SAP makes shareholders happy with high dividends. Even though customers might be dissatisfied with SAP’s roadmaps and cloud apps, and even though its on-prem license sales are going down, SAP’s figures seldom disappoint.
Sometimes it seems like everything SAP touches turns to gold. The list of software flops from the German ERP company is relatively short. And there’s a simple reason for that: SAP outsourced testing to the customer. By having customers run the software until it is faultless, even the biggest catastrophes are easily remediated.
Even the greedy cloud acquisitions made by former SAP CEO Bill McDermott were never able to threaten the company’s exceptional growth and figures. Despite the lack of roadmaps and integration as well as low availability (see SuccessFactors), SAP’s cloud figures seldom disappoint.
SAP’s Midas touch: blessing or curse?
Even the most awestruck observers have to ask themselves how long SAP can continue this streak. This seemingly endless chain of success after success, fueling the myth that everything SAP touches turns to gold, has one tiny flaw: the contribution margin leaves a lot to be desired.
SAP knows about this flaw and is doing everything it can to combat it, even if it means the company has to pinch pennies wherever it can. Cloud could certainly be a significant part of maximizing profit – if the ERP company didn’t recently announce a new roadmap involving extended maintenance for Business Suite 7 including AnyDB, NetWeaver and compatibility packages that’s going to cost a lot of money until 2030.
The new lean maintenance infrastructure with Linux and Hana that SAP has been dreaming of for the past years will have to wait. Instead, numerous hardware configurations, databases, NetWeaver stacks and employees with Abap and Java know-how have to be retained and paid for until 2030. Every step of the way will cost SAP a lot of money – not the best prerequisite for increasing its margin.