A year ago, SAP still firmly believed in cloud only, or at least cloud first. The company has not yet cancelled the “RISE with SAP” concept. The ERP world market leader staunchly believes in its future success in cloud services. But SAP is an ERP world market leader and not a tech company like Google, AWS, Apple, and Microsoft. SAP’s unique strength is standardized business processes. SAP knows a great deal about end-to-end processes, but very little about IT infrastructure and computer architectures. SAP’s forays into cloud computing remain incomprehensible to most experts, even to this day.
Thus, the failure of a cloud-only approach in Europe, with its long-standing SAP tradition, was predictable. SAP customers with the R/3 legacy system and Business Suite 7 cannot and will not move their intimate business processes into the cloud. To appease its European customers, SAP made a hybrid concept available in fall 2022. But for new S/4 customers, the cloud-only approach would not pose a problem. Code splitting would thus make a great deal of sense.
A company having its own data center is not necessarily better than resorting to cloud computing. Many SAP customers use cloud services from Microsoft, Google, and AWS. But many SAP customers would also prefer SAP focus on business problems. There is concern that SAP is consuming a lot of its resources with its own cloud experiments and is thus neglecting its own strengths. The main topic of discussion in the SAP community is not whether on-prem or cloud is better, but rather concern over what the future of the ERP company holds. Will SAP continue to surprise its customers with innovative processes such as BRIM, Billing and Revenue Innovation Management, and IBP, Integrated Business Planning?
S/4 code splitting
SAP also appears to have some doubts about a hybrid ERP architecture, probably because on-prem and cloud do not harmonize easily. At SAP, the cloud-only faction now seems to be gaining the upper hand and taking on a life of its own with code splitting. One possible scenario would be an S/4 cloud-only that could evolve very quickly and successfully, free of hybrid demands and R/3. This S/4 cloud-only app could even replace the not-so-fresh Abap and become a Java and open-source-based answer to cloud competitors like Workday, ServiceNow, and Salesforce. If SAP were to then break into two factions, each group could be much more focused on its own technology and customers.
Code splitting would result in an on-prem Abap faction and a cloud-only faction. Both factions would probably be very successful, but both would also rapidly move away from each other. Right from the start, SAP would have to bury any hope that orchestration between on-prem and cloud would be possible in the medium term. Experience has already shown that synchronizing on-prem and cloud development is virtually impossible. Code splitting at SAP would therefore not be dissimilar to an equity carve-out. Whether the SAP community would support this experiment remains to be seen. What is certain, however, is that a hybrid ERP does not necessarily guarantee a successful future. Cloud computing or code splitting is thus a decision between a plague and cholera. SAP can thus fall apart in either a positive or negative sense, in either ruin or a carve-out.
Any questions, comments, or concerns? Please feel free to let us know in a comment down below.
I think the real message here is that SAP’s cloud strategy is NOT taking off as well as they want it to. This means they need to reconsider a cloud-only strategy, and instead offer best-of-breed solutions off-cloud as well.
Controversial title or not, leading ERP solution or not, this is a real problem for SAP.
Thanks for sharing your opinion.
At all levels, this is the stupidest article I have ever read in the history of ERP.
We think that a discussion about separate paths for private cloud (on-prem) and public cloud must be allowed both in and out of SAP—and is perhaps also necessary.
SAP is very far from falling apart…it is growing day by day there’s no need to argue on this…article should change this title
SAP is growing in the private cloud (on-prem) and public cloud, meaning the company is successful across the board. However, it is legitimate that SAP itself is thinking about “falling apart”, i.e. code splitting, in order to achieve even greater added value and success for existing customers. So if SAP is falling apart (in the literal sense of separating into smaller pieces), that can be both positive and negative for the SAP community.
What a sensationalist headline. “Falling apart”? How do you expect anyone in the sector to take you seriously? I’ve got plenty of criticisms of SAP, but to say it’s “falling apart” is just ridiculous and a cheap attention grabbing tactic. Grow up.
We see nothing negative about separating private cloud (on-prem) and public cloud. The splitting is due to technical and organizational considerations. Separate code development for different needs from the ERP area are not necessarily negative, nor is this a criticism of SAP. Many IT companies have shown that splitting can lead to success, but whether this will be successful for SAP, only time can tell.
Sap Rise mostly use other Hyperscaler and not only HEC ( sap cloud ). Infrastructure is not the problem.
The main problem for the customer is to work using ticket/incident approach.
They usually used direct call or mail.
I think that Sap Rise can be a great solution in the long term but it should be better organized internally to provide fast solution to the customer.
At the moment the workflow is too slow and to solve a problem it can take up to 2 days ( for a simple solution in certain case)
We have the same view: namely, that RISE is a good concept, but still has gaps in its practical implementation at SAP and at SAP partners. So there is still some room for improvement with RISE. And, of course, it is important to distinguish where the journey with RISE will take us: directly towards SAP or to hyperscalers, such as Microsoft, Google or AWS.
