I had the opportunity to spend a few days with SAP executives and had to conclude that, despite proven successes, there is a great deal of uncertainty and nervousness at the SAP executive level.
Needless to say, the planned departure of CFO Luka Mucic early next year has thwarted, if not destroyed, some SAP plans. In SAP’s fifty-year history, Mucic is only the third CFO. You look in vain for this continuity in other board areas. Most executive board positions already have a turnover rate in the double digits.
None of the people I spoke to really wanted to comment on the departure that came as a surprise to many. Of course, everyone involved knows that Professor Hasso Plattner is very unhappy with the current SAP stock price and often voices his displeasure at supervisory board meetings. Plattner’s criticism may be correct, because it is obvious that the low share price is not only due to current politics or COVID-19. SAP bears a lot of the blame here, and it apparently needs a pawn. Of course, it is also possible that SAP and Luka Mucic have simply drifted apart.
In the past, Christian Klein and Luka Mucic have repeatedly demanded a higher share price based on SAP’s successes. If SAP were a startup with its cloud offering, the share price could possibly be twice as high. But what SAP must be blamed for in any case is the very rudimentary and inadequate communication. Is there an impressive narrative for SAP’s future? Is there a comprehensible strategy? Storytelling at SAP boils down to three terms: Hana, S/4 and RISE – as well as the demand: Cloud First.
In my conversations, it has become quite apparent that despite all the past successes, Professor Plattner is in little mood to celebrate. Although there is to be a 50-year celebration in Hamburg at the Elbphilharmonie, it is doubtful at the moment whether Plattner will be there. His SAP is imploding: The CFO is leaving the (sinking) ship, Plattner’s own planned successor (Gerd Oswald) will in all probability not be available, SAP has poor communication, no narrative, no storytelling for the financial analysts and no product strategy for beyond Hana and S/4.
In my recent conversations, it almost sounded like an apology: Yeah, we might have some problems, but we promised continued S/4 maintenance until 2040! That may be a nice message for the many SAP customers who will not have completed their S/4 conversion until 2030, but it’s no help to anyone who has to develop an ERP future concept for their own board of directors in the next three years – which is precisely why I wanted to spend a few days with SAP executives in the first place. I wanted to get information about an S/5, S/6 and S/7 and finally find out how Hana is to continue.
I can now well empathize with Hasso Plattner’s desperate situation: I felt the speechlessness, the lack of a narrative and the disorientation. All my conversation partners were anxious but determined. At the same time, however, they appeared helpless in the face of a low stock price, the ongoing loss of CRM market share to Salesforce, and the cloud threat from ServiceNow, Workday, Google, and many others. Of course, it must also be said that SAP itself made many strategic mistakes: dropping Celonis and relying on Signavio, which is now to be rescued with the help of Professor Scheer, is no tour de force from RISE inventor Christian Klein.
The nervousness and dissatisfaction have their reasons. So, in the end, my visit to SAP was not about arming myself with new arguments, but about the realization that SAP’s future seems very uncertain right now.
Another failed ambition of Hasso Plattner is SAP Hana. Hasso wanted to shake up the database world but today Hana is relevant only in a SAP landscape. Hana may have been a commercial success by force feeding to all SAP customers but outside SAP Hana effectively does not exist and it can not compete on its own merits. This is not what Hasso had in mind when he started Hana.
Inside their bubble SAP continues to think that their ecosystem rules the world as it did in the 1990s but the world has moved on.