According to the ERP spending indicator DSAG, cloud adoption and upgrade conversions are maintaining a steady yet sluggish pace, with SAP users showing a cautious approach towards expanding their budgets.

The German-speaking SAP user group recently published findings indicating a waning interest among companies in increasing their spending, which has implications for the progress of cloud transformation initiatives.

DSAG's Investment Report 2024, representing SAP users across Germany, Austria, and Switzerland, reveals that while some companies are seeing an uptick in IT and SAP investment budgets, this trend is less prevalent compared to the previous year.

Jens Hungershausen, Chairman of the Board at DSAG, commented in the report, "The number of companies maintaining or reducing their IT and SAP investment budgets has notably increased. Given the challenging and uncertain market conditions, it's understandable that companies are adopting a cautious stance. However, this approach may not be advisable for maintaining long-term competitiveness."

The survey found that 43% of organizations plan to increase their overall IT budgets, down from 54% in 2023. Similarly, 46% are increasing their SAP investment budgets, a slight decline from 52% the previous year. On the other hand, 18% of respondents expect a decrease in IT spending, while 19% anticipate a decrease in SAP investments.

Despite the ongoing shift towards SAP's S/4HANA, an in-memory enterprise application technology, the transition to cloud deployment, which SAP promotes, continues to face challenges.

The report notes that SAP's older Business Suite software remains prevalent, with 68% of organizations still utilizing it, albeit down from 79% in the previous year. S/4HANA on-premises usage has increased slightly to 44%, while adoption in private and public clouds has also seen modest growth.

Hungershausen highlighted the ongoing challenges in adopting cloud operating models for S/4HANA, citing reasons such as existing investments and security concerns for critical IT infrastructures.

"Investments in S/4HANA are on the rise, particularly in significant implementations, indicating progress in DSAG and SAP's efforts to support companies during the transformation. However, considering the end of maintenance in 2027 and the tight migration timeline, there's an expected higher willingness to invest in S/4HANA," he noted.

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