Blog SOH and S/4

The Deconstruction of the SAP Ecosystem

Could have, would have, should have. If SAP had recognized sooner that the SAP community is hybrid and heterogeneous, then SAP CEO Christian Klein would not feel the need to spin tall tales about hybrid, first, and only.

SAP’s Sleight of Hand

Cloud computing is a major trend, but with every quarterly report, SAP betrays their difficulties capitalizing on said trend. The figures relating to cloud use in SAP’s quarterly report have once again risen significantly. But what is presented as a success is merely an ingenious sleight of hand. The actual application of SAP products takes place within the SAP community and amongst the DSAG (German-speaking User Group) members, and few there want to hear about cloud computing.

SAP’s sleight of hand—a thought experiment: on your street there are two restaurants, both owned by the same person. A simple calculation shows that the restaurant owner could be making significantly more if they had only one restaurant—irrespective of the food they serve. The catchment area remains the same and competition has been negligible in the past.

And thus the restaurant owner decides to decrease the quality of service for one of the locales. Restrooms are now inadequately cleaned, and prices significantly raised. It comes then as no surprise that the hungry masses begin to frequent the other locale more, even though the food there is also bad, because at least the restrooms are clean, and the service staff makes an effort. At the provisional end of the story, the restaurant owner has accomplished their goal: a restaurant with a veritable profit margin! The other restaurant called “on-prem” will close down shortly. That is the deconstruction of a market segment.

And SAP?

The ERP world market leader has the best business management algorithms, tried and tested business processes. When SAP cancels an APO, Advanced Planner and Optimizer, that has worked perfectly for several years, and offers only a cloud-based service as an alternative, then it’s not surprising when many existing SAP customers are forced to switch over to APO’s successor IBP, Integrated Business Planning.

Why is SAP IBP a success story?

Not because, but despite cloud computing. IBP extends far beyond APO and has numerous innovative expansions to offer. This is where the old SAP’s unique selling points in the field of standard business software are made evident. Functions, algorithms, and IBP processes are unique—existing customers thus accept the cloud, even with the hard-to-manage maintenance windows.

Of course, there can be no talk of a voluntary switch to cloud computing or of the persuasive power of the cloud itself. If only one restaurant is open and gnawing hunger rears its head, then existing customers accept this offer in the absence of an alternative. However, it is an embarrassment when those responsible for SAP boast about their cloud expertise and celebrate an alleged success for cloud computing.

The trick is simple and transparent

SAP offers only one database for future ERP systems, namely Hana, and they rejoice at their success as more and more existing customers choose Hana as their database—but do they even have a choice? Far beyond 2040, when all existing SAP customers have converted to S/4, the Hana database will have a hundred percent market share—because it won’t technically be possible to have it any other way. But then SAP will once again pat themselves on the back and say that no other database provider has a one hundred percent market share. Don’t trust any statistic you haven’t falsified yourself.

Resistance is futile

Because of their illustrious past, SAP has the market power to use this sleight of hand with impunity.

The trick with the database caused quite a stir, yet remains unpunished. Why? Ultimately, which SQL-database a business’ data is stored in is not critical for their success. Another database could be faster, cheaper, and more efficient, but the difference would be within a very narrow percentage range. It’s not worth the effort to go to the antitrust authorities because of Hana, or to initiate antitrust proceedings in Brussels. The challenges for existing SAP customers lie elsewhere.

The end of SAP’s success is foreseeable if not yet within reach. Like the IT scene, the SAP community is also heterogeneous.  In hybrid landscapes, it’s not just on-prem and cloud services that change, but also app vendors. For many existing SAP customers, it goes without saying that they will be purchasing CRM from Salesforce and HCM from Workday. This agility is good for the market and a challenge for the provider, true to the motto “could have, would have, should have.” And another interesting piece of news to end with: more and more voices from the SAP community believe that the new SAP CRM is superior to the no less successful Salesforce in terms of usability and interface. This proves that the issue isn’t cloud computing, but rather functionality.

Source:
E-3 Magazine December/January 2022-2023 (German)

About the author

Peter M. Färbinger, Editor-in-Chief

Peter M. Färbinger is Editor-in-Chief and Publisher at E-3 Magazine, B4Bmedia.net AG, Munich, Germany. He can be reached at pmf@b4bmedia.net

Add Comment

Click here to post a comment

Sign up for e3zine´s biweekly newsbites

Please do not use administrative mail adresses like "noreply@..", "admin@.." or similar as these may get blocked for security reasons.

We use rapidmail for dispatching our newsletter. By signing up, you agree that the data you have entered will be transmitted to rapidmail. Please take note of their terms and conditions and privacy policy.termsandconditions.

Our Authors