sap defragmentation cloud on-prem [shutterstock: 2155709159, Rroselavy]
[shutterstock: 2155709159, Rroselavy]
Blog Nomen Nescio

SAP’s Defragmentation

To establish public cloud as the infrastructure of choice would be like winning the jackpot for SAP. Scaling effects are enormous, but individuality, innovation, agility, and resilience fall by the wayside.

The idea behind SAP’s concept “Cloud Only” can be described as “greed”. There is nothing that the public cloud can do better than other IT architectures – except drive margins to over 90 percent with a huge scaling effect. Wanting to make money is not inherently bad, but if all other parameters are negated and only the size of the bank account is taken as a yardstick, then the very advantages that have made R/3 so successful are disregarded.

For successful SAP customers, R/3 and ECC 6.0 are the foundation, Abap modifications the freestyle. Because SAP’s classic ERP systems can be defragmented with a client/server architecture, they offer individuality, innovation, agility, and resilience.

The discussion is therefore not primarily about on-prem or cloud, but individualization versus standard. Who is the world’s most successful cloud provider? The answer is simple: AWS. The highly talented AWS computer scientists are not much different from their colleagues at IBM, Microsoft, Alibaba, Google, or SAP. Rather, the secret is a unique scaling effect based on standards cast in silicon.

SAP will never gain an USP in the database sector or in cloud applications – even its consulting expertise is not outstanding. However, SAP is the global market leader for integrated, feature-rich, internationally applicable ERP systems. There are endless possibilities for expansion and modernization – and that’s what SAP should focus on: the added value that comes from defragmentation.

In a world where many things are becoming more stringent, standardized, and compliant, SAP’s customers can gain a competitive edge through individuality and innovation. However, SAP’s efforts are going in exactly the opposite direction: With a public cloud and strict rules on the Business Technology Platform, the ERP company is trying to further increase its gross margin.

Behind all this criticism is ultimately concern about SAP: Many customers are asking if we will still have an ERP world market leader from Germany in ten years’ times. The more homogeneous and compliant the SAP offering becomes, and the more the share price will fall in the coming years, the easier and more likely a hostile takeover will become. A standardized SAP with 90 percent of its existing customers in the public cloud and a share price well below 100 euros is a sitting duck for hyperscalers.

Only a heterogeneous, individualized, defragmented SAP community can spoil the appetite of hungry hyperscalers. The success of ERP/ECC 6.0 lies in customization, the numerous user groups, a successful CCoE concept, and a vibrant SAP partner landscape. Any attempt – such as RISE with SAP – to norm the SAP community is counterproductive.

E-3 Magazine June 2022 (German)

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N. N. (Nomen Nescio)

Nomen nescio, abbreviated to N.N., is used to signify an anonymous or unnamed person.

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