Hewlett Packard Enterprise (HPE) is in talks to acquire cloud computing firm Nutanix, Bloomberg reported on Thursday, quoting sources familiar with the matter. 

The deal between the two companies could be mutually benefitial according to experts.

Nutanix offers its customers an open, software-defined hybrid cloud platform. HPE, on the other hand, calls itself an edge-to-cloud company that helps customers protect, analyze, and act on their data and applications from anywhere. 

“The two companies have a symbiotic and competitive relationship. It is symbiotic because when Nutanix goes to the market to sell the HCI products, it sometimes uses HP servers to package the HCI deal,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “At the same time, HPE has a portfolio called SimpliVity, which is hyper-competitive with Nutanix.”

In recent months, there have been talks on and off between the two companies, the Bloomberg report said.   

Nutanix is valued at over $6.5 billion

As of Wednesday, Nutanix had a market capitalization of about $6.5 billion, while HPE was worth over three times of that at $21.6 billion.

For the financial year 2022, Nutanix posted revenue of $1.6 billion while HPE revenue stood tall at $28.5 billion. 

“The enterprise software business is a scale business, a big boys’ play. So, Nutanix will either have to acquire firms and get to the next level of scale or they will have to consider an option of getting acquired from other firms,” said Pareekh Jain, CEO at Pareekh Consulting.

In October, Nutanix was reportedly exploring sale opportunities after receiving a takeover interest.  

“HPE has more than 100,000 customers, over five times the size of Nutanix customer base. From HPE’s perspective, they will get a growth portfolio which they can cross-sell to their customers, and Nutanix will get to work with a larger customer base of the HP group,” Jain said. 

During the COVID-19 pandemic, the demand for cloud computing firms surged as businesses had to speed up the process of their digital offerings. Spending on cloud services in 2022 has been $490.3 billion, according to Gartner, and is expected to reach nearly $600 billion by next year, growing at over 20% year-on-year.  

HPE has a large legacy portfolio, while Nutanix has a growth portfolio with more software solutions, Jain said. “HPE wants to get into high-growth areas of cloud software, so Nutanix is the right fit for them. Nutanix can help HPE accelerate the transformation into new cloud services.” 

Customers might have to pay more for cloud services

While the deal with Nutanix, HPE could have a twin advantage—lower operational costs, and a higher potential to charge more for its cloud services.

HPE currently uses Microsoft or VMware for the virtualization platform. If they use the Nutanix platform, the licensing cost can benefit HPE directly, Gogia said.

Customers on the other hand can expect higher pricing post the acquisition as HPE will get a more dominant market share, allowing them to command higher pricing, Gogia said. “While the deal can give customers better support from the companies, they can also expect higher pricing. As seen in the past, after the company has been acquired the licensing cost and pricing overall go north in the range of 20% to 30%.”

Mergers and Acquisitions

Senior executives around the world are realising their business success is irrevocably tied to their network strategy. Yet, the goalposts keep moving amid rapidly evolving network technology, making it harder to stay on a sustainable path of network growth.

This is clear from NTT’s 2022–23 Global Network Report, for which we conducted 1,378 in-depth interviews across 21 countries in the Americas, Europe, Asia Pacific, the Middle East and Africa, and Australia and New Zealand.

The interviews delivered a treasure trove of data about the importance of the network to organizations, how the network is transforming, how organizations manage and buy the network, and how it is delivered.

Insights from the top

From the survey results, another valuable layer of insight emerged: it soon became clear that most organizations at the top of their game from a business-performance perspective shared certain characteristics when it came to their network strategies.

For example, we found that nearly all executives (98%) agree that the network is a critical part of driving business growth – yet 72% believe that a lack of network maturity is negatively affecting their delivery and goals.

Ever-increasing security and compliance risks present further challenges. Distributed hybrid work models present far more attack opportunities for malicious actors, and compliance (including data privacy) is a complicated topic in a multicloud-enabled world. So, for most of our respondents, much remains to be done to future-proof their networks. But when we looked at the top performers, it was clear that they had already made great strides in this regard and in other areas.

