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Belt-Tightening Slows U.S. Adoption of SAP S/4HANA

Firms become more careful about transformation projects due to economic worries, need for ROI, ISG Provider Lens™ report says

Many SAP customers in the U.S. continue to pursue SAP S/4HANA transformation, but at a more deliberate pace amid current macroeconomic conditions, 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 the U.S. finds that S/4HANA transformation initiatives grew by between 10 percent and 12 percent in 2023, down slightly from earlier forecasts. Uncertain macroeconomic conditions have caused organizations to reassess such transformations, carefully evaluating subscription terms as they focus more sharply on IT return on investment.

“A wait-and-watch approach by many companies has slowed adoption of S/4HANA, despite its potential benefits,” said Bill Huber, ISG partner, Digital Platforms and Solutions. “Enterprises face long implementation times, uncertain ROI, and often complex negotiations.”

A majority of S/4HANA projects in the U.S. are greenfield initiatives, but there was an exponential growth in so-called bluefield implementations, in which organizations create a new S/4HANA instance and selectively migrate processes and data over time, the report says. This approach is most popular among large enterprises, where it has delivered greater business value. RISE with SAP, the company’s managed cloud offering for SAP ERP migration, is most popular among midmarket organizations.

The average S/4HANA implementation time, though still several months long, decreased by four to five weeks in 2023, thanks to the increasing use of industry-specific solutions and automation tools by service providers, which increase productivity, ISG says.

Manufacturing, healthcare, pharmaceutical and consumer packaged goods companies continued to lead in adoption of S/4HANA, motivated by the need to streamline production, optimize processes and improve customer experience through digital transformation of functions such as sales and customer service, the report says. Many financial services, retail, telecommunications and public-sector organizations remained skeptical of the benefits of the platform.

As enterprises sought SAP outsourcing experts to help them overcome the challenges of migration to S/4HANA, managed cloud services grew in popularity for the second year in a row, ISG says. Services and solutions around SAP SuccessFactors, including employee experience management and payroll transformation services, are also gaining momentum.

“Many organizations need to modernize HR functions as work modes change, and providers can help them do this in a unified way,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research.

The report also explores other trends affecting the SAP ecosystem in the U.S., including rising provider investment in AI and generative AI (GenAI) and the growing importance of partnerships between service providers and hyperscale cloud companies.

For more insights into SAP-related challenges facing U.S. enterprises, including shifting economic conditions and pressure to quickly implement AI, along with advice for addressing those issues, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ SAP Ecosystem report for the U.S. evaluates the capabilities of 46 providers across five quadrants: SAP S/4HANA System Transformation — Large Accounts, SAP S/4HANA System Transformation — Midmarket, SAP Applications Managed Services, Managed Cloud Services for SAP ERP and SAP SuccessFactors HXM Partner Services

The report names Accenture, Capgemini, Infosys and Wipro as Leaders in four quadrants each. It names Cognizant, Deloitte, HCLTech, IBM and TCS as Leaders in three quadrants each and EY as a Leader in two quadrants. Birlasoft, Eviden (an Atos Business), Hexaware, Kyndryl, LTIMindtree, Navisite, NTT DATA and Tech Mahindra are named as Leaders in one quadrant each.

In addition, Hexware and Kyndryl are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrant each. Alight, Hitachi Digital Services, Syntax, Tech Mahindra and UST are named as Rising Stars in one quadrant each.

Customized versions of the report are available from Hexaware and KaarTech.

In the area of customer experience, Infosys is named the global ISG CX Star Performer for 2024 among SAP ecosystem providers. Infosys9 earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, which is part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

The 2024 ISG Provider Lens™ SAP Ecosystem report for the U.S. is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit


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