SAP’s Real Integration Challenge

The traditional SAP ERP model is well-known, its foundation being consistent data and integration of all functionalities to avoid redundancy. Due to numerous cloud acquisitions SAP has made over the years, this competitive advantage has been lost. Interfaces and redundant data sets have become necessary to integrate on-prem and cloud modules. Usually, it works, and sometimes, it even works well, but not as well as cloud offers from IBM, Oracle, Amazon, and Microsoft.

SAP executive board members Christian Klein, Thomas Saueressig, and Juergen Mueller are trying to consolidate SAP’s proliferation of applications. However, SAP’s existing on-prem and cloud offers shouldn’t become another R/3, which, at the end of the day, was kind of a ‘black box’. The new SAP is supposed to be integrated, multi-functional, and, most important of all, open. The new SAP world will be based on standards like O-data and leverage open-source products. It is supposed to combine the convenience of R/3 with the openness of web applications, meaning maximum integration and data consistency paired with maximum openness. Quite honestly, I think it could work – if Klein, Saueressig, and Mueller manage to strike a balance between an SAP integration that extends far beyond ERP and keeping customers satisfied.

My friends in Walldorf (SAP’s HQ) agree with me when I say that innovation and openness are great for SAP, users, and partners, but also for competitors who can more easily swoop in and poach customers. SAP’s competitors in this open, digital, and innovative market environment have become more numerous over the years. Furthermore, openness means open source, making it a necessity for SAP’s innovation plan. Problem is, SAP’s competitors are generally more comfortable in this area than the ERP company.

Taking all of this into consideration, it becomes clear what Klein’s real challenge will be: SAP’s integration, consolidation, and transformation to S/4 Hana must remain more cost-efficient than switching to another system entirely. If the S/4 conversion will be as expensive as a completely new ERP implementation, then I for one will license an alternative ERP system and let my successor handle the customizing.