Enterprise mindsets are evolving. Many organisations are shifting away from technology investments that simply improve IT operations and efficiency. Instead, they are focusing their technology investment strategies on generating business value, such as increased speed to market for products and services, enhanced customer intimacy, improved lead generation and qualification, and increased sales conversions and revenues. An enterprise’s capacity to achieve business value often centres on its core ability to quickly shift business priorities amidst changing economic and political environments and to innovate. To power innovation and prepare for future business success, enterprises will need data and analytics that better inform decision making. Organisations that can tap into the right data at the right time and derive key insights from that data will be empowered to drive business success.
Yet accomplishing business priorities focused on improving operational efficiency, enhancing customer satisfaction, and boosting business sustainability have become more challenging for many enterprises due to antiquated applications and systems environments that are inflexible and lack functionality to generate real-time analytics and insights. As a result, enterprises are migrating and modernising key applications to the cloud with the intent to boost productivity and security, as well as increase organisational flexibility, agility, and resiliency.
Priorities for Application Migration and Modernisation Are Rising
The current state of the global economy is forcing enterprises to grapple with how to manage inflationary pressures against predefined IT budgets. At the same time, they also must manage predetermined digital transformation initiatives. Along these lines, application modernisation and migration have emerged as key tactics for building better business resiliency and operational efficiency to help organisations circumvent unstable economic challenges. In fact, application modernisation is rated as a high or top priority for nearly 60% of enterprises today; in the next 24 to 36 months, modernisation will be a high or top priority for nearly two thirds of enterprises (IDC’s Application Services Survey, Q4 2021). Through application migration and modernisation, enterprises aim to better position themselves to accomplish higher levels of business performance, as well as more deftly adapt to changing conditions to seize opportunities during times of economic duress.
Figure 1: Priority of Application Modernisation
Q: Using the following scale, please rate how much of a strategic priority application modernisation is at your company, both today and in the next three years.
SAP Modernisation and Migration Can Yield Business Benefits, If Done Right
As enterprises have elevated their priority for application modernisation, IDC has found that many of those relying upon SAP to run their businesses are thinking about migrating and modernising their SAP estates to the cloud. Not long ago, IDC interviewed five organisations that successfully migrated and modernised their SAP estates to the cloud. They told us that their SAP migration and modernisation initiatives led to improved business results, and they also shared that their SAP transformation initiatives unearthed some lessons learned. When asked about what types of business results enterprises were able to harness from their SAP modernisation, organisations offered the following explanations:
- “Benefits are localised and centred around efficiencies in operations.”
- “[We’re] saving engineering time for custom products for customers.”
- “[We’ve] enhanced supply chain capabilities, almost like a straight-through processing capability.”
- “Our paperwork exercises have become much more streamlined.”
- “Month-end processes have gotten smoother.”
- “We’ve experienced faster month-end closing for financial reporting, and enhanced productivity gains against those processes.”
- “No impact for system failure…previously had impacts in monthly closings with older, on-premises, and hosted systems.”
While these enterprises were able to harness benefits from their SAP modernisation initiatives, they also encountered challenges along the way. Despite the hiccups they encountered through their modernisation initiatives, these organisations were able to overcome the obstacles they met. They offered the following advice about modernising and migrating their SAP applications to the cloud:
- “Manage business expectations and communicate consistently and frequently.”
- “Establish windows of downtimes to mitigate risk.”
- “Set up a follow-the-sun support model.”
- “Designate a single point of ownership for each functional area and make those roles visible.”
- “Get commitment from business resources, especially during testing phases and iterations.”
- “Establish early engagement from business partners.”
- “Start small and build incrementally via pilots versus taking a large, big bang transformation and cutover initiative.”
- “Ensure resources leading the initiative are full time and solely dedicated to the modernisation exercise.”
- “Testing plays an important role. [Organisations] must test new systems in all scenarios. Testing time cannot be shortchanged.”