We classified top performers as those with:

Higher revenue growth (increased by more than 10% in the last fiscal year)A stronger operating profit as a percentage of revenue (more than 15% in the last fiscal year)

Conversely, underperforming organizations were categorised as having:

Poor revenue growth (0% or less in the last fiscal year)A weaker operating profit as a percentage of revenue (less than 5% in the last fiscal year)

Network traits of top performers

Strategic alignment: Almost 9 in 10 top-performing organizations have aligned their technology strategy and their business goals; similarly, nearly 8 in 10 have aligned their network and business strategies, compared with only about 40% of underperformers on both counts.Investment in digital transformation and the network: Nearly 90% of top performers are accelerating their investment in digital transformation compared with less than half of underperformers.Increasing dependence on the network: Almost 70%of top performers believe strongly that their network dependency will grow in the next two years, but just more than 40% of underperformers say the same.Adoption of leading technologies: Almost 8 in 10 top performers have implemented leading technologies such as multicloud networking, edge computing, SD-WAN and 5G.A preference for outsourcing: More than 7 in 10 top performers already outsource most of their network management; more than half also believe their future network information technology needs will be fully outsourced and managed, compared with just over a quarter of underperformers.Network as a service: Top performers are almost twice as likely as underperformers to strongly prefer a network-as-a-service model (6 in 10 compared with 3 in 10).Sustainability: Top performers are almost 90% more likely to focus on sustainability and environmental, social and governance (ESG) goals than underperformers.

These are just some of the many relevant and actionable insights contained in our full 2022–23 Global Network Report. The report also includes a look at the technologies on the rise that are affecting the network, suggests steps to follow to transform your network, and gives practical advice on future-proofing your network.

Download the 2022–23 Global Network Report now.

Amit Dhingra is Executive Vice President of Enterprise Network Services at NTT

Business, Business Intelligence, Multi Cloud

Even though 90% of IT leaders in the UK expect an economic downturn, technology spending this year is set to grow at its third fastest rate in over 15 years, and most tech executives expect their budget to rise in 2023, according to the latest Digital Leadership report from talent and technology solutions firm Nash Squared (formerly Harvey Nash Group).

More than half (52%) of IT leaders in the UK polled for the report expect their technology budget to rise, and  56% of UK organisations expect to increase their technology headcount in 2023. Only approximately one in seven believe their budget will fall.

The Nash Squared Digital Leadership Report marks the 24th year the firm has polled leading CIOs, CTOs and CDOs, with this year’s study finding a surprising uptick in global, European and UK tech spending, as organisations accelerate digital transformation initiatives and adapt to hybrid working.

The report polled 1,783 digital leaders across 87 countries, including 746 in the UK, and discovered that improving operational efficiency, customer experience and developing new products and services are the top three priorities for digital leaders— markedly similar to last year’s findings.

It also suggested, however, that many of those same leaders are yet to feel the pinch from the recession and cost-of-living pressures.

“Economic headwinds are gathering and indicators are turning negative—but despite or even because of this, UK businesses know that investment in technology remains crucial. Both to maximise the efficiency of what they already have and to become more agile and responsive in highly unpredictable conditions, technology is the key enabler,” said Bev White, CEO of Nash Squared.

Tech spend is rising, as lines with business blur

Nash Squared’s report, pointedly, highlights that business and technology spending is becoming increasingly entwined, and how businesses define technology spending is getting hazy.

“What defines ‘technology spend’ is a point of debate,” according to the report, which added that the average IT budget for all respondents was a surprisingly high 7% of organisation revenue. “Most would agree spending on IT infrastructure is technology spend. Most would agree spending on Google adverts is not. But in the middle ground sit applications like customer systems, new technology products and apps. Is even defining it as ‘technology spend’ helpful?”

White believes that the growth in spending can be seen as a lasting impact from Covid-19, which gave CIOs the encouragement “to go faster and further”, in particular accelerating their investments in data and cybersecurity.

Alex Bazin, CTO at legal firm Lewis Silkin LLP, said that the Nash report’s headlines echo what he sees on a “day-to-day basis”, with investment rising at his company—a City firm focused on driving internal efficiencies. “We’ve got to keep the investment even, maybe even especially, through economic downturn,” he said.

Part of this investment, he said, can be attributed ton hybrid and remote working, with Lewis Silkin’s new office in Manchester representing a “significant investment in itself.”

Bazin—who said that ROI timeframes remain relatively unaffected, with most projects needing to deliver value within two years—does however note that the lines between IT and business spending are closing. This potentially muddies the waters, in terms of understanding where tech investment growth is coming from, and the impact it has on more traditional IT budgets.

