Run simple and rise with - what?

SAP CEO Christian Klein started the annual press conference at the end of January this year with a lot of momentum: "What a difference a year can make. SAP has significantly accelerated its growth in the cloud, Rise with SAP is a huge success and I am really proud of the strong mentality and teamwork of our Executive Board and the entire company." Whistling in the woods?

The explanation on Wikipedia: Instead of confronting the threat or avoiding the danger, the person tries to encourage themselves by whistling a tune. And there is a threat to SAP. Neither SAP nor the DSAG user association has an answer to the current discussion as to whether Hana and S/4 are still up to date. The digital transformation has greatly accelerated the development cycles of IT providers. The good ideas of an in-memory computing database and an SAP Business 7 successor were innovative and came at the right time, but Hana is now over ten years old and S/4 over five years old - an eternity in the fast-moving IT scene.

In the best-case scenario, the S/4 conversion will be completed in 2027. However, it can be assumed that it will be 2030 and beyond before all existing SAP customers are productive on S/4 Hana. But then the question "How up-to-date are Hana and S/4?" is more than justified and the answer can be anticipated: Beyond 2030, the Hana database and the S/4 ERP system will no longer be up to date. From a business perspective, every SAP system from R/3 to S/4 is still the measure of all things in the ERP world. Many business processes from ERP/ECC 6.0 and S/4 have become standard. If you want to map your organizational and operational structure using IT, you are on the safe side with ECC and AnyDB as well as S/4 and Hana.

There are concerns and criticism regarding the information technology used in the cloud and on-prem. Only a few are willing to grant SAP technological leadership, especially in the area of cloud computing. The discussion about the current user interface is similar. A presentation of a current S/4 system is often less successful when competitors such as UiPath, Salesforce, ServiceNow or Workday are involved. Most competitors have the more appealing interface. On the other hand, SAP almost always wins when it comes to back-office functions, compliance, the scope of business processes, business processes and governance. Fifty years of experience in ERP and business management is still unique.

Technology versus processes

Christian Klein put it correctly at the annual press conference: "To remain competitive, customers need more than just a technical implementation. They need to change business processes and strive to standardize them. That's why many of our customers rely on Rise with SAP." However, its success in the SAP community is limited, as a study conducted by the DSAG user association last summer shows: Only twelve percent of DSAG members consider Rise's offering to be somewhat to very valuable and 39 percent believe that Rise is not very or not at all valuable. This means that only ten percent of DSAG members are actually considering getting involved with Rise.

DSAG Board Member for Transformation Christine Tussing said at the presentation of the study: "SAP needs to communicate the added value and the associated transformation potential of Rise with SAP much more clearly. Because only those who recognize this value contribution as part of their corporate transformation will also shape the path with Rise with SAP." Where Christian Klein sees his huge success with Rise in the past year remains unresolved, but he explains to financial analysts: "To be competitive, customers need more than just a technical migration to the cloud. The most difficult part of the transformation is not just implementing new technology, but also changing long-standing business models and standardizing business processes. Many customers have discovered Rise with SAP as a unique offering that enables them to achieve a holistic business transformation. Rise is a journey in which SAP is moving even closer to its customers to offer them three key benefits: business process re-engineering, cloud migration and continuous innovation. With Rise, we don't just want to achieve a technical transformation of existing IT landscapes. We want to help our customers eliminate the complexity of existing system landscapes and move to a modular and integrated ERP system in the public cloud."

SAP has acquired many good cloud systems in recent years. In some cases, integration into the ERP core has been neglected. The question currently arises as to how this integration could take place in a modern way. SAP CEO Christian Klein is very keen and repeatedly emphasizes his success in consolidating the numerous cloud systems acquired by his predecessor Bill McDermott. The dominant theme in recent years has been the integration of SAP's innovations into a common standard. The project has come a long way and is showing moderate success, but the question must still be asked: Is it still up to date?

Computer science itself has been working with microservices and containers for many years in order to make large monolithic IT architectures manageable. Ultimately, it is about the management of complex ERP landscapes. The digital transformation is continuously expanding the range of topics, so it is to be feared that Christian Klein is too late with his efforts for final integration. The effort to integrate is a Sisyphean task: as soon as A is integrated with B, C comes around the corner and the whole process starts all over again. A microservices architecture and container management are designed from the outset to integrate everything - come what may! And many more innovations will hit the SAP community. The topic of containers and microservices is thus gaining further attention at SAP, and this year the SAP community could be surprised with important announcements.

