3 Oct 2024 by Andrew Spicer
Between sluggish demand, rising unemployment and spiking electricity prices, it’s been a tough winter for many Kiwis and business owners alike.
Official interest rate cuts by the Reserve Bank of New Zealand are expected to encourage investment once again and offer relief to those with mortgages later this year and into 2025. There is light at the end of the tunnel, though we’ve some challenging times to navigate before we once again achieve solid economic growth as a nation.
Nevertheless, I’ve been pleasantly surprised at the volume of RFPs (requests for proposal) and scoping enquiries I’ve received in recent weeks for SAP projects from medium-sized and large New Zealand organisations.
They are looking to the future and planning to invest in their digital platforms. What do I put this appetite down to? The anticipation of better economic times is part of it. So too is the pent-up demand that has grown in the years since the pandemic, when rapid deployment of IT systems and digital platforms saw a flurry of tech-related investment by businesses in a short period of time.
Now, many organisations have consolidated those investments and are looking to add value, with productivity and efficiency improvements widely cited as key priorities in a market where cost escalation and sluggish demand is putting pressure on everyone’s bottom line.
The path to S/4HANA
In the SAP environment we have a couple of additional drivers. The deadline for the discontinuation of SAP ECC (ERP Central Component) 6.0 support, scheduled for the end of 2027, is now looming large for IT managers.
Those who have been happily using an ECC on-premise installation for years now have a short window to plan and implement their migration to SAP S/4HANA, SAP’s cloud-based enterprise resource planning platform. Many New Zealand-based ECC customers have got the message, with a lot of interest in S/4HANA translating into some of those RFPs I’m seeing.
Then there’s the fact that many SAP users are realising the limitations of legacy systems like ECC and are looking for a better user experience in an ERP, and the opportunity to leverage artificial intelligence to a greater extent.
It’s become clear over the last year that SAP is in the process of embedding AI into its entire platform. It means that S/4HANA users have a great deal of AI-powered functionality straight out of the box, which puts them at an advantage over rivals on older SAP installations or other legacy ERP systems.
Key areas I’m seeing customers drawing on AI to great effect in the S/4HANA environment include automating processes and repetitive tasks to free up staff to focus on driving business benefits, and gleaning useful insights and reports by analysing company data.
SAP has made Joule, its natural language generative AI copilot, available to cloud customers through its Rise with SAP programme. Joule will eventually be embedded across the entire SAP portfolio. It’s of great benefit to those already in the cloud and an added incentive for those on legacy systems to modernise their platforms to draw on the new AI functionality within SAP. Low-code options for integration with existing systems makes it all the more useful.
SAP’s scalability
If there’s one other key trend in the New Zealand ERP market I’m seeing, it's that the perception of SAP as the leading software platform for large organisations is changing. S/4HANA, in particular, is well-suited to mid-size organisations as a flexible, scalable, and cost-effective ERP solution and at Realtech we’ve had many enquiries from mid-sized businesses across a wide range of industries who are looking at deploying SAP for the first time.
Again, that is a heartening sign. We have a widely acknowledged productivity problem in New Zealand. The reasons for it are complex, but one key one regularly cited is our lagging adoption of advanced technology. Most New Zealand businesses are well on their way to the cloud. By taking advantage of the tools readily available on platforms, they can achieve the productivity gains that will add up to better economic growth and international competitiveness.
As SAP’s leading SAP consultancy and integrator focussed on mid-sized organisations, we are ready and able to help you go on that journey.