Historically when company revenues decline it has led to IT budgets being cut back. IDC have recently explored this assumption to try to answer how they think that organisations will respond to the current crisis. SAP commissioned this research to try to predict what their users will need and how they will respond to the pandemic, in order to establish what will be required from the SAP vendor ecosystem and help better understand how they will need to transform for the future.

SAP released their research at their recent SAP Partner Business Insights update, to ensure the partner community were developing the right solutions and expertise that will be required to help customers during the future phases of a COVID-19 recovery. This recent pandemic has underscored the importance of digital transformation and is believed to help flatten an organisation’s recessionary curve by leveraging technology. How well companies are able to leverage technology can not only affect how their brands are perceived but will also influence how their businesses will operate over the next decade.

Sap partners post covid-19 recovery

However, how this technology is adopted and how well it can be embedded in the organisation’s processes and value chain will affect the success for the longer period, rather than just the initial crisis management. IDC describe five stages that companies go through with a crisis: Business Continuity, Cost Optimisation, Business Resiliency, Targeted Investments and Future Enterprise.

Initially companies had to ensure their business could function during the lockdown period with all staff unable to travel to work. The initial benefits of adopting technology that was able to deal with the crisis were mostly orientated around how easily the organisation could manage home working and continue to engage with their customers and suppliers through digital connections.

Six months on and we are now entering what IDC term as “economic slowdown” which will cause companies to go through a “cost optimisation” stage where technology must help manage companies get through a predicted hardship period to help manage cashflows and support short term priorities.

During this cost cutting period, companies, according to the IDC research, will typically turn to partners that are “closer to them — in both proximity and cultural alignment — and that have lower price-tag offerings, flexi-pricing and payment terms, and/or modular offerings”. Companies will typically turn to their IT/SAP providers to help them transition their business for this phase.

The third stage of “Business Resiliency” concerns how well companies are able to apply their central purpose or mission by adapting to their changing circumstances. Many organisations will leverage and invest further in technology to ensure they are more resilient and have a better digital fit for the new world.

Working from home

The business will need to be ready to come out of this crisis as a new and improved flexible organisation that can operate cost effectively as well as take advantage of new potential revenues. For this reason, the fourth stage is called “Targeted Investments” – how companies invest and prioritise their programmes of change to ensure they are better prepared for the future. IDC also believe that most digital initiatives will now have higher priorities than they did before the crisis.

The role that SAP Partners must now play with their clients must be relevant to these phases to help them achieve what they need. For example, initially most services were concerning remote working with solutions involving connectivity, virtual desktops, collaborative tools and business continuity. Over time these solutions must evolve to offer more sustainable and efficient longer-term solutions that will enable the business in an adaptable, secure and cost-effective manner.

IDC also modelled the SAP specific market to see what impact was expected as a result of COVID-19.

Currently the SAP partner market is predicted to be massive, about $260Bn by 2024, which is a significant increase to the previous $200Bn that was previously predicted from 2018 to 2023. Not surprisingly most of this change is attributed to cloud growth. Half of these future revenues are expected to be from cloud-based solutions (rather than on-premises) and, interestingly, two thirds of all opportunities for new projects created over this period are expected to be with cloud-based solutions, highlighting the dominance of this technology for future projects.

SAP were also keen to emphasise how they believed that the most successful SAP partners will be ones that can develop roles, expertise and IPR. Partners that can offer specialisation around cloud products or cloud related services will be most in demand. SAP users wishing to benefit from the expertise available within the SAP community will use the API Hub to access information and resources. Partners need to share their ‘know-how’ as well as their Intellectual Property for certain solutions around core SAP products and platforms.

SAP are particularly keen that any vertical-specific knowledge is developed from the partner community – especially in complex businesses like manufacturing or pharmaceuticals where the SAP’s own cloud products only offer limited customisation, compared with the on-premises variants that allow more configuration. Developing expertise will be vital not just to allow SAP companies to be able to adopt technology effectively, but also to ensure the SAP partners delivers value and differentiation in a new post pandemic market.

Finally, I’ll share a poignant Darwin quote that I heard recently: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”