“It’s hard to draw the line sometimes,” he said, giving the example of library services falling into his remit and budget, as subscription services fall into the realm of data and knowledge sharing. He adds that other industries, such as automotive manufacturing, have the additional complexity of IT/OT (operational technology) convergence and budgets falling between the cracks of technology, product and operations.

Tech executives in a variety of industries agree the lines between spending on IT and other segments of business are blurring. Nadine Thomson, Global CTO at Mediacom, gave one such example at the WPP-owned media agency.

“If you think about product, product doesn’t necessarily always sit in an IT or even in a CTO function,” shes says. “In my role, I kind of share product…with our chief product officer. So that’s one example of an area where you wouldn’t necessarily see it all on the IT line.”

Business-led tech is on the rise

There has also been a general increase in business-led technology, she notes, highlighting that this would not be cloud hosting or licensing costs, but rather areas like business analysis and product management.

“I wonder if some organisations are starting to think about how they’re accounting for technology more broadly,” she said, adding that budgets are now under ‘more pressure’ than two months ago.

In fact, a lot has changed recently. The Nash Squared survey was based on responses between 20 July and 10 October— chancellor Jeremy Hunt axed most of the so-called ‘mini budget’ seven days later, with now-former UK prime minister Liz Truss relinquishing her role after 10 days, on 20 October. The political tumult has added to general economic uncertainty.

For Scott Petty, the CDIO (chief digital information officer) at Vodafone, the financial uncertainty represents another opportunity for CIOs to drive change through crisis, even if investments are more acutely focused on projects which can save energy and drive operational efficiencies.

“So things like investments to save energy, and automation. Anything that can reduce power consumption, suddenly has an amazing business case,” he said on the sidelines of Gartner’s symposium in Barcelona, which ended Thursday. “So you’re seeing a wave of investments in those areas,” he said, pointing to data centre consolidation and cloud migration plans moving from “three-year plans to 18-month plans.”

“Will that continue? It really depends how long the downturn lasts, how long the headwinds are and how big the energy upside is,” Petty said.

AI and RPA cuts as projects get prioritised

Even though CIOs seemingly have yet to feel the impact of economic headwinds, some technologies have already been scaled back.  Although investment remains strong in cloud (67% of executives polled by Nash reported large-scale usage in the UK), companies are cutting back their investments in big data and RPA (robotic process automation).

“As the CIO, you want to make sure that you’re putting things on the board that show real value and help the business transform itself, grow and scale be more productive,” said Nash Squared’s White, adding that organisations are committing to bigger infrastructure projects rather than smaller, and more iterative AI projects which “start out small and then permeate.”

Mediacom’s Thomson expressed surprise at the relative fall from grace for RPA, suggesting that efficiency must be king in financially uncertain times.

“We know that talent is getting harder to get, so cutting back on anything that’s going to drive automation or RPA is a strange decision,” she said.

Lewis Silkin’s Bazin has a similar stance on AI, saying that this suite of technologies is “front and centre” to the company’s ambitions, with “nothing on pause.” In particular, he said the law firm is looking to AI for document discovery to help build legal cases and give advice to clients, as well as for contract analysis, contract automation and fact-checking on case law. “Anything that decouples effort from the equation makes a quick difference, and a rapid ROI,” he said.

Skills gap and diversity progress—but sustainability stalls

Elsewhere in Nash Squared’s report, there was concern over how cost-of-living pressures were having an impact on salary demands and thus recruitment, and frustration with the UK government’s inability to tackle the digital skills divide. But there was promising news for gender diversity: Approximately 28% of new hires are female, with the recruitment firm attributing the slight rise in the number of female leaders (up from 12% to 15% year-on-year) and new hires likely due at least in part to greater flexibility in the workplace.

Thomson, though encouraged by the findings, believes that building diverse teams is an ongoing journey. At Mediacom, she points to a “reasonably diverse” technology team, built over three years through partnerships with the likes of D&I organisation Tech Talent Charter, connections in the CIO-CTO world, and internal schemes like WPP ‘Visible Start’, which gives women an opportunity to come back after a career break. But she believes that developing the company culture, as well as active role modelling, is pivotal to get to a point where word-of-mouth drives diversity and employee retention.

“People recommend or bring in other people. And that’s actually really helpful, because they stick—and they stick because the culture is already there. You’re coming into a welcoming culture.”

