People are allowed to make mistakes, but running into the same dead end twice is irresponsible and stupid. Many years ago, SAP tried to set up an outsourcing and hosting business with its Germany-based subsidiary SAP SI. The attempt failed and Deutsche Telekom took pity and bought the company.
Many years later, SAP is trying again: This time, the project is called cloud computing and is no less ambitious. SAP wants to prove to global IT groups such as IBM, Microsoft, Oracle, Salesforce, and Workday that it is just as good at infrastructure and services business. While the effects are catastrophic, SAP has unfortunately long since passed the point of no return. By now, the foray into cloud computing can’t be stopped. SAP must take off into the cloud or the ERP world market leader will topple.
SAP has committed itself to cloud computing without any need or compulsion, even though many other business and organizational fields fall by the wayside. RISE with SAP could have become the business management framework for digital transformation. It could have ushered in a new digital business administration and organization theory. Instead, RISE with SAP became a tool for cloud computing.
If transformation, sustainability, and purpose are to be more than buzzwords, companies need real system change. SAP thinks it has found this system change in cloud computing. Investor confidence in the shares and stock market activity paint a different picture. Over the past three years, Microsoft’s stock price has risen by about 88 percent and Oracle’s by about 44 percent, Salesforce’s has stayed almost the same, and IBM’s has fallen by a little over five percent, Workday’s by about ten percent, and SAP’s by 21 percent. Thus, SAP CEO Christian Klein’s purpose and RISE have destroyed a good amount of stock market capital. (The selection of companies was based on SAP’s self-defined peers.) To compare: While SAP’s share price fell by the aforementioned 21 percent during the period from September 30, 2019 to September 4, 2022, the DAX rose by almost ten percent.
Gut feeling and common sense would probably call for a serious strategy correction in view of these figures. But SAP has passed the point of no return. The technical cloud transformation with RISE must succeed. For too long, the core business and organizational competencies have been neglected, but there is still tremendous potential in the ERP company that many SAP executives apparently fail to see for the clouds.
With its core business competence, SAP could outpace most IT groups such as Apple, Google, AWS, Oracle, and Microsoft. SAP CEO Christian Klein would have to find the courage to concentrate on SAP’s own strengths and look less at the technical offerings of the supposed competitors. RISE, purpose and “cobbler stick to your last” do not have to contradict each other.