Journey to the Cloud

Hope dies last: According to DSAG, the idea of traveling to the cloud has not yet been fulfilled. The majority of DSAG members will continue to rely on S/4 Hana on-premises in the future. Only just under half of those surveyed have a positive attitude towards the cloud, while a further quarter are neutral. According to the user association, the greatest challenges are currently posed by license models and costs. There is still room for improvement in terms of knowledge about Rise with SAP. Only 33 percent of DSAG members are already familiar with it and only ten percent currently consider it likely that they will consider Rise with SAP. Nevertheless, SAP CFO Luka Mucic also maintains that Rise is a success: "Rise with SAP has been a great success and has contributed significantly to our excellent results. Not only have we gained 1300 customers, which is well above our expectations, but we have also seen a high adoption rate among our largest customers"explained the CFO during this year's balance sheet presentation.

"Rise is a journey, and it doesn't stop at the point of sale"said Christian Klein during the SAP balance sheet press conference. "As a result, our incentives are much more focused on change, time-to-value and the advisory business to give our employees a real incentive to strive for customer success." In order to convince the community, SAP is not only relying on its own employees, but also on partners such as IBM. It has now been announced that IBM is the first SAP partner to provide cloud infrastructure and technical managed services as part of the Rise offering.

One year after the announcement of Rise with SAP, there is now an SAP partner that goes beyond consulting and is the first partner that can cover the complete stack from technical foundation (IBM Cloud) to SAP migration, application operations and SAP innovation. As part of this collaboration, IBM will provide technology and consulting services to enable clients in both regulated and non-regulated industries to more easily transition to a hybrid cloud model and move business-critical workloads from SAP solutions to the cloud.

Cloud only - what?

In contrast to the "cloud only" that Christian Klein and Luka Mucic are calling for, IBM believes that more and more customers are opting for a hybrid cloud strategy. In order to be able to move workloads and applications that form the backbone of their business operations to the cloud, IBM believes that existing SAP customers need a secure and reliable cloud environment. IBM recently introduced the Premium Supplier Option for Rise with SAP. It provides existing SAP customers with tools that enable them to migrate SAP software workloads from their on-prem environment to the IBM Cloud more quickly.

Christian Klein is convinced and said as much at the annual press conference: "A large part of our installed base is now being moved to the cloud. Many customers are going with us, because when you compare on-prem with the cloud, customers simply no longer have the time to carry out complex upgrades and change their system landscapes every seven years. And of course we are continuing our innovations in the cloud. Customers want to move to the cloud, they don't want to be left behind."

With the recent announcement that IBM will become a Premium Supplier, IBM will in future be the first cloud provider to offer services for infrastructure, business transformation and application management. The "Breakthrough with IBM for Rise with SAP" program was presented for this purpose. The portfolio of solutions and consulting services is intended to help companies move to an S/4 cloud more quickly. "'Breakthrough with IBM' is an ideal complement to our Rise with SAP offering, as it creates the conditions for our customers to tackle or advance their transformation"confirmed Brian Duffy, President of Cloud at SAP. "It also underpins the added value that customers associate with Rise with SAP and extends the opportunities that Rise offers companies on their journey to the cloud."

End-to-end, but how?

"Our strength in the cloud business is obvious," said Christian Klein at the beginning of this year. "More and more companies are choosing SAP to reposition themselves, build robust supply chains and become sustainable businesses as they move to the cloud. This dynamic development is reflected in the tremendous success of Rise with SAP, our flagship cloud offering, and the outstanding growth of our entire portfolio. This accelerated growth promises even greater opportunities in the future." The opportunities in the future are therefore based less on technical innovations and more on the reengineering of business processes - a key challenge of digital transformation. It was therefore logical not only to announce the Rise concept a year ago, but also to acquire the Berlin start-up Signavio.