Big data analysts, cybersecurity experts and technical architects were the top three job types sought in the UK, according to the report, but rising salaries were a concern, with almost two-thirds of UK leaders saying that the rising cost of living has made salary demands ‘unsustainable’.

Sustainability, as was the case last year, remains somewhat down on the CIO’s priority list. In the UK, while 43% of respondents think technology has a ‘big part to play’ in sustainability, only 22% are using technology to measure their carbon footprint to any great extent.

A fifth of digital leaders polled in the UK (20%) think sustainability had only a ‘negligible or no part to play in 2022’, leading Nash Squared to question if there’s a vacuum in leadership responsibility for sustainability. “We expected to see it playing a greater role than when we measured it last year when in fact it appears little has changed,” the report said. “Do digital leaders have their heads firmly in the sand or is the board not focusing them on this?”

Bazin notes that IT concerns about sustainability could differ widely by sector—a logistics company may, for instance, see a bigger environmental impact from haulage by air or sea than from IT—but believes an altogether bigger challenge is focusing on goals for the year ahead. In the study, most UK leaders cited concerns about a lack of focus on digital innovation (21%), followed by under-resourcing (18%) and prioritising ideas (10%).

“IT has been so busy in innovating core IT for the pandemic, and adapting for the hybrid workplace. But it is really important that business owns business innovation, and IT owns its part of that,” Bazin said, adding that getting the right team and process structures in place is at the top of his agenda.

Budgeting, IT Strategy

As popularity of project collaboration software grows along with other software-as-a-service products, a research report from SaaS purchasing platform Vertice shows that more than 90% of enterprises are overpaying for these tools.   

The project collaboration software market is estimated to reach a value of $27.40 billion by the end of 2022, from $21.69 billion in 2021, according to a report from Grand View Research, which links the growth to factors such as the evolution of the workplace and the rising need to incorporate effective means of team collaboration across different geographies in an enterprise due to the pandemic.

Another survey, conducted by market research firm Gartner, showed that there was a 44% increase in the use of SaaS-based project collaboration tools between 2019 and 2021.

This increase in usage of these collaboration tools have led more than 80% of vendors to increase their price listing by 10% every year since 2019, the Vertice report showed.

Lack of pricing transparency is a challenge

A lack of transparency in pricing seem to be the biggest challenge for enterprises when buying project collaboration software, resulting in overpayment for these tools, according to the Vertice report.

A meagre 14% of software vendors selling project collaboration software list prices on their website or through third parties, the report showed.

The nondisclosure of pricing poses a significant challenge for enterprises as they are not able to compare pricing across a variety of vendors, the company said in its report, adding that most project collaboration vendors require a consultation with their sales teams before they quote a price.

Lack of pricing transparency also plagues the broader SaaS category as well. Only 45% of vendors list pricing online, while 55% of vendors obscure pricing from potential customers, a separate report from OpenView Venture Partners showed.

Is long-term commitment the answer?

Considering long-term commitment or multiyear contracts could be the only solution that an enterprise might have when looking to seek discounts while buying project collaboration tools, Vertice said.  

Currently, 89% of project collaboration vendors offer discounts based on term length, the report showed.

In addition, the autorenewal clauses of software contracts also contributes to price increases, Vertice said, noting that 91% of vendors have autorenewal clauses stipulated in their contracts and nearly 72% of project collaboration vendors have clauses that allow them to change their pricing at any given time.

“It’s typical for vendors to automate the cost increases that are passed onto customers,” the company said in a statement.

Budgeting, Collaboration Software, Enterprise Applications

Unit 42 is Palo Alto Networks’ world-renowned threat intelligence and security consulting team.

The key headline of the latest Unit 42 Cloud Threat Report isn’t about the most sophisticated attacks. It’s that nearly all organizations we analyzed lack the proper controls to keep their cloud resources secure.

The term for this in cloud security is identity and access management (IAM), and it refers to the policies that define who has permission to do what in a cloud environment. A fundamental best practice for policies like this is to apply least privilege access – ensuring that each user or group has the minimum access required to perform necessary functions. This helps minimize the damage an attacker can do in the event of a compromise as the attacker will only gain access to the limited information and capabilities of that one compromised cloud resource.

