Users Are Different

SAP is attempting to transition customers to the cloud. First with a martial "cloud only," then months later with a conciliatory "cloud first." SAP is currently satisfied with signed cloud contracts and allows on-prem operation until 2033 because these words on paper are not binding.

“Cloud” is the mantra of SAP CEO Christian Klein and CFO Dominik Asam. At the start of their careers, the cloud was a megatrend in the IT scene, which led to SAP rushing to ensure it would not be excluded. SAP's cloud experiment was a success, delighting financial analysts. The SAP share price rose sharply, and Deutsche Bank analysts predicted a share value of 300 EUR.

SAP almost achieved this goal, but users, customers, shareholders, and analysts do not always behave in line with the market. While the SAP community may have left the golden age of R/3 behind, many other successful legacy systems are still in operation. The transition to S/4 began ten years ago, and it is not what SAP anticipated. The "patient customer" is far from dead with their "old" ERP releases.

Whatever Jim Hagemann Snabe and Bill McDermott, the former SAP dual leadership, may have believed and planned, the old SAP Business Suite 7 is alive and well, and the computer scientist declares: never change a running system!

"Operation Cloud" was successful at SAP, albeit unsustainable. No new ERP was created on the way to the cloud. There is no cloud innovation, only existing cloud customer business. The move to the cloud was right in principle, which means SAP is currently well-positioned and successful. However, the construct is not sustainable; nothing new has emerged from the S/4 conversion and cloud digitization efforts.

Ultimately, it was a lift-and-shift with no innovative added value. Financial analysts have also recognized this dead end and realized that AI agents will soon take the helm. SAP shares are beginning to fall and are far from their former high.

The cartoon by Robert Platzgummer (1975 to 2016) was first published in the May 2012 issue of E3. At that time, SAP customers were still more than successful with the ancient ERP R/3, while SAP was attempting to sell the Hana database and an upcoming S/4.