What Was That About Core Competence Again?
Blog Editor-in-Chief

What Was That About Core Competence Again?

A few years ago core competence was a popular term. Then the paradigm shift began, unnoticed. More and more often, every IT service provider was able to do it all. It seems impossible for the application user to make distinctions. Direction and credibility are lacking.

It was the automotive industry that kicked off this general chaos in product offerings, in a big way. A company invented a new vehicle class and, the next moment, competitors copied the concept, fully regardless of firms‘ core competences. Now every global automotive group offers every conceivable vehicle type, from small car to high-end, from four-wheel drive to the hybrid engine. Of course, the IT sector copied the car makers. Is there any global IT service provider that is not including cloud computing, machine learning or blockchain in its repertoire?

Core competence is no longer a proof of performance for additional customer-confidence. Evidently today everyone must be able to do it all. Partnerships and cooperations count for little if nobody focuses on their own knowledge and draws upon it. For interested buyers and applcation users, the market offering thus becomes an unstructured, characterless exercise in randomness. Those no longer able to differentiate based on facts, functions or performance will take brands and their image as their orientation point. Again, the automotive and consumer-goods industries have understood and mastered this challenge well. Car advertising is about lifestyle and image. Sports shoes and sneakers are evaluated on the basis of three stripes or a well known swoosh.

Evidently, the IT sector has not yet come to terms with this paradigm shift. Although almost every market player offers cloud computing, the service providers are still trying to spearhead their market message by using technical terms, instead of highlighting their own company, their own knowledge and experience.

So is core competence thus irrelevant, behind the times? SAP has set the pace with the paradigm shift, now having its fingers in every IT pie. This includes in-memory-computing databases, blockchain, machine/deep learning, IoT, cloud and mobile computing, etc. People hardly hear anything about the former core competence in FI/CO and HR anymore. So has everything in that activity area already been invented and programmed already?


From an SAP customers‘ perspective, FI/CO and HR still rank among SAP’s unmatched core competences. Hardly any other software firm can hold a candle to the global market leader in ERP in these areas. That however does not mean that everything has already been invented with SAP merely needing to rest on its well-deserved laurels. In FI, with Continuous Accounting, there are highly interesting further developments available already, as SAP Partner BlackLine is impressively demonstrating. In HR the customers are by no means satisfied with ꞌcloud computingꞌ as the direction. SuccessFactors may be enough for some application-users, as a minimalist HR/HCM solution in the cloud, but for most users the simply-constructed SuccessFactors is no adequate response to complex HR/HCM processes. Pressured by DSAG, the German-speaking SAP user group, SAP has promised further development of an on-premise HCM solution. Undeniably, SAP does have the core competence for this undertaking at their headquarters in Walldorf.

Announcing that it will further develop HCM beyond SuccessFactors, also as an on-premise solution, SAP has revealed an important, necessary decision and roadmap. In this, SAP has remained true to its word. At SAP’s Field Kick-off Meeting (FKOM) 2018 in Barcelona we were told: ꞌWe must focus on our customers’ strategic priorities to create outcomes.ꞌ

Simultaneously however, SAP FKOM 2018 also exhibited the ꞌall IT things to all peopleꞌ approach: ꞌSAP CoPilot as your digital assistant,ꞌ which Alexa and Siri are better at; ꞌautomation through AI & machine learning,ꞌ – here too, Amazon, Google, Nvidia and Microsoft are already far ahead; ꞌIoT is a trigger and enabler for transformation,ꞌ – oh really? Outside of any core competence, all SAP is producing with this approach is buzzwords. There are no roadmaps spanning five to ten years that allow the actual customer to gain any sense of security. Hence, the SAP customers should be cautious and vigilant. This is also because the final message to us in Barcelona lacked any core competence at all: ꞌS/4 Hana growth is strong but start to position yourselves and sell Leonardo now!ꞌ

E-3 Magazine (German) March 2018

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 [email protected]

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