Some German Enterprises Are Remaining Cloud Cautious

With time running out on support for its ERP Central Component (ECC), Germany-based SAP has concentrated on the “cloudification” of its offerings, yet not all German enterprises are in a hurry to follow the company’s lead, 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 Germany finds the general trend toward cloud migration will continue, even if German enterprises are more cautious than companies in other markets. The approaching end of ECC support in 2027 has not yet resulted in the expected surge in transformation business, with many German customers adopting a wait-and-watch approach, the ISG report says.

“When that surge finally does come, providers will be ready,” said Dr. Matthias Paletta, director, technology modernization, for ISG in Germany. “Those equipped with effective methods and tools for quick and low-risk transformations will be poised for success.”

In the meantime, some German enterprises are still grappling with outdated legacy systems, fragmented IT landscapes, security concerns, and the challenge of maintaining quality standards across their IT landscapes, the ISG report says. This can lead to inefficiencies, increased risk of defects, high operational costs and longer time-to-market, the report says.

The reluctance to quickly adopt cloud solutions has been the most conspicuous among small and medium-sized enterprises in Germany, the ISG report says. Yet providers have demonstrated readiness for the inevitable transformation on multiple fronts. They have been diligent in addressing possible gaps in their consulting offerings, resulting in a convergence of leading providers’ service portfolios, the report says. These providers are positioning themselves as one-stop shops, capable of handling all aspects of a transformation project, ISG says.

Midmarket enterprises are seeking partners that can guide them in their end-to-end SAP S/4HANA transformation journey, the ISG report says. They are focused on cost savings and improved efficiency through streamlined processes and enhanced functionalities, the report says. However, these same companies often require industry-specific transformation solutions, a preference that typically increases time-to-market, ISG says.