This is unnecessarily negative. Trying a bit too hard to be controversial, I think.
We see nothing negative in the separation (code splitting) of private cloud (on-prem) and public cloud as a first step. SAP developers will probably be able to concentrate more on app functionality through this code splitting. Whether there will then be a possibility in the future to switch between private and public cloud and overcome the code splitting is another matter.
Horribly biased article against Sao by the editor-in-chief.
No software co. would have survived for this long with one of the more stabler stock prices, if it is indeed as bad as projected with as much as 70% of world’s transactions using some sap product.
Sap erp isn’t dead. It is mature & stable. Cloud move is a worldwide trend and sap had adopted 3 cloud runtimes accepted by the software communities world wide.
Criticism against Sap & rise d btp & cloud first in NOT justified.
After 20 years of sap consultant i can watch how sap is prefering the cloud solution while neglecting the on prem Version in the utilities Sector. The last Rollouts for on prem were a quality desaster, because the whole workforce was put into the cloud version. Thus the customers are also forced in a way to buy the cloud Version.
Yes, we have also noticed this constraint. A good example is APO (on-prem) and IBP (cloud only). IBP is an excellent solution in terms of functionality and completeness. However, many current SAP customers do not want to be dependent on SAP’s maintenance windows for their cloud solution. This means that for logistics and supply chain, the demand for an on-prem solution is quite high within the SAP community.
SAP’s share price fell more in 2022 than its competitors’, such as Oracle and Microsoft, did. SAP co-founder and Supervisory Board Chairman Professor Hasso Plattner was very dissatisfied with the development of the share price last year and even before—a likely victim of this development was CFO Luka Mucic. Now SAP is getting a new CFO, Dominik Asam, who comes from Airbus. We will see how the share price develops.
SAP ERP is not dead, of course, but SAP’s European legacy customers with an R/2, R/3 and Business Suite 7 past are not happy with an SAP’s “cloud first” and “cloud only” strategy. RISE adoption is not high in Europe and is below average compared to the rest of the world. Cloud computing is of course a global trend, but it is important to distinguish precisely between private cloud (on-prem) and public cloud.
Such a ridiculous article! The company is winning customers and striking the right balance between on Prem and on-cloud solutions. None of the cIO of large organizations is stupid to live with a negatively portrayed version of SAP. The BTP as a middle ware is working well and they are winning unlike the workday and sales force that lacks clarity at all levels.
Code-splitting for private cloud (on-prem) and public cloud is not a negative assumption, but just an organizational and technical deliberation. We do not see any negative aspects in this discussion, but rather recognize and realize different goals. Certain functions can be implemented faster in a private cloud. Public cloud’s standardization and robustness are major challenges. From a functional perspective, code splitting can add value to both sides. Regardless of this, BTP can be a great success as middleware for all SAP applications, S/4, Ariba, SuccessFactory, Signavio, etc.
Well put. ERP software itself is beyond hopeless. Try to get past the idiotic nature of residual documents or call a service provider running glorious sap S4.. do the experiment try pay partially an invoice in bits . It is incapable to give you a balance of the invoice remaining. Yes.. try now to go back to the ridiculously designed ims type 70s tables n
Bpkf bseg and chart out what is where. Then reverse out an applicant. Soon you will get yourself in a knot. Please let us not use word erp leader. Erps evolove and keep abreast technical and solutions wise. Here it is neither. Abap u
Is long dead… Quasi client server then push down architecture to what others are doing decades earlier. Move to java and widget based tools. How cheap can u be to hand coding UIs in this day and age. Sap is not suffering from direction in S4. It is suffering a gereatric affliction it is obsolete and needs to be designed bottoms up in proper design methods by standardised UIs, interfaces, databases which scale well, proper documentation vs non existing stuff floating blogs or attend a course to find out.
Enough of the koolaid. Sap will fall into the legacy systems which it is already. The tsunami is on the door.
Thank you for sharing your opinion!
I am a bit confused. SAP has S4 Hana cloud which is a multi-tenant version that has a different code line from on-prem/pce S4. Are you saying their may be a code split between on-prem S4 and the cloud delivers S4PCE(RISE) offerings which are currently the same?
There was a difference between private and public cloud in the S/4 Hana offering right from the very beginning. This difference was not discussed until now because SAP’s public cloud offering was not yet ready for the market. Now both offerings, private and public cloud, are available. SAP is now discussing whether private cloud should be further developed as a hybrid cloud variant (on-prem) with its own code line. At the same time, there was and will be Public Cloud. Officially, they are called Private Cloud and Public Cloud. But for existing SAP customers, Private Cloud is an offering that can also be operated in their own data center (on-prem), while Public Cloud is a true cloud computing offering.