Unfortunately, we found a different situation when we studied how organizations are managing access to their cloud environments. We analyzed more than 680,000 identities across 18,000 cloud accounts from 200 different organizations and found that a staggering 99% of cloud users, roles, services and resources were granted excessive permissions. This matters because the majority of known cloud incidents start with a misconfigured IAM policy or a leaked credential.

How Could Lax IAM Policies Impact You?

Throughout the pandemic, many organizations moved significant amounts of data and business operations into the cloud. We found that 69% of organizations now host more than half their workloads in the cloud, compared with just 31% in 2020.

This makes the cloud a more tempting target for adversaries looking to—for example—steal sensitive data, deliver ransomware or take advantage of computing resources that don’t belong to them. While sophisticated attacks on cloud resources are possible, attackers don’t need to go to those lengths to achieve their goals when organizations allow excessive permissions and overly permissive policies. If your organization isn’t following best practices for IAM permissions in the cloud, you could be making an attacker’s job easier.

Improving Cloud Security: Recommendations

Your security should be just as native to the cloud as the applications you run there. CISOs should look into Cloud Native Application Protection Platform (CNAPP) suite integration. This can help bring disparate security functions into a single user interface, all tailored to cloud security.

Your security team should also harden IAM permissions. Our recent Cloud Threat Report includes an eight-step best practices guide that could help you.

Finally, as is common in cybersecurity today, an overabundance of alerts is likely hampering your security team and reducing their efficiency. Look into tools and workflows you can deploy to increase security automation, allowing your team the breathing room to get your overall security posture right, rather than being stuck responding to one alert after another.

Want to learn more? Download the full report here: Unit 42 Cloud Threat Report, vol 6

Cloud Security, IT Leadership

More than 70% of US legal departments across enterprises spanning various industry sectors have not made any investment towards digital transformation in the last two years, according to a joint report from The Association of Corporate Counsel (ACC) and legal-technology company Disco.

The report captures insights from a survey of 278 law department leaders and legal operations professionals and shows that larger companies were more open to transformation initiatives than smaller ones.

Survey respondents from about half of companies with revenue of less than $1 billion said that they have not invested in, or have made only minimal investment in, digital transformation, according to the report. Respondents from only 7% of companies of this size reported making significant investments in digital transformation.

Thirty-four percent of respondents from companies with revenue of $1 billion-$10 billion said they had made no or minimal investment in digital transformation, with 10% of respondents in this category reporting significant investment in transformation.

Otherwise, survey respondents from 9% of companies with revenue of more than $10 billion said they had made minimal or no investments in digital transformation, and 17% of those polled in this category reported making significant investments in digital transformation.

Resistance to change, lack of budget top barriers to transformation

Resistance to change and lack of budget were the top barriers to digital transformation in these legal departments. More than 70% of respondents who said that their departments had not made any investment in transformation initiatives explained that they were satisfied with how litigation-related work gets done presently. Of these respondents, more than 35% cited lack of budget as the second-biggest reason for lack of focus on on digital transformation, followed by issues such as lack of long-term strategy, lack of executive support for transformation, and lack of transformation expertise.   

More than 76% of departments surveyed said that getting the right mix of talent along with the right technology is key to serve the growing demands of the business. About 4% of these respondents voiced skepticism about technology being an asset to improving litigation and internal investigation outcomes.

Data and project management top transformation initiatives

Data and project management were ranked as top transformation initiatives by 30% of respondents who had said that they have made some investment in digital transformation over the last two years. More than 65% of these respondents said that data management and information governance was their top priority when it came to transforming digitally, followed by 47% of respondents saying legal project management was another important focus area.

Other focus areas include performance analytics and reporting, automation, and e-discovery—use of electronic means to gather and exchange information about evidence.

Data and project management top transformation initiatives

The legal departments that made investments into digital transformation initiatives said they reaped benefits such as increased efficiency, cost savings, increased productivity, minimization of risk and increased chances of better litigation outcome.

At least 48% of those respondents who said that they have made investments in transformation initiatives ranked increased efficiency as the most immediate benefit of their expenditure.

Around 35% of these respondents cited cost savings, followed by 28% reporting positive outcomes in data management and security as benefits of transformation initiatives, according to the survey.

Almost 13% of such respondents said that they saw an increased chance of better litigation outcome post digital transformation projects being undertaken.

