The SAP services industry in Brazil is recovering from a steep decline at the beginning of the pandemic, after withstanding the impact of the country’s second COVID wave in January 2021, according to a new report published by Information Services Group (ISG) (Nasdaq:III), a leading global technology research and advisory firm.

“The S/4HANA market in Brazil has matured to the point where most companies will not be affected by the end of legacy SAP ERP product support”

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The 2021 ISG Provider Lens™ SAP HANA Ecosystem Services report for Brazil finds providers reported a sharp dip in business between March and June 2020 but saw sales come back gradually in the second half of the year, especially in November, as the number of COVID-19 cases declined. By the time the second wave hit in January, providers had adopted work-from-home business models and were able to close and sign contracts virtually and have projects carried out by consultants working remotely.

The work-from-home requirements imposed by the pandemic have actually benefited SAP service providers in Brazil by giving them greater access to local talent, the report says. Many independent consultants are now working remotely for more than one company, splitting their workdays into shifts. Brazilian providers can now afford these more highly skilled professionals by compensating them on delivery measures, rather than hours worked. In some cases, this allows local providers to hire freelancers who also work for European or U.S. providers even if they cannot match the foreign companies’ hourly pay rates.

Rebounding service engagements have allowed long-term growth of the SAP S/4HANA market to continue, ISG says.

“The S/4HANA market in Brazil has matured to the point where most companies will not be affected by the end of legacy SAP ERP product support,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Enterprises are accelerating their digital transformation plans and going ahead with upgrades for a range of reasons, including the need to move to the cloud in response to COVID-19 requirements.”

Enterprise customers gained more cloud flexibility with SAP’s “RISE with SAP” campaign, launched in January 2021, which allows companies to implement S/4HANA on a SaaS model running on any cloud they choose, the report says. SAP has reduced its efforts to push clients onto SAP S/4HANA Cloud, the shared ERP configuration running on SAP Cloud Platform (SCP).

Service providers in Brazil that carry out SAP S/4HANA transformations are improving their assessment and migration tools for both large and midmarket clients, ISG says. More are offering automated tools that use artificial intelligence to enable safer and faster transformations. These include tools to extract and convert data for loading into the HANA database and to identify custom code in SAP’s ABAP language and rewrite it to run with S/4HANA. This automation allows most transformation projects to be completed in less than 10 months.

The report also surveys the Brazilian market for services related to SAP Business Technology Platform (SAP BTP), previously called Leonardo. While BTP is not a common offering among SAP service providers in Brazil, a few are investing in expanding BTP services.

The 2021 ISG Provider Lens™ SAP HANA Ecosystem Services report for Brazil evaluates the capabilities of 36 providers across five quadrants: SAP S/4HANA System Transformation for Large Accounts; SAP S/4HANA System Transformation for the Midmarket; Managed Application Services for SAP ERP; SAP Business Technology Platform and Intelligent Technologies, and Managed Cloud Services for SAP HANA.

The report names Accenture, Capgemini and IBM as Leaders in four quadrants each, and essence IT, Infosys, NTT DATA (FH) and Tech Mahindra as Leaders in three quadrants each. Deloitte, T-Systems and Wipro are named Leaders in two quadrants each, and BCI Consulting, Cast group, Seidor and Softtek are named as Leaders in one quadrant each.

In addition, Infosys, Neoris, T-Systems and Wipro are named Rising Stars—companies with a “promising portfolio” and “high future potential” by ISG’s definition—in one quadrant each.

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