ISG Provider Lens™ SAP Ecosystem - SAP S/4HANA System Transformation for Midmarket - Brazil 2024

Providers are satisfied with the Brazilian market and project double-digit growth in the next year

The SAP services providers who took part in the ISG Provider Lens™ study were satisfied with the Brazilian market, especially in Q4 2023 when several projects waiting to be closed were given priority and signed for implementation in 2024. The evaluation included an analysis of more than 400 cases of SAP solutions signed since 2019, and some relevant results are listed below:

● Energy is the most representative industry sector, with a share of 38 percent. The largest share is in oil and gas companies, followed by retail and manufacturing, with 25 percent and 23 percent, respectively.

● In projects where the contract’s total value is less than $10 million, the manufacturing sector leads with 37 percent, followed by energy with 19 percent, services with 13 percent and the retail sector with 11 percent.

● The duration of the contracts varied between six months and seven years, with 73 percent of the contracts being signed for three years, nine percent for four years and six percent for one year.

● Study participants in Brazil are projecting strong growth in SAP business over the next 12 months, with 60 percent expecting double-digit growth.

The SAP S/4HANA System Transformation services quadrants have seen the biggest investments in  differentiation, creating new offers and solutions. A large number of the leading suppliers have developed their own tools for greenfield implementation (a strategy where structures are created in S/4HANA without loading the databases), brownfield implementation (a strategy that migrates the databases while minimizing
transformations and migration time) and bluefield implementation (a strategy where there is a selective migration of the databases). The development of new tools has allowed these providers to take greater  control of their processes, expand their project teams and differentiate their services.

Some suppliers have also invested in creating adaptable models for each type of industry, which speeds up implementation and reduces project risks. In addition to the industry-tailored process model, the leading providers in the quadrant have used process mining tools to adapt and optimize customer processes during
and after implementation with SAP application management services (AMS).

The main differentiation of suppliers in the Application Managed Services (AMS) quadrant occurs in process optimization and the automation of SAP processes through using SAP tools or other specific automation tools.

The development and integration of SAP Business Technology Platform (BTP) has gained much attention in the last 12 months, with all the providers of AMS services and SAP transformation experiencing a sharp increase in the number of platform developers. There has also been a significant increase in BTP-certified
professionals. The SAP Marketplace platform announced in February 2021 that it has more than 390 BTP solutions developed by SAP partners. In this ISG Provider Lens™ study, we found that almost all AMS service providers have solutions that have been approved or are in the process of being approved by SAP.

Also noteworthy is the use of traditional and generative AI (GenAI), either in the documentation of  applications, in resolving less complex tickets or even as a tool for the support team where knowledge bases are accessed more quickly and easily.

The Managed Cloud Services for SAP ERP quadrant has changed very little in the last 12 months. Partners are more confident about SAP management in public cloud environments. They are enhancing their services to use all the resources and technologies offered by leading cloud providers, such as AWS, Azure and Google Cloud. The leading SAP cloud environment management vendors have incorporated advanced monitoring capabilities into their end-to-end monitoring frameworks, which are made available in the cloud as part of the services. The vendors’ architecture and support teams have also fully assimilated hybrid multicloud architectures, where business processes run across different clouds and on-premises environments.

In addition to advanced monitoring, SAP ERP cloud service providers develop advanced automation tools to automatically resolve SAP infrastructure issues and automate the provisioning of multicloud environments.

The RISE with SAP offering (commonly referred to as SAP RISE) has recently gained prominence in Brazil and worldwide. In the SAP Q4 and full-year 2023 results report, published at the beginning of 2024, SAP reported a 23 percent growth in constant currency in its cloud revenue. Therefore, SAP service providers are strongly adapting their offerings to this environment. We have observed that the vast majority of infrastructure
management service providers have built cloud management service offerings complementary to SAP RISE. In these offerings, the provider monitors the environment with an end-to-end vision, considering the  customer’s experience of using the application and is responsible for interacting technically with SAP in day-to-day situations or in the event of incidents.

Concerning human experience management services, developments in the SAP SuccessFactors HXM Partner Services quadrant show Brazilian customers are heavily concentrated in two main categories:

● Large global clients, where suppliers implement the solution in several countries, involving large-scale projects affecting several thousand employees. These projects require considerable competence on the
supplier’s part in understanding each region’s various aspects and peculiarities, including technical, cultural, regulatory and even personal differences.

● Midsize local companies that want to significantly improve their EX to attract new talent, especially young people. These projects are dedicated to relieving the HR department of the need to act more strategically and innovatively, and they require local experts who understand the culture and needs of typically Brazilian companies.

The providers who participated in this study have specific characteristics that make them better qualified to serve a particular customer profile. However, some leading providers have sufficient qualifications to serve both local companies and large global clients.

The bottom line is that providers in all quadrants of this study are preparing for strong growth in SAP solutions. To meet the rising technological demand, they are investing in training and certification programs for professionals, developing replicable solutions and marketable products, using automation resources heavily and applying AI and GenAI to their processes and deliverables.

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