DSAG 2023 Report: Fiscal Growth and Industry Critics Part 1

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IT and SAP budgets in Germany, Austria and Switzerland (DACH) will continue to increase this year, this is one of the main conclusions of the 2023 investment report published by the German-speaking SAP User Group (DSAG) . S/4 Hana will also gain in relevance for enterprises, but SAP’s Business Suite remains the preferred solution. To read the second part of this two-part report, click here.

Compared to 2022, IT budgets for most companies surveyed are up 54%, only 26% are unchanged and 15% are actually shrinking. 52% of companies’ SAP budget increased, 31% stayed the same, and 15% decreased.

“The upward trend in IT budgets and budgets for SAP solutions, which had already started last year, continues at approximately the same level. This demonstrates the companies’ confidence that crisis situations will be well under control,” summarizes DSAG President Jens Hungershausen and adds: “In addition, some established SAP solutions will soon be coming out of maintenance and the business projects are well completed. a budget is necessary. as a result.”

S/4 Hana and transformation projects take time

Another question revolves around digital transformation and the progress companies are making with it. This question was not asked last year, so the comparison was made with 2021 figures. 5% of companies said they were very advanced in their digital transformation (2021: 2%), 39% described themselves also advanced, the same value as in 2021. 52% do not consider themselves very far, an increase of two percentage points compared to the report two years ago.

“This indicates that companies have set other priorities during the pandemic and may have initially postponed planned digitization projects due to existing uncertainties,” says Jens Hungershausen.

When asked about the SAP ERP solutions used, Enterprise Resource Planning or Business Suite is still clearly in the lead with 79% (2022: 75%), ahead of S/4 Hana On-Premise with 41% (2022: 32%). . This is followed by S/4 Hana Private Cloud with 8% (2022: 6%) and S/4 Hana Public Cloud with 3% (2022: 2%).

“The following applies to S/4 Hana projects in particular and to transformation projects in general: depending on the complexity, migration projects can take several years. True transformation requires new technologies to be evaluated and introduced, and processes to be redesigned,” says Jens Hungershausen.

Additionally, migration projects often involve replacing old code or existing processes and cleaning up master data. The DSAG believes that SAP has a duty to empower its partners to provide adequate support for migration projects.

The end of maintenance pushes the switch to S/4 Hana

Business Suite is relevant for SAP investments in 2023 at 6% (2022: 6%) for high investments and 22% (2022: 18%) for medium investments. In S/4 Hana, 28% (2022: 26%) of companies plan high investments and 38% (2022: 24%) medium investments. The willingness of DSAG member companies to invest is not surprising. After all, companies will have to move from their old ERP system to S/4 Hana by 2027 or 2030 at the latest. After that, old systems will no longer be maintained.

2027 still sounds a long way off. Nevertheless, the effort involved in such a migration should not be underestimated. Companies need strong partners with sufficient resources at their side, says Jens Hungershausen.

The necessary availability of partners for the short time until 2027 will be an additional external challenge for the success of the project. Companies are therefore called upon to act quickly.

Construction as a central element of the SAP strategy

When it comes to SAP cloud solutions, 24% of companies say they will make large and medium investments in SAP Business Technology Platform (BTP). In this case, investing means increasing spending on cloud solutions, including subscriptions. SuccessFactors ranks second in the SAP cloud solutions ranking, with high and medium investments from 17% of respondents. Customer experience takes third place with 9%.

SAP positions construction as a central element of its strategy. In this context, it is understandable that survey participants are considering this SAP cloud solution, says Jens Hungershausen.

From a DSAG perspective, the fact that the first migration services are now being developed to support the conversion of existing integration architectures to BTPs Integration Suite is positive. However, the costs of development, quality assurance and use of services without a productive reference are too high, as are the general operating costs. The DSAG is in discussion with SAP on this subject.

This report has been split into two parts. To read part two, click here.

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