Digital Transformation, Legal

Ease of implementation and return on investment (ROI), combined with ease of use, continue to dominate the business to business (B2B) software buying process, according to a report from software marketplace G2.

The report, which is based on a survey of 1,002 global decision-makers with responsibility for, or influence over, purchase decisions for departments, multiple departments, operating units, or entire businesses, showed that at least 93% of respondents indicate the quality of the implementation process is very important when deciding whether to renew a software product.

The respondents said they are looking for the least amount of friction while adding a new solution or software to their technology stack and that ease of implementation can add to the frictionless experience, according to the report.

In fact, 77% of respondents indicated they have either worked with a vendor’s implementation team or have worked with a third-party vendor for implementation, as opposed to 34% of respondents indicating that they handle implementation with their internal teams.

These implementation teams play a pivotal role as they shape an opinion about vendors and can help make contract renewals easier, the report noted.

Pricing no longer an effective sales tool

Pricing, according to the respondents, was the second-least favored factor in the buying process. The survey showed that sticker price is no longer a sales tool and has been replaced by proof of return in investment.

The decision makers ranked ease of implementation as the top important factor while ROI within six months and ease of use were the second and third most important factors among 12 other considerations, including price, as part of the buying process.

The survey data showed that these decision makers want to achieve ROI quickly and believe that an easy implementation process combined with an easy-to-use product may help them generate returns faster.

Lower switching costs affect renewal rates

At least 53% of respondents surveyed said they conduct research and consider alternatives when a product is up for renewal as opposed to 45% claiming they renew the software they already use without considering other options. This phenomenon can be attributed to increasing options and lower switching costs, the report showed.

However, the group of decision makers that renews a product without considering options is growing slowly. There has been a 3% increase year-on-year for the same category, according to the report.

Vendors must make information such as proof of ROI available in early stages of adoption in places where these decision makers frequent for researching new products, as a majority of decision makers are still looking for alternative products, the report said.

At least 76% of respondents said product and service review websites are trustworthy and transparency in the validation of the reviews is key. More than 33% of decision-makers surveyed said transparent validation of reviews is the most helpful feature when using online software or service review sites.

The report also shows that most enterprises have a six-month contract period, which leaves limited time for vendors to make an impression on the buyer. At least 57% of respondents said they have a six-month period compared to just 11% stating that they have two-year or multiyear contracts in place.

Buying directly from vendors is slowing down

Buyers are slowly shying away from buying directly from vendors, the report highlighted. Only 60% of respondents said they bought directly from vendors, a 9% decrease from the previous year.

Alternatively, buyers are increasingly purchasing software from third-party marketplaces and value-added resellers (VARs), according to the report.

At least 28% of respondents said they were buying software from third-party marketplaces, an increase of 6% from the previous year’s survey. Further, 11% of respondents said they were buying software from VARs, a 4% increase year-on-year.

Buying committee changes complicate purchase process

The B2B buying journey, according to the report, is becoming increasingly complex due to changes in buying committees. At least 80% of respondents said their enterprises or organizations have such committees in place.

More than 67% of respondents said buying-decision makers are changed frequently or nearly always during the software buying process, up by 15% from previous year’s survey.

Another challenge is that the buying committee is more likely to have changed at the time of renewal from when the product was originally purchased, the report showed.

IT Strategy, Software Licensing

A vast majority of enterprises surveyed globally are overspending in the cloud, according to a new HashiCorp-Forrester report.

In a survey that saw participation of over 1,000 IT decision makers across North America, Europe, Middle East and Asia-Pacific, 94% of respondents said their organizations had notable, avoidable cloud expenses due to a combination of factors including underused and overprovisioned resources, and lack of skills to utilize cloud infrastructure.

Underused resources were among the top reasons for overspending, the report showed, with more than 66% of respondents listing it, followed by 59% and 47% of respondents claiming that overprovisioned resources and lack of needed skills, respectively, caused the wastage.

Another 37% of respondents also listed manual containerization as a contributor to overspending in the cloud.

Nearly 60% of respondents said they are already using multicloud infrastructures, with an additional 21% saying they will be moving to such an architecture within the next 12 months.

The report showed that a majority of enterprises surveyed were already using multicloud infrastructures.

Multicloud infrastructure works for most enterprises

Further, the report said that 90% of respondents claimed a multicloud strategy is working for their enterprises. This contrasts with just 53% of respondents in last year’s survey claiming that such a strategy was working for them.