Signavio has now defined some trends for this year, but without explicitly addressing Rise: These trends reflect the increasingly business-critical importance of process management. Whether digital transformation, Covid-19 or disrupted supply chains: Companies worldwide faced major challenges last year. Only those who were able to adapt quickly to changing market and customer requirements on the basis of efficient processes were successful in the new normal. Intelligent process management was therefore more necessary than ever, according to Signavio. Many companies are now increasingly drawing the consequences from the negative experiences of the past year. According to Signavio, the following developments and necessities are emerging, which will change the BPM (Business Process Management) sector in particular.

Process excellence and mining

To be successful in the long term, companies must recognize that process excellence is the basis for fast response times. Only in this way can companies efficiently adapt processes to new conditions, translate findings into business improvements in the short term and drastically reduce the time to market for new products. Process excellence will therefore become the most important factor for a company's agility in this and subsequent years, which will also mean that many existing SAP customers will be looking beyond the ERP shell for new solutions beyond SAP.

Ten years ago, process experts mainly optimized existing processes to make them faster and more cost-effective. Today, they are at the forefront of companies and are actively shaping the future. As experts in the areas of change and flexibility, they are primarily responsible for reducing the complexity of organizations. At the same time, process specialists have often moved into management positions in many companies. The importance of the topic of processes is also reflected in the success of the former SAP partner Celonis from Munich. Process mining can become a decisive competitive advantage if the business and organizational knowledge is also available. To this end, Signavio entered into a partnership with Scheer, the veteran of BPM, at the end of last year. 

"No company can operate successfully without clearly defined and optimized business processes. No company can ignore the need for transformation and flexible adaptation to new customer requirements and changing market conditions"explained Gero Decker, Co-General Manager, Business Process Intelligence, SAP, and co-founder of Signavio. 

IT experts and SAP agree on many IT trends. However, while SAP wants to lead its existing customers into a closed store of Hana and S/4, many IT users want flexibility, agility and transparency. The possibility of operating SAP integration via microservices and containers was mentioned. Another step would be to open up to open source, as IBM has done with Red Hat, for example - SAP has not taken this step. Since the beginning of this year, a discussion has been ongoing on the topic: How up-to-date is S/4? The same question needs to be asked: How innovative is Hana? SAP's database platform is over ten years old and has only been given a makeover by former SAP Chief Technology Officer Bernd Leukert.

The future of S/4 and Hana

The fact is that there is no community of developers and applications for Hana beyond the ERP boundaries of SAP. One idea would be to position Hana as open source software on GitHub and hope that interested parties can be found who would like to further develop the content. A model similar to Linux under the responsibility of Suse and Red Hat would be conceivable. In combination with the IBM company Red Hat, standardization on the IBM Power platform would be a further added value for the SAP community. However, as long as Hana bears the "S/4 only" trademark, there will be no fan base for this database.

However, this broad open source support for a core element of SAP's ERP strategy is urgently needed. A shortage of skilled workers, pressure to innovate and a lack of demand are just some of the many effects of the current pandemic. Their consequences require a rethink, including in the IT infrastructure. In this context, 74% of the companies surveyed by Techconsult that use individual software solutions see this use as the reason for their success - a discussion between individual software and standard software that is now arising again. Individual solutions not only offer leaps in innovation, but also competitive advantages over competitors. The research and analyst firm Techconsult has examined how German companies are currently positioned with regard to the use of individual software solutions and how such solutions are used as drivers of new and innovative technologies.

Choosing the right software is therefore extremely important. However, whether a company opts for standard software or prefers to develop its own usually depends on the company's specific requirements. More than every second company opts for the development of customized software. For SAP itself, this would also represent an enormous opportunity: hardly any beleaguered CIO wants a return to the proliferation of Abap modifications, but SAP's BTP, Business Technology Platform, can fulfill many special requests if SAP were to get to grips with the issue of subscriptions and CPEA, Cloud Platform Enterprise Agreement.

Existing SAP customers and the user association DSAG still see major challenges in SAP's cloud approach with its sometimes expensive and complex licensing scheme. SAP itself obviously sees things differently: "I am proud that our team has achieved an outstanding year with strong results that far exceed our expectations. With this quarter, we have brought the year to a very successful close after already extremely strong growth momentum in the cloud business. We are confident that we will continue our growth in the current cloud backlog from the fourth quarter into 2022. The forecast for the cloud business in 2022 reflects a further acceleration as we make great progress towards achieving our mid-term targets," said Luka Mucic, CFO of SAP.