ISG Provider Lens™ SAP Ecosystem - SAP SuccessFactors HXM Partner Services - U.S. 2025

Clients in the U.S. prefer a more phased and controlled approach for transforming to SAP S/4HANA

The 2025 SAP Ecosystem study for the U.S. observes that enterprise clients, like the previous year, continue to have a cautious and risk-averse approach to planning their migration from ECC 6.0 to SAP S/4HANA cloud. External factors such as economic headwinds and tariff conflict and technical factors such as limited reference business use cases, uncertain ROI, legacy systems to support technology such as generative AI (GenAI), longer implementation duration and data migration challenges have made the transition to SAP S/4HANA even more complex. Enterprises in the U.S. are reassessing their strategies for transformation to SAP S/4HANA. They are increasingly focused on an approach that guarantees minimal business disruption and cost-effective solutions. These enterprises are seeking service partners that can offer strong consulting capabilities for a seamless transformation road map. Clients in the U.S. want to assess the risks and implications of accepting SAP’s subscription terms and the future expansion of their ERP systems, leading to an increase in demand for robust risk management and change management tools and solutions.

Large clients in the U.S. continue using a cautionary approach for transitioning to SAP S/4HANA, often delaying transformation decisions to better understand the licensing implications and waiting to observe peer negotiations. Although SAP S/4HANA has been on the market for a decade now, many large enterprises are still struggling to make the transition, as projects are complex, consume a long time and usually incur heavy investments. In recent years, numerous SAP customers have queried about the added business value of such an ERP migration and have not found a satisfactory answer, as many projects are still stalled or have not yet commenced. The overall growth of clients  opting for SAP S/4HANA licensing has been moderate and not very encouraging for SAP. Consequently, SAP has extended ECC 6.0 mainstream maintenance services till December 2030. This moderate conversion is reflected in the performance of SAP partners, with SAP-certified hiring growth in single digits and their revenues and client growth rate being slightly low compared to last year. To address these challenges, leading SAP partners use real-time  analytics and GenAI to support and influence their clients’ decisionmaking processes, thereby propelling the adoption of SAP S/4HANA. These technologies provide valuable insights and evidence needed to demonstrate the strategic advantages and operational improvements enabled by the transformation. SAP partners are creating a comprehensive and compelling business case that clearly outlines the benefits, efficiencies and ROIs of migrating to SAP S/4HANA. They are using GenAI to provide predictive analytics, automate data analysis and offer personalized recommendations.

Providers’ innovation and go-to-market strategies have demonstrated an increased focus and dedicated investments toward enhancing their consulting capabilities. They are also focused on offering comprehensive consulting-led services, including robust assessment, readiness gap analysis, risk management, change management and business use cases. Service providers continue to concentrate on enhancing their industryspecific solutions with preconfigured process workflow best practices, automating data migration, offering value-added services such as sustainability, tailoring solutions, and integrating advance AI, GenAI and RPA to achieve quick time to market.

Many leaders are leveraging GenAI to enhance their SAP offerings by integrating advanced AI capabilities into SAP services, improving automation, decision-making and UX. Additionally, providers emphasize collaboration with key SAP partners and other AI technology providers to drive innovation and create tailored solutions for clients. The use of GenAI for code generation and optimization, automated test script generation, predictive analytics and process  automation has witnessed improved traction compared to last year. Furthermore, providers are focusing on building a robust strategy to prioritize relevant use cases, ensure security and compliance, and continuously monitor and optimize AI models within their SAP services. ISG observes that SAP S/4HANA transformation frameworks are designed to complement the SAP Activate methodology, aiming to deliver successful end-to-end transformations  leveraging SAP S/4HANA. Providers emphasize the use of proprietary methodologies to ensure efficient project delivery, standard methods, templates, and Agile or hybrid methodologies. These frameworks focus on business  outcomes, agility, and leveraging industry-specific models and best practices. Continuous updates and alignment with SAP methodologies are maintained, ensuring best practices and innovative approaches through regular updates and integration of advanced technologies such as AI and process automation.

The SAP S/4HANA transformation initiatives grew moderately again this year, increasing by 10 – 12 percent, similar to what ISG observed during last year’s assessment. Over 4,500 projects were reported by providers, of which greenfield
continues to dominate. This year, the bluefield approach grew by more than 100 percent, accounting for over 20 percent of projects, whereas the brownfield approach grew by more than 25 percent, accounting for over 35 percent
of projects. Although the greenfield approach has been a leading approach for clients when migrating to SAP  S/4HANA, it has declined significantly, accounting for approximately 45 percent of projects, compared to 60 percent
last year. In the U.S. SAP S/4HANA market, the brownfield approach exhibits robust growth owing to its lower risk factor, cost-effectiveness and minimal disruption. Heavily regulated and established industries such as  pharmaceuticals, utilities and manufacturing are prime candidates for this approach. The bluefield approach is emerging as a versatile option that balances transformation with continuity. Industries such as finance,  telecommunications and consulting services requiring gradual and hybrid transformation strategies are adopting this approach. Overall, the growth and adoption of these transformation approaches are driven by organizational  objectives, industry-specific needs, and the balance between innovation and operational continuity. Enterprises are evaluating their strategic priorities to select the most suitable path for their SAP S/4HANA journey.