Reliability was the major driver of multicloud adoption this year, with 46% of respondents citing it as the top reason for adopting the computing architecture. Digital transformation came in second place this year, cited by 43% of respondents as the main driver for the move to multicloud, slipping from first place last year.

Other factors driving multicloud adoption this year included scalability, security and governance, and cost reduction.

Almost 86% of respondents claimed they are dependent on cloud operations and strategy teams, which perform critical tasks such as standardizing cloud services, creating and sharing best practices and policies, and centralizing cloud security and compliance.

Skill shortages were the top barrier to multicloud adoption, with 41% of respondents listing it as the top reason. Some of the other barriers listed by respondents included teams working in silos, compliance, risk management and lack of training.

Additionally, almost 99% of respondents said that infrastructure automation is important for multicloud operations as it can provide benefits such as faster, reliable self-service IT infrastructure, better security, and better utilization of cloud resources, along with faster incident response.

Eighty-nine percent of respondents said they see security as a key driver for multicloud success, with nearly 88% of respondents claiming they already relied on security automation tools. Another 83% of respondents said they already use some form of infrastructure as code and network infrastructure automation, according to the report.

Cloud Computing, Multi Cloud

Only a minority of companies who are either current SAP customers, or plan to become SAP ERP users, have completed their migration to the company’s S/4HANA system, even though support for its ECC on-premises suite will end in 2030, according to a report from digital transformation services provider LeanIX.

Just 12% of current and intended SAP ERP users responding to a LeanIX survey have completed the transition to S/4HANA, SAP’s cloud-based ERP suite that runs on the HANA in-memory database. The survey polled 100 enterprise architects, IT managers and other IT practitioners across US and Europe.

Another 12% of those surveyed said they intend to migrate, but have postponed the start of their S/4HANA transformation, and 74% of enterprises that were polled are just at the  evaluation and planning phase of their ERP transformation journey, LeanIX reports.

SAP introduced S/4HANA in 2015, expecting its existing base of 35,000 customers (as estimated by Gartner) to convert to the new ERP system.

However, SAP’s earnings disclosure show that S/4HANA has been attracting more new users rather than existing SAP ERP customers. In the last quarter of 2021, about half of all S/4HANA were new users, and for the last two quarters, 60% of S/4HANA users were new SAP customers.

Alignment among teams the biggest challenge

Almost 66% of respondents said that alignment, especially among IT teams, is the biggest challenge when it comes to S/4HANA mirgation.

“This may be due to the size of internal SAP teams: In 63% of the companies, these teams are often made up by more than 50 people,” the report reads.

Further, it states that only very few SAP teams work closely with enterprise architects, who can provide clarity about complex ERP landscapes and their dependencies within the whole software environment in an enterprise.

Only 33% of respondents termed the collaboration between the SAP and enterprise architecture teams in their enterprise as close, and 22% of respondents said that there is no collaboration between the teams at all.

Out of all of the enterprise architects surveyed, only 38% feel sufficiently involved with a transformation project, the report shows.

ERP, software dependencies pose challenges

And due to the lack of collaboration with enterprise architecture teams, almost 50% of respondents say that they see both the definition of the target architecture or roadmap and the identification of dependencies between ERP systems and the surrounding software landscape as challenging for SAP S/4HANA migration.

When asked about the level of transparency into these landscapes, only 20% of respondents said they always have a comprehensive overview or can achieve it in under one month, with 47% of respondents saying that they would need more than three months to provide an overview of all applications and systems, including all ERP solutions and dependencies, used by an enterprise.

Uncertainty over HANA transition period

Despite time for support for SAP ECC coming to an end, there is still uncertainty over the time needed for an enterprise to move to S/4HANA, according to the report.

While Gartner estimates or prescribes a three-to-five-year period as ideal for S/4HANA transition, almost 36% of respondents said that it could take more than three years, followed by 33% respondents estimating that it would take less than two years to upgrade.

However, when asked if the time currently planned for S/4HANA transition would be enough, 37% of respondents say that they would not be able to give an estimate, with 29% saying that they have not adhered to the time planned and overshot it.

Only 33% of respondents estimate that they will be able to complete the ERP transformation according to their planned schedule, the report shows.

Business IT Alignment, Digital Transformation, ERP Systems, IT Management