ISG Provider Lens™ SAP Ecosystem - RISE with SAP Implementation Partners - Global 2024

The adoption of RISE is increasing among enterprises, along with their cloud journey

RISE with SAP:

In today’s digital landscape, the utilization of cloud technology has become paramount for organizations seeking flexibility and agility in their operations to seamlessly align with evolving business requirements. Within this context, the RISE with SAP proposition stands out as a pioneering initiative, empowering
enterprises to seamlessly integrate their ERP systems into their core cloud strategies. RISE with SAP represents more than just a cloud offering; it embodies a comprehensive suite of SAP products bundled together to deliver enhanced value. While SAP S/4HANA Cloud and SAP Business Technology Platform (BTP) are integral components of RISE, the proposition extends beyond these to encompass a spectrum of  solutions. These include infrastructure offerings, alongside embedded tools such as the SAP Readiness Check, Custom Code Migration and SAP Enable Now, facilitating smooth transitions to the cloud environment.
Moreover, RISE incorporates innovation tools, such as SAP Build, and business process transformation capabilities through SAP Singavio. Notably, the premier version of RISE introduces Joule, SAP’s cuttingedge
AI assistant, further augmenting the suite’s capabilities and underscoring SAP’s commitment to driving innovation and enabling digital transformation for enterprises worldwide.

The RISE proposition covers infrastructure, applications, integration and support in a single contract depending on clients’ requirements and their hyperscaler strategy. A simple commercial contract for RISE can
include software, support, infrastructure management, technical managed services, governance, security and SLA. The offering is based on a full usage equivalent (FUE) metric that considers different types of employees
and their types of usage. Additionally, industry and lines of business add-on packages can be licensed with metrics aligning with each solution’s business value.

While SAP has built its custom offering for enterprises considering hyperscalers and the SAP Cloud, there has been ambiguity among enterprises in terms of the aspects that this contract covers with respect to their SAP landscape. Some enterprises have raised concerns about the cost estimation for long-term contracts and the flexibility this proposition provides for innovation. Despite these challenges, enterprises are adopting RISE with SAP to accelerate their digital transformation, considering factors such as cost, security, performance, ease of migration, automation, infrastructure, partner capabilities and SAP BTP integration capabilities. The RISE proposition is gaining traction in the upper midmarket segment and now in the large enterprise segment as well. 

Enterprises are seeking help from their partners and service providers to navigate the areas where they are unclear and need handholding to decide on the technological priorities per the business requirements. The providers are building industry-specific propositions with their industry cloud offerings tailored to clients’
needs to accelerate their cloud journey.

Service providers are strategically aligning themselves with SAP’s overarching vision and the transformative potential of RISE with SAP, which serves as a catalyst for expediting the SAP S/4HANA migration journey for customers, particularly those embarking on significant technical migrations and large-scale business 
transformation endeavors. These providers play a pivotal role in assisting clients in navigating the complexities surrounding licensing models and intricate multicomponent environments, while concurrently streamlining governance structures, particularly in areas concerning cybersecurity, integration of multicloud,
and management of scattered and diverse components and instances. Moreover, service providers offer comprehensive end-to-end solutions, encompassing consultancy, transformational initiatives, hosting and
ongoing operations, all encapsulated within a single managed service contract. Emphasis is placed on driving cost savings early in the RISE with SAP journey, often leveraging partner managed cloud services to seamlessly integrate non-RISE with SAP components within the same commercial framework, thereby  maximizing efficiencies and optimizing resource utilization.

The percentage of clients adopting SAP S/4HANA cloud differs across service providers. For some, only 5–10 percent of their clients adopt SAP S/4HANA Cloud, while for some providers, most of their clients use SAP
S/4HANA Cloud. In general, it is observed that there is a 70:30 ratio in terms of adoption of on-premises vs cloud version of SAP S/4HANA. The typical benefits realized for clients include reduced TCO, improved license
ownership, optimized infrastructure use, minimized risk, enhanced security posture,  simplified operations, and improved business outcomes; clients can also have a platform for innovation aligned with their business
requirements. The typical timeline required to implement SAP S/4HANA cloud varies on an average of around 40-60 weeks. For instance, the SAP S/4HANA public cloud version takes around 40 weeks, while the SAP S/4HANA private cloud requires around 50-60 weeks, with an additional 4-8 weeks for infrastructure provisioning.

The RISE offering is gaining traction among enterprises. Service providers are capturing this opportunity to grow their SAP business. In certain regions, specifically around Europe, there is resistance to using the public cloud as a preferred infrastructure. Depending on the governance and compliance requirements of the industry for cloud infrastructure, the adoption of RISE with SAP proposition varies. The use of SAP BTP for the clean core approach and digital transformation is an holistic approach for enterprises that adopt RISE with SAP and for providers that help their clients in their cloud journey for SAP workloads.

