SAP’s Metamorphosis

Does digital transformation change and transform the meaning and function of ERP software? This is not a question of whether to deploy it on premises, in the cloud, or in a hybrid system landscape. Many existing customers are questioning the fundamental SAP paradigm: Does there need to be a central database in line with the old, three-tier client-server model? Does every piece of software in an IT landscape have to come from SAP itself?

Given the technical and organizational possibilities, the answer to these two questions would have been a resounding yes just a few years ago. However, information technology has evolved quickly: Distributed databases with blockchain technology are possible. Almost any combination of applications with container technology is no problem. Open source in hyperscaler clouds is a given. Salesforce and Workday can easily communicate with SAP systems.

From a meta-level, ERP is undergoing a metamorphosis, driven by digital transformation. This evolution is a positive development for the SAP community because it opens up new opportunities. However, it might be dangerous for SAP itself, because it threatens its traditional business model depending on rigid licensing and multiple dependencies.

SAP could undergo a metamorphosis and rise like a phoenix from the ashes into a new ERP heaven. But will SAP manage to shed its legacy? This much can already be said: In five years at the latest, i.e., well before 2030, SAP will have to transform itself under pressure from competitors such as Salesforce and Workday.