Listed below are the top trends identified during this year’s assessment:

Automation and cost management: Leading providers are responding to increasing cost pressures by  implementing numerous innovations in automation. These innovations include using code or data analysis to simplify transformation steps and operations, thereby improving margins and minimizing implementation and migration times.

Tool-based assessment and risk management: Customers now support transformation strategies with comprehensive, tool-supported assessment services and readiness checks, emphasizing industry expertise and  indepth process knowledge. Providers offer prefabricated best practice templates with industry-specific add-on  solutions to significantly reduce implementation risks.

Strong emphasis on innovative and consulting-led solutions: Providers are increasingly focusing on innovative
solutions, particularly leveraging AI, ML and RPA capabilities. They are evolving from traditional service management to continuously integrating innovation, prototype development and deployment. Providers are now even more focused on offering consultingled services, which include assessment, readiness checks, risk management, change management and design-thinking. These services provide extra client support to build confidence.

Focus on industry-specific solutions and data migration tools: Two of the most pressing challenges clients face with transitioning to S/4HANA are longer implementation duration and data migration. SAP partners have increased their investments and efforts in building industry-specific solutions that seamlessly address industry requirements and
challenges with best practices and ready-to-deploy templates, significantly reducing overall implementation duration. Partners are collaborating with SAP to build data migration tools integrated with AI and analytics. These tools offer data-driven insights to determine which data sets or processes are ready and logical to move to SAP S/4HANA, significantly reducing the risk of operation disruption.

Listed below are the top challenges identified during this year’s assessment:

Data migration and integration: Transferring data from SAP ECC 6.0 to SAP S/4HANA Cloud involves complex migration activities, including data extraction, transformation and loading. Ensuring data accuracy and integrity is  vital. Enterprises must ensure that data is clean, consistent, and free from redundancies and errors before migration. Legacy systems and third-party applications need to be compatible with SAP S/4HANA Cloud. Seamless integration
and communication between these systems and the new cloud platform can be challenging.

Change management and user training: Employees accustomed to SAP ECC 6.0 may face a steep learning curve with the new user interface and functionalities of SAP S/4HANA Cloud. Comprehensive training programs are required to equip staff with the necessary skills and knowledge to perform their roles effectively in the new system. Managing resistance to change is a critical aspect of the transition. Effective communication, training and support mechanisms are essential to foster a positive attitude and smooth transition.

Customization and standardization: Enterprises often have customized processes and functionalities in SAP ECC 6.0 that need to be adapted to the new SAP S/4HANA environment. Ensuring these customizations remain effective in cloud-based systems can be challenging. Overcustomization can lead to increased complexity and maintenance issues; thus, a balance needs to be maintained between customization and standardization. Adapting existing  business processes to align with these best practices may require significant workflow changes.

Similar to the previous year, Accenture, Capgemini and Infosys are among the key players dominating the SAP ecosystem in the U.S., with IBM showcasing promising growth and innovative solutions. Deloitte, Wipro, HCLTech and LTIMindtree have reported a substantial increase in revenue, clients and full-time employees (FTE). They have adopted robust customer-centric approaches, encouraging them to challenge the top three providers in the next 12 –18 months. They continue to adopt innovationfocused approaches to enhance their service capabilities. Other providers, notably Cognizant, Tech Mahindra, EY and TCS, are working toward further strengthening their leadership positions.

According to ISG analysis and in-depth interviews with service providers, providers’ SAP FTE count in 2025 has increased by 8 – 12 percent compared to last year. Certified SAP consultants now account for approximately 35 percent of the total SAP FTEs, similar to the previous year, leading to a strong need for providers to employ more  experienced SAPcertified professionals. Client growth has been moderate this year, with a growth rate between 10 and 12 percent. In transformation services for large accounts, leading providers, on an average, secured between 8 and 10 new deals, whereas midmarket providers won between 12 and 15 new deals.

To conclude, service providers are approaching the market by reducing overall implementation duration to achieve quick ROI, building robust consulting capabilities, differentiating through value-added services, and focusing on automation and GenAI for rapid implementation and better margins. This focused approach to client proximity and delivering better business outcomes is expected to continue with the increased adoption of the outcome-based pricing model.

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