SAP Business AI and BTP:

SAP Business Technology Platform (BTP) is considered a multi-purpose, multicloud platform that SAP has positioned as an enabler for integrating applications for the enterprise IT landscape. While the erstwhile BTP was specifically an integration platform that drove digitalization, the current BTP enables a clean core approach for SAP S/4HANA migration. Integrating AI with BTP and building ready-touse business cases have also positioned BTP as a lucrative approach for enterprise use cases using AI and BTP, for integrating applications in the enterprise IT landscape using cloud, to build tools and accelerators on BTP that help manage applications for clients and to use it as a platform that enables digital core and clean core approach for SAP S/4HANA transformation.

The utilization of SAP Business AI and BTP remains exploratory among diverse stakeholders within the SAP market. Enterprises have yet to fully grasp the advantages of combining BTP and AI. Typically, BTP deployment occurs alongside initiatives such as RISE or as part of the digital journey toward SAP S/4HANA transformation, particularly in greenfield transformation scenarios. Service providers have taken the lead in experimenting with SAP BTP, crafting numerous enterprise use cases to deploy applications for their clientele. Over the years, these providers have collaborated closely with SAP to develop applications on BTP, resulting in many apps featured on the SAP Store. Recognizing the immense potential in this domain, SAP has designated BTP as a distinct business unit and appointed dedicated leadership roles to propel its growth. SAP positions BTP as the cornerstone for organizations seeking to dismantle departmental silos and embrace dynamic, cross-functional business processes aimed at delivering exceptional experiences to stakeholders. This strategic focus underscores SAP’s commitment to leveraging BTP as a catalyst for organizational transformation and innovation.

Service providers are actively assisting their clients in harnessing the potential of AI and BTP either to develop novel cloud solutions or to extend the existing SAP offerings. These providers are investing significantly in integrating BTP-based solutions with GenAI capabilities. They are spearheading the
development of a GenAI platform that offers a pragmatic and secure avenue for businesses to fully capitalize on the advantages of GenAI. The objective is to utilize this platform to create an array of BTP-focused automation use cases. Numerous use cases leveraging BTP have emerged recently across various industries,
including manufacturing, retail, energy and utilities. Service providers have curated over 100 business use cases through relentless motivation, empowered by cutting-edge technology and AI. These predefined solutions are readily available, sparing businesses the need to embark on implementations from scratch, provided their specific business requirements align with the functionalities offered, tailored by industry and line of business (LOB).

SAP BTP combined with Business AI represents a transformative paradigm shift in the correlation between work methodologies and desired outcomes across various facets, including organizational dynamics, software delivery and operational efficacy. This innovative approach offers many benefits, promising accelerated project delivery with potential reductions in delivery times by up to 33 percent. Organizations can expect an overall decrease in lead time through constant release cycles, swifter implementation of changes and minimized downtimes, thereby enhancing operational agility. The platform also facilitates timesaving
upgrades, a notable 25 to 30 percent reduction in upgrade duration, which scales with complexity. SAP BTP enables faster software deployment and easier adoption of both SAP software innovations and regulatory
changes to software. The providers are offering new ways to address business needs while avoiding excess technical debt, preparing organizations to maximize strategic benefits and limit the transformation cost. SAP BTP has the potential to unlock business values, supporting the business in being more agile and able to adapt to external factors. The providers also aim to increase the productivity index through AI-powered developer tools.

With numerous use cases and as a pivot for the clean core approach of SAP S/4HANA transformation, adopting SAP BTP and AI is expected to increase multifold. The providers play an important role in educating their clients about the benefits of this segment and embedding it in their digital journey.

Cloud Economics and FinOps for SAP:

With the rise of digital transformation, the adoption of cloud has tremendously increased. This surge encompasses the development of applications on cloud, migration of existing applications to cloud environments and utilizing cloud as a definitive medium to execute digital initiatives. However, just cloud
adoption does not guarantee a successful digital transformation. Achieving successful cloud adoption requires meticulous planning and the creation of an optimal technology architecture that positions cloud as a foundational infrastructure component. Another crucial driver for cloud adoption is cost optimization.

It is imperative that any application being transitioned to cloud undergoes rationalization or transformation to ensure optimal functionality in the cloud environment, while also justifying the cost of infrastructure.
When it comes to SAP applications, due to their complexity, adopting cloud as the infrastructure is not a straightforward approach for enterprises. The expenditure and economic considerations involved in migrating SAP applications to cloud can adversely impact business outcomes if not executed properly. Hence, the domain of cloud economics and FinOps has gained traction and become a significant area of interest for enterprises.

