Are we heading towards an SAP skills dearth?

With a migration deadline looming, organizations face the prospect of replacing decades worth of experience as people involved in early projects approach retirement.
18 November 2020

Enterprise Resource Planning (ERP) software systems coordinate all information and communication within the business. While it may have flexed and evolved over the years, in today’s world of cloud-enabled remote work, ERP is more important than ever.

Love it or hate it, SAP is the daddy of them all.

Counting customers like Ford, Coca-Cola, 3M, and eBay among a base that spans more than 440 thousand companies across more than 180 companies — SAP is a true enterprise software giant. With 25 industry-specific business solutions, the company makes the incredible claim that 77% of the world’s transaction revenue ‘touches’ an SAP system.

But while it’s a common belief that only large enterprises make use of (or can afford) SAP software, about 80% are small-to-medium-sized businesses are on board as well.

Having been founded in 1972, SAP’s long-term success and evolution through the years have led to a generational shift in expertise, which could be tapering toward a skills shortage in the coming years.

In 2027, SAP will cease support for its legacy ERP technology, urging customers to migrate to SAP S4/HANA.

But with 52% of SAP consultants unexperienced in the new iteration and expecting pay hikes for equipping themselves with the right skills, enterprises could be left without the necessary skills needed to successfully migrate.

Research from the UK & Ireland SAP User Group (UKISUG), the independent not-for-profit organization representing all users of SAP software, has today revealed that nearly two-thirds (63%) of organizations are concerned about an imminent skills shortage.

“SAP remains a business-critical system for many organizations. Yet our survey shows many are facing challenges when it comes to retaining or acquiring the technical skills they need to implement, manage, and support their SAP estates,” said Paul Cooper, Chairman, UK & Ireland SAP User Group.

Some 79% of SAP users expected to lose SAP specialists from the businesses, driven by salary demands, lack of clear career enhancement and opportunities to work on new technologies.

At the same time, organizations are finding recruiting for SAP talent more challenging — they’re few and far between and expecting higher salaries as a result, while recruitment strategies overall are hampered by concerns over the impact of the pandemic on the market.

“The challenge of replacing existing knowledge and expertise cannot be underestimated, with organizations facing the prospect of needing to replace decades worth of experience as those people involved in early projects approach retirement,” said Cooper.

Technical skills are at a premium and that’s creating a supply and demand problem as the migration deadline looms. Without the right specialists on board, large organizations could face lengthy disruptions to services they and their customers have relied on.

“Whether it is attracting the Basis skills to maintain an existing estate or requiring new skills to move to the cloud – cost and availability is front of mind for many IT decision-makers,” Cooper continued. “This, in turn, is forcing organizations to make continual trade-offs when it comes to investing in both people and systems.”

There isn’t a “silver bullet”, Cooper continued, and while the SAP skills shortage is manageable at present, the disparity is likely to become a lot more noticeable as the migration window draws closer.

As such, it’s up to the SAP ecosystem to work together to retain and share knowledge and develop the next-generation of specialists.