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The Three-Headed Challenge of SAP ERP Cloud Migration Services

 

As we have previously written, cloud services overall are poised to be the fastest growing area of IT services in 2021. The changing nature of cloud adoption, from non-production and non-critical applications to core business applications means that SAP environments will be no exception.

In our recently published SAP Cloud Migration Services market analysis, NelsonHall estimates demand for these services will grow by 12% in 2021, compared to 5% growth for SAP services overall. This growth is driven by the need for tangible cost reductions in an uncertain economic environment as well as a goal of modernizing IT landscapes to position for the expanded adoption of new and emerging technologies.

The adoption of S/4HANA to date has been restrained in part due to business case challenges for migrating from legacy landscapes. Migrating to the cloud helps address this, as the pivot from on-premise managed infrastructure to the cloud reduces IT operating costs and allows for adjusting cloud sizing as requirements change. And IT service vendors and cloud vendors are building capabilities and offerings to reduce the migration cost itself.

But migrating enterprise core SAP systems to cloud environments presents a three-headed challenge in the form of coordination between the three different service providers involved: the ISV (SAP), the hyperscaler cloud provider, and the systems integrator responsible for executing the migration and overlaying both business process and functional extensions. Collaborative relationships between the providers and coordination in service delivery are a necessity.

We recently spoke with Infosys and Microsoft to understand where they have invested to build complementary capabilities and how they integrate them to gain insights into how these challenges are addressed in supporting client SAP migrations to Microsoft Azure.

Investing in foundational SAP cloud migration capabilities

Microsoft’s investments in supporting SAP migration to Azure include project Embrace, launched in 2019, and a suite of tools and assets it has developed. Infosys, one of SAP’s Global Strategic Service Partners, looks to act as a bridge to facilitate the migration of legacy SAP workloads to Azure and add incremental capabilities on top of the foundational ERP system.

In 2020, Infosys introduced Infosys Cobalt to enable its clients’ cloud journeys. Infosys Cobalt offers ~14k cloud assets and ~200 industry cloud solution blueprints. Within Infosys Cobalt there are methodologies, solutions, tools, templates and accelerators to facilitate the migration of client workloads to cloud environments. Its SAP practice is working within this corporate initiative on a portfolio focusing on client SAP workloads. While migrating a full client application landscape to the cloud is broader than an ERP alone, Infosys estimates that of clients that have SAP environments, 90% of cloud migrations involve some element of their ERP as the core of a broader digital transformation.

Infosys and Microsoft have developed joint go-to-market plans aligned to client business objectives such as reducing cost through cloud adoption versus expanded capabilities through digital transformation.

Building complementary capabilities to support a variety of client journeys

Infosys has worked with Azure to refine its Safe Passage SAP migration approach to be applicable for migrating SAP to Azure environments, regardless of path chosen: migrating legacy ERP to Azure, converting the database or OS, or transforming from a legacy system to S/4HANA. Within Safe Passage to Azure, Infosys has four key assessment offerings, the first two offered free of charge, delivered with Microsoft Azure team support:

  • Lift & Shift Starter Kit: this assessment allows clients to understand how their existing system would operate in Azure without any major database or application changes
  • Landscape Conversion: leverages its S/4Assist asset to aid a client in understanding the value, effort and risks required to convert to S/4HANA
  • Business Value Assessment: based on adoption of Infosys’ pre-configured industry-tailored solution housed in Azure, Infosys Catalyst, this illustrates for the client’s business units the value that could be realized through migration
  • SAP on Cloud with Innov8 solution: migrating or converting the client’s ERP landscape on cloud and implementing Infosys’ ‘above the cloud’ solutions developed using AI/ML, IoT and blockchain technologies to apply intelligence to the business operations.

These offerings are supported by a mix of complementary Infosys and Azure assets. For example, while Azure offers assets to facilitate data migration and provisioning for new environments, Infosys has developed S/4Assist to assess legacy landscapes to understand the fit-gap to S/4HANA on Azure and CMO, which provides identification and remediation of custom code.

In addition to assets that span the breadth of migration approaches, Infosys offers Catalyst, a bundled S/4HANA offering tailored to the specific requirements of an industry, hosted on Azure. Catalyst offerings on Azure are available for 15 industries including CPG/retail/fashion, life sciences, oil & field services, automotive, utilities & resources, and high tech clients.

As part of its innovation offering, Innov8, Infosys has developed intelligent industry solutions hosted on Azure that can provide clients with increased intelligence in their systems while remaining on their legacy ERP systems or migrating to S/4HANA. Examples of Innov8 solutions on Azure include Smart Warehouse and intelligent cycle counting, Intelligent order management, predictive revenue assurance services, and on-time in-full delivery performance. Infosys has published these solutions on Microsoft Azure marketplace and they are ready for client consumption. The entire suite of Catalyst solutions and Innov8 solutions is now part of the Live Enterprise offering.

An example of a joint client project is one for a European automotive OEM. The client began its journey as a business imperative to migrate one of its lines of business from a legacy ECC instance. As part of the modernization and migration to S/4HANA, Infosys is also embedding predictive analytics and IoT within both warehouses and trucks. It is then using this as a spearhead to migrate the broader corporate SAP landscape to S/4HANA on Azure.

Positioning to maximize client value

The transformation of a legacy SAP ERP is a complex and risky endeavor for organizations. After decades of investment to customize a monolithic on-premise ERP to specific needs, transforming to a cloud environment and more standardized ERP can be a daunting undertaking. However, as the end of life for legacy SAP support comes closer, companies are faced with increasingly pressing needs to transform their legacy SAP systems to S/4HANA.

The simultaneous journey to cloud can accelerate the value to be realized but also increases the challenge. In order to help clients in this journey, IT service providers must demonstrate how they partner with both SAP and hyperscalers and have integrated their complementary capabilities to de-risk the journey and maximize the value realized.

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