In the UK, ISG’s research found that the majority of service providers have been able to support their clients during the coronavirus pandemic by enforcing business continuity plans and finding ways to deliver essential services. But ISG said there was minimal or negative growth in the UK for SAP S/4 Hana, specifically among large accounts. It predicted that more organisations will be looking to implement S/4 Hana Cloud.
Given that cost reduction will be a primary enterprise focus, ISG said it expected the service providers that offer competitive pricing (at less cost) or an innovative pricing model (such as consumption-based) will have an extra edge over their competitors. According to the ISG report, managed services will increase for SAP applications because the client enterprises will want to optimise their cost model and service delivery efficiency for managing their SAP architecture.
Negotiate outcome-based pricing
In the report, ISG predicted that as enterprises navigate through the uncertainty of the pandemic and brace for alignment across regulations defined for Brexit completion, they will demand different types of outcome-based pricing and services from their service providers. Some of the pricing models explored are consumption-based, gain-sharing, risk-sharing and shared fixed reward, where a fixed fee amount is decided by both the provider and the client. Any delay in execution results in a reduced fee, while any increase in execution cost will add to it.
According to ISG, service providers will continue to focus on meeting their employees’ remote working needs to ensure business continuity, which will mean the use of data analytics for faster and efficient decision-making.
Improve productivity with service provider AI
Assessing the SAP S/4 Hana service providers’ market, ISG found that service providers were relying on tools that use bots, automation, artificial intelligence (AI) and machine learning (ML) to deliver application management services. These bots are generally used for managing repetitive tasks and repeatable business processes, as well as fixing the more straightforward user support queries.
ISG found that the AI and ML deployed by SAP service providers was being used to resolve tickets automatically, learn from tasks in the IT landscape, predict application failures and perform fixes as required. The report’s authors found that most providers have holistic application management frameworks that enable better productivity, throughput, quality and reliability.
Wait for improved integration
SAP has recognised that customers will face challenges and costs when they upgrade to S/4 Hana. It has set out a roadmap to simplify integration, in a bid to lower the transition cost of moving from ECC to the S/4 platform.