We are ERP! …Right?

A friend and analyst mentioned the new SAP motto “We are ERP!” to me in an email. It was first introduced by executive board member Adaire Fox-Martin during FKOM 2020. According to her, SAP is first and foremost an ERP company – but what about cloud, in-memory computing database Hana, C/4 and Qualtrics?

Well, scratch C/4, actually. The CRM vision of Bill McDermott was never feasible; it was DOA, really. The C/4 idea, first introduced during Sapphire 2018, was more a rebranding of SAP’s acquisition Hybris than anything else.

What about Qualtrics, though? The way former CEO Bill McDermott tried to convince customers of its merits, you’d think SAP’s new management would be all over that money maker. While especially co-CEO Jennifer Morgan is praising the company, that’s about all we hear from Qualtrics at the moment while it continues to profit off of SAP’s customer base.

The new business contacts help Qualtrics grow its revenue, but that’s not exactly what customers imagined when McDermott told them how successful it would be. It was supposed to be combined with other acquisitions of recent years to form the best and most powerful CRM system in the market. Even Hasso Plattner seemed convinced at Sapphire 2018.

However, like so many other SAP ideas, it just wasn’t meant to be. Now that Bill McDermott is gone, C/4 is officially dead and Qualtrics is more a business partner than an integrated acquisition.

What Adaire Fox-Martin therefore means when she says, “We are ERP!” is “Back to the roots!” Not only did C/4 fail spectacularly, but also the cloud strategy with HEC and HCP never really took off. Will Hana 3, the new code vision with infinite cloud scaling and software multitenancy, fail as well?

Going back to SAP’s roots is not a bad thing – in some instances. During the R/3 era, SAP’s data compatibility and module integration was exemplary. Customers’ wish to harmonize, synchronize and integrate all cloud acquisitions was not thought of on a whim. SAP community veterans know, love and now miss the continuity and compatibility of the R/3 model.

We are ERP – but not Hana 3?

An especially complex construction site at SAP is Hana, the genius in-memory computing database that was never intended for the cloud. Hana was supposed to introduce real time into the SAP realm, just like former CTO Vishal Sikka intended. And Hana is real time – but it was never anything else than an on-prem project. If Hana cannot scale in the cloud, then that’s a systematic failure in the Hana code.

SAP recognized Hana’s architecture deficit. Cloud computing can only be profitable if the application can scale infinitely. To implement a Hana instance in cloud datacenters for every new SAP customer is expensive, illogical and counterproductive – at the beginning of SAP’s cloud journey, the ERP company thought it was the way to go, but it’s not feasible in the long term.

SAP recognized the Hana dilemma and commissioned Hana 3. For over a year now, it has been working on a new Hana code supposed to comply with all requirements of successful cloud computing. This year, the new Hana cloud edition is supposed to premiere, but the results have been disappointing so far: transferring traditional Hana applications to the new HCP creates dangerous anomalies.

We will see what SAP will be able to whip up before mainstream maintenance for ERP/ECC 6.0 ends in 2027, but I’d say the new management has their work cut out for them.