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Bridging the SAP Talent Gap: A Strategic Approach to S/4HANA Migration

In the ever-evolving landscape of technology, where the demand for specialized skills and talents is reaching new heights, SAP’s realm of Enterprise Resource Planning (ERP) is no exception. Specifically, the transition to S/4HANA, an intelligent ERP suite designed to streamline business processes and enable organizations to thrive in the digital age, poses both challenges and opportunities. As companies embark on this transformative journey, the need for skilled SAP talent becomes paramount.

Understanding the SAP Talent Landscape

As I have often highlighted the distinctions between American skills and talents, my focus has perennially been on service companies providing digital solutions for various industries. This spans cybersecurity, data science, emerging software platforms like Salesforce and Workday, and bespoke digital solutions for specific sectors such as finance, healthcare, insurance, home care, construction, pharmaceuticals, sales and marketing, customer service, software development, low-code app development, cloud computing, and digital transformation.

However, despite the widespread usage of platforms like Salesforce and Workday, the most extensively utilized software platforms are not these but rather Enterprise Resource Planning (ERP) systems such as SAP and Oracle. These two with their origins dating back to the 1970s, have stood the test of time. The reason behind their enduring popularity is the comprehensive suite of functionalities they offer, including accounting, budgeting, project management, and supply chain management.

The Dominance of SAP in ERP

SAP, with a staggering 425,000 clients in 180 countries, overshadows other platforms, including Salesforce, by nearly threefold. While Salesforce and Workday are prominent in their own right, ERP systems like SAP S/4HANA hold a unique position in seamlessly handling a myriad of business activities.

The challenges arise as companies consider migrating from legacy ERP systems to S/4HANA, especially with SAP setting a target deadline of 2027 for completing this transition. While S/4HANA operates both on-premises and on the cloud, the increasing advantages of cloud-based ERP, such as scalability, feature accessibility, security, and cost-effectiveness, make it an enticing option for businesses.

The SAP Talent Crunch

Yet, this migration to the cloud is no small feat. Migrating legacy ERP systems to S/4HANA demands a workforce proficient in SAP technologies, and herein lies the challenge. The demand for SAP talent has dramatically surged, driven by companies like Salesforce, which have altered the landscape of software procurement and usage.

Traditionally, companies would install and host their on-premises instances of it. However, SAP is now facilitating clients to transition to the cloud through its S/4HANA platform. While operating ERP in the cloud brings numerous advantages, including scalability, feature accessibility, security, and cost savings, the magnitude of moving the entire ERP to the cloud should not be underestimated.

The Evolving Role of SAP Talent

As the deadline for migrating to S/4HANA approaches, clients face critical decisions. While S/4HANA operates both on-premises and on the cloud, the benefits of adopting cloud technology are continually growing. For most clients, transitioning S/4HANA to the cloud is becoming synonymous with the migration itself.

Role of SAP Talent
Role of Talent

The shift towards S/4HANA introduces a new dimension to the SAP talent landscape. A survey by the Americas SAP User Group in 2020 revealed that only a fraction of SAP consultants were adequately trained and prepared for the impending S/4HANA wave. Responding to this shift, it has collaborated with partner Talent Anarchy to offer free online boot camps lasting 2-3 weeks for its partners and aspiring consultants.

However, the gap in expertise remains significant. A new study by the Americas SAP User Group disclosed that 25% of users claimed talent shortages were impeding their projects, with 49% reporting a shortage of S/4HANA talent.

Addressing the Talent Gap

The talent gap is not limited to end-users. According to the SAP User Group, the talent shortage is impacting system integrators and consultancies aligned with SAP partners. Jeff Scott, CEO of the Americas SAP User Group, emphasized this concern, stating, “We’re seeing the impact of the talent gap. It’s a significant issue for entry-level employment opportunities today. But those skills can be obsolete within five or 10 years. That means — which is central to the thinking of colleges and universities — updating the curriculum to reflect the needs of nearby technology. And even if colleges, universities, or – more likely – boot camps have offered S/4HANA training, it won’t do much to eliminate the growing gap in experience.”

Thomas Michael, founder, and CEO of Michael Management, a provider of SAP training, echoes the sentiment, stating, “Out of our 1000 SAP professional survey, 4 out of 10 say they haven’t received enough training to perform their job duties. This not only highlights a crucial gap in professional advancement but also presents organizations with an opportunity to reevaluate their training wisdom on practical actions. The future of SAP careers lies in empowering aspiring professionals with the knowledge and tools to embark on the S/4HANA upgrade journey.”

Apprenticeships: A Pathway to Bridging the Gap

The most promising solution is one that not only provides training but also hands-on experience – apprenticeships. Apprenticeships offer employment where both classroom training and practical experience are components, allowing the apprentice to obtain services without the need for an apprentice to be trained. As discussed in my new book, “The Apprenticeship Model,” apprenticeships cover a vast array of fields, providing a dual approach to talent development while contributing to societal and economic mobility. SAP is no exception.

If apprenticeships prove to be the optimal solution for its environments, where will they emerge from? Look no further than SAP clients. These organizations themselves are not equipped to solve this predicament. Faced with the high cost of vacant positions and a growing shortage of skilled employees, they are aggressively focusing on qualified candidates with hands-on experience.

If job applicants are not checking all the boxes for potential employers, the problem lies not with them but with those employers. As Peter Cappelli of Wharton noted, “Employers are demanding more of job applicants than ever before. They want possible employees to be immediately ready to play a role without any training or ramp-up time. To obtain a job, you need to have already gotten that job.”

My best estimate is that new S/4HANA talent will come from one or more SAP partners who decide to engage in the business of providing trained, proven talent to clients and other stakeholders. By recruiting newly trained talent through migration projects or directly adding consultants and partners to the workforce, its partner participation can become a mature partner in one system, with thousands of benefits for SAP careers.

Conclusion

In the coming years, I anticipate that SAP partners will initiate new initiatives to provide trained, proven S/4HANA talent to clients and other stakeholders. As numerous clients and partners seek talent, the opportunity is vast for leaving a substantial talent gap for an extended period.

As the SAP talent gap continues to widen, addressing the shortage is not just a matter of upgrading skills but a strategic and holistic approach that combines training, experience, and real-world application. The S/4HANA migration is not just a technological shift; it is an opportunity for organizations to rethink their approach to talent development, embrace apprenticeships, and empower a new generation of professionals with the knowledge.

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