Is SAP the better cloud service provider?
SAP is probably the most valuable IT group in the world—but hardly anyone knows that, least of all SAP itself. Pointless discussion about cloud computing has severely weakened the ERP world market leader in recent years. Instead of focusing on its unique and still undisputed core competencies, SAP is pointlessly trying to prove that it is the best cloud service provider.
The situation is comparable to if a renowned and successful car manufacturer decided to operate a refinery simply because car engines need diesel or gasoline—and whether the bet will pay off now that car manufacturers are setting up their own battery plants also remains to be seen. Stick to what you know: successful car manufacturers do not run construction companies just so they can build highways , nor do they develop parking garages. Likewise, SAP should keep its hands off hosting, hardware, databases, and cloud computing. But SAP could not resist temptation and was ultimately overtaken in CRM core competencies by competitor Salesforce in terms of revenue and stock market value this summer.
If SAP is not a perfect cloud computing provider because Microsoft, Google, Alibaba, or Amazon have more years of experience and better scaling effects, then no one can hold that against them. Latecomers always have it a little harder. If SAP is not perfect as a database provider because its own in-memory database is still young, then no one can hold that against them either. IBM and Oracle are old warhorses in that area.
If SAP does not have a perfect CRM system and its own existing customers are migrating in large numbers to its competitor Salesforce, then alarm bells should be ringing throughout Walldorf, the main headquarters of SAP. CRM is as much a part of ERP as SCM, HCM, finance, and controlling. If SAP fails in its core competencies and loses revenue, profit, and market value to Salesforce, then the management board and supervisory board must ask themselves whether there are fundamental problems here beyond exchange rate fluctuations, war, pandemics, and working from home.
One of the co-inventors of CRM has lost out to a newcomer in cloud services. Salesforce has overtaken the ERP world market leader SAP with its CRM product idea. How could this development occur? Does Salesforce have better programmers? Does Salesforce have a better sales concept? Does Salesforce have better management? I think the answer to all these questions is no. SAP’s fundamental problem is its product-oriented approach—which is why the SAP community must now help the ERP world market leader.
In many business sectors, it is no longer about functionality, quality, and price, but about communication. Over the past twenty years, there has been a transition from functionality to meaning. Many years ago, Audi advertised its cars with emphasis on the Quattro, a four-wheel drive. This feature was unnecessary for most people, yet it triggered consumers’ desire.
For many years, the point of having an Audi in Salzburg, Austria—where I reside—has been to bring visitors safely and comfortably to the world-famous Salzburg Festival. But Audi has now changed its entire brand message from Quattro to culture. It is not the technology itself that is the competitive edge, but rather what the consumer can do with that technology.
An example of marketing, of pure and simple storytelling, is the image of a smooth ride in an Audi e-tron on route to the Felsenreitschule Theater at the annual Salzburg Festival to see the sensational performance of the Czech opera “Káťa Kabanová” by Leoš Janáček, starring the stunning Corinne Winters as Katěrina (Káťa).
SAP CEO Christian Klein and his colleagues on the executive board have not mastered this type of storytelling. Christian Klein still recites the functionality, quality, and interoperability of BTP, Hana, and S/4 to his customers. What users are supposed to do with this technology is all up to them.
What Christian Klein refuses to, and perhaps is unable to, use is storytelling. SAP has been overtaken by Salesforce because the other CRM provider tells all the right stories. Ex-SAP CEO Bill McDermott was an excellent storyteller. ServiceNow, where McDermott is now employed, will soon overtake SAP as well. We should all help SAP tell good stories because there are more than enough of them to be found in the SAP community. As the community very well knows, SAP is probably the most valuable IT company in the world.