Adoption of SAP S/4HANA and SuccessFactors is growing despite worries over cloud costs, integration, data protection, ISG Provider Lens™ report says
Accelerated cloud adoption is reshaping the SAP ecosystem in Germany as enterprises shift toward the company’s cloud-based solutions despite ongoing concerns, according to a new research report published by Information Services Group (ISG), a global AI-centered technology research and advisory firm.
Strict data protection laws make many German companies hesitant to store data in the cloud. Phased migrations starting with non-critical systems are gaining popularity, but some organizations still prefer the on-premises solutions they know.
The 2025 ISG Provider Lens SAP Ecosystem report for Germany finds that a growing number of companies favor scalable, subscription-based cloud software for cost efficiency, agility and rapid deployment. SAP’s cloud-first strategy has helped to increase adoption of its cloud solutions, especially SAP S/4HANA Cloud and SuccessFactors. But despite market momentum toward the cloud, German enterprises remain cautious about data sovereignty, complex integration with legacy systems and compliance with the EU’s General Data Protection Regulation (GDPR).
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“Strict data protection laws make many German companies hesitant to store data in the cloud,” said Dr. Matthias Paletta, ISG technology modernization solution lead, EMEA. “Phased migrations starting with non-critical systems are gaining popularity, but some organizations still prefer the on-premises solutions they know.”
The impending end of support for on-premises SAP ERP Central Component (ECC) environments in 2027 has increased the urgency of cloud migration, but some organizations are still holding back due to cultural resistance and resource constraints amid slow economic growth, the report says. German midmarket companies are particularly hesitant to make the move due to limited budgets and IT expertise.
SAP has introduced bundled offerings such as RISE with SAP in hopes of easing cost concerns by simplifying migration and consolidating licensing, hosting and support, ISG says. However, companies remain worried about high initial migration costs, including the prospect of expensive, time-consuming redevelopment of highly customized ECC systems.
German SAP migration strategies have evolved significantly as the ECC support deadline approaches, the report says. Previously, most companies chose greenfield initiatives to create fresh installations, but increasingly they favor brownfield projects with selective updates and partial reuse of existing SAP components. Bluefield migrations, designed to combine the benefits of both reuse and new implementations, also are resonating with typically risk-sensitive German enterprises.
AI plays a growing role in SAP services in Germany as providers use AI-based tools to streamline and automate transformation processes to cut costs and timelines, ISG says. Generative AI is also influencing SAP services, especially through SAP’s Joule assistant. Joule is designed to automate complex workflows, facilitate natural-language interactions and improve business decision-making capabilities.
“With customizable GenAI, German enterprises can tailor AI to solve specific industry challenges,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Despite concerns around compliance and scalability, interest in AI remains high.”
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The report also explores other SAP ecosystem trends affecting enterprises in Germany, including the integration of sustainability measurement tools and increasing adoption of SAP’s clean core strategy to reduce cost and risk through simplification.
The 2025 ISG Provider Lens™ SAP Ecosystem report for Germany evaluates the capabilities of 57 providers across five quadrants: SAP S/4HANA System Transformation — Large Accounts, SAP S/4HANA System Transformation — Midmarket, SAP Application Managed Services, Managed Cloud Services for SAP ERP and SAP SuccessFactors HXM Partner Services.
The report names Accenture, All for One Group, Atos, Capgemini, Infosys and Wipro as Leaders in four quadrants each. It names T-Systems as a Leader in three quadrants and Deloitte, NTT DATA and TCS as Leaders in two quadrants each. The report names adesso, Arvato Systems, Birlasoft, CANCOM, Cognizant, DATAGROUP, EY, HCLTech, Kyndryl, Pentos, PwC, Syntax and Tech Mahindra as Leaders in one quadrant each.
In addition, DATAGROUP is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. Atos and DXC Technology are named as Rising Stars in one quadrant each.
In the area of customer experience, Wipro is named the global ISG CX Star Performer for 2025 among SAP ecosystem providers. Wipro earned the highest customer satisfaction scores in ISG’s Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.
Customized versions of the report are available from adesso, DATAGROUP and T-Systems.
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Source – businesswire
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