISG advisors use the reports to validate their own market
knowledge and make recommendations to ISG's enterprise clients. The
research currently covers providers offering their services
globally, across Europe, as well as in the U.S., Canada, Brazil,
the U.K., France, Benelux, Germany, Switzerland, the Nordics,
Australia and Singapore/Malaysia, with additional markets to be
added in the future. For more information about ISG Provider Lens
research, please visit this webpage.
A companion research series, the ISG Provider Lens Archetype
reports, offer a first-of-its-kind evaluation of providers from the
perspective of specific buyer types.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including AI and automation, cloud and data analytics; sourcing
advisory; managed governance and risk services; network carrier
services; strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,600
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240412918082/en/
Press Contacts:
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978-518-4520
isg@matternow.com
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