Cloud economics refers to the financial principles and factors associated with the use of cloud computing services. This includes understanding the costs, benefits and tradeoffs involved in migrating, operating and
optimizing workloads on cloud. On the other hand, FinOps is a set of practices that helps businesses optimize their cloud investments by anticipating and controlling their cloud spending. It empowers enterprises to make
informed decisions regarding resource allocation, identify cost-saving opportunities and ensure that cloud usage aligns with overarching business goals.

RISE with SAP has empowered businesses to embrace cloud solutions for their SAP applications, leading to the growing adoption of cloud services among enterprises. While the advantages of cloud are evident, there are also associated costs involved in migrating workloads and managing cloud expenses for SAP operations. To reduce these costs, enterprises often collaborate with service providers to oversee cloud deployments and
governance expenses. This report delves into the role of service providers that assist clients in navigating cloud economics and implementing FinOps strategies to optimize costs. These providers offer valuable insights into potential expenditures and opportunities for savings within enterprises’ cloud environments hosting SAP workloads.

In FinOps for SAP, attention to detail is important across several key areas. Firstly, establishing cost visibility is foundational; organizations must employ cloud cost management tools and services to comprehensively track and comprehend the expenditure associated with running SAP systems on cloud. Next, cost allocation is
imperative, given the intricate nature of SAP environments. Accurately assigning costs to various business units or departments facilitates chargeback and showback processes, fostering awareness among stakeholders regarding the costs incurred. Furthermore, budgeting and forecasting play a pivotal role,
enabling organizations to proactively plan and allocate resources for SAP on cloud, thus averting unexpected cost overruns.

The FinOps approach highlights cost optimization by identifying and capitalizing on cost-saving opportunities, such as rightsizing SAP instances, utilizing reserved instances for long-term savings or incorporating spot
instances when feasible. Real-time cost monitoring and alerts are indispensable, as they allow for the swift identification and resolution of any cost anomalies or unexpected spikes. Tagging and metadata management are equally vital, ensuring accurate cost allocation and tracking by associating resources with specific projects or teams. Cloud vendor negotiations present opportunities for organizations to further optimize costs by leveraging the resource-intensive nature of SAP workloads to negotiate better pricing or discounts with their
cloud service providers, with FinOps teams playing a pivotal role in these negotiations.

Regular cost reporting and accountability mechanisms sustain transparency and responsibility within an organization, ensuring that stakeholders are aware of their costs and accountable for managing them effectively. Lastly, the integration of automation and optimization tools tailored to SAP facilitates the automation of cost-saving measures and ensures the efficient operation of SAP instances, thereby maximizing cost efficiency in SAP cloud operations.

Cloud economics and FinOps follow the industry guidelines for optimizing cloud infrastructure. Enterprises mostly rely on the service providers to help them assess and manage SAP workloads on cloud. The cloud
and SAP teams of these service providers collaborate to ensure optimal workload performance in the cloud environment. Providers positioned in this quadrant have the capabilities to assess the landscape, guide enterprises on their cloud journey and manage SAP workloads on cloud to achieve optimal operations. They also handle the complexities of SAP applications on cloud; employ tools to monitor, assess and respond
(Inform-Optimize-Operate stages of FinOps); invest in R&D; maintain robust governance processes; and continuously monitor KPIs.

In response to the specific requirements of niche enterprises, service providers are building propositions and frameworks tailored to the cloud economics and FinOps aspects of SAP landscapes. Providers are building predictive usage models to help clients define FinOps best practices, which are integrated into their global cloud strategy and embedded within application design guidelines for each target cloud environment. Some of these best practices are published by the FinOps Foundation, and providers liaise with global design authorities in this regard. Additionally, some providers are establishing FinOps-as-a-service offerings to facilitate the implementation of continuous cloud cost optimization services.

With the increasing adoption of RISE with SAP, it has become increasingly important for providers to focus on and develop capabilities in cloud economics and FinOps. Some of the leading service providers have built platforms with the core principle of extensibility, ensuring unparalleled customization flexibility to meet the unique needs of each customer. These service providers have developed a comprehensive ecosystem comprising certified FinOps practitioners, a robust consulting practice specializing in the cost optimization
process, and continuous enhancement of platform capabilities based on customer feedback and  requirements. With seamless integration across multiple public clouds, including AWS, Azure and Google Cloud, this ecosystem offers unparalleled versatility. Whether opting for SaaS or on-premise solutions, clients benefit from the flexibility of deployment tailored to their preferences. Centralizing service management visibility helps clients view their applications in a single pane of glass, streamlining operations and enhancing efficiency. With the increasing adoption of cloud technology within the SAP environment and beyond, this segment is expected to gain significant traction in the coming years.

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