Insights

The chasm is only as wide as you want it to be

The author, Geoffrey Moore, coined the term “crossing the chasm” in his book on disruptive technology marketing as a reference to solution providers trying to drive buyer adoption beyond early markets.  The journey is characterized by crossing a metaphorical “chasm” representing the disconnect between the early adopters and buyers in the mainstream market.

Moore’s chasm also applies to SAP’s S/4HANA, an innovative technology that still has not achieved mainstream acceptance despite the hype.  Our conversations with Gartner analysts and customers confirm S/4HANA adoption at barely 15% – the precipice of the chasm.  This comes despite the product being in market for four years and backed by SAP’s marketing machine.  Perhaps more importantly, only 50% of customers are capable of running S/4HANA today because they’re on older R3 4.x versions.  Most of these companies are in the industrial manufacturing sector.

Source: Geoffrey Moore, “Crossing the Chasm”

So why is S/4HANA adoption taking so long?  The benefits delivered through the SAP S/HANA are significant. Business owners get insights from real time data. Technology teams get a cost effective, high performance, cloud ready platform that supports innovation.  But despite the game changing potential for S/4HANA, there’s still a lot of status quo inertia to overcome:

• For many organizations, the company’s own SAP deployment becomes a world view of SAP. Experienced technical staffs have invested thousands of hours customizing and maintaining their SAP infrastructure just to keep the lights on.  S/4HANA may not be well understood.
• The current SAP infrastructure still works, even if it’s an older version no longer supported by SAP. This is easy to understand. My own mother uses an early NOKIA feature phone that’s more than 10 years old.  She can still text, slowly. She can surf the web too… but very slowly. The point is her phone works, it meets her needs, she’s happy with it and she has no reason to change.
• Most organizations have a limited appetite for time consuming and costly digital transformation initiatives, despite the promise of long term benefits. Resources, budget and time are scarce and the business case for justifying a major change may be undercut in pursuit of other projects with more immediate payback.
• Not having a partner to provide necessary skills, along with industry insights and technology chops can be a significant barrier. Collaboration with the right partner provides value in developing a roadmap that considers cloud, security, the state of data and future demands of the business.

Now is the time to overtake inertia and rethink migration to S/4HANA.  CIOs are under increased pressure to run lean in uncertain economic times, but digital transformation is accelerating.  According to PWC, 78% of industrial manufacturers have begun their digital transformation journey.  Remaining manufacturers who are just getting started need to make a real commitment or risk falling further behind.

Organizations need to determine the best migration path to S/4HANA. The best alternative will put their company on a path towards digital transformation at a sustainable rate and pace, delivering the right balance of immediate benefits and transformational change.  For many manufacturers still running R3 4.x, taking the first step with a technical upgrade to SAP Business Suite ECC 6.0 on HANA (SoH) is an attractive option. A technical upgrade provides immediate benefits prior to the second step of migrating to S/4HANA with full capabilities.

Once the organization has transitioned to a supported version of SAP, there may also be an opportunity to get out from under the more expensive 3^rd party support contracts. However, those companies that have pocketed the AMS support expense by taking a DIY approach will have to make the call on support for SOH.

Companies get some valuable breathing room to plan for the final migration to S/4HANA once the technical upgrade to SoH is complete.  Gaining time to plan this future roll-out while still getting the benefits of the technical upgrade may be the best reason of all for the two-step migration to S/4HANA.

The overall takeaway is that the “chasm” companies face in adopting S/4HANA is only as wide as companies want to make it.  The two-step migration approach with a technical upgrade to Suite on HANA with future migration to S/4HANA provides immediate and valuable benefits to the business while deferring much of the pain associated with big transformational projects.