Company Core

What was considered a goal for new customers as well as for established SAP customers in the early years of SAP ERP is now long outdated. More and more third-party solutions are entering the market and helping their customers to connect to their SAP solution in a wide variety of ways. As a result, SAP is becoming a platform and supporting a wide range of digital transformation strategies that cannot be implemented with SAP board resources alone.

SAP offers a large number of additional solutions, which - because they are mostly bought in - are connected in a similar way to third-party solutions. SAP also does not want to expand the actual SAP solution core too much, because otherwise it costs performance and worsens the administrability.

Moreover, additional products from SAP can be offered to existing customers at higher prices than if everything were integrated in the core from the outset.

For customers, this modularity is a great advantage. With today's solutions for combining on-premise, private and public clouds as desired, customers regain their flexibility. Maintenance and further development can also be carried out in an agile manner and thus much faster, more securely and in any number of steps.

This means that the (painful) path SAP told its customers to take to the in-memory database Hana was the right one for many. SAP likes to use the term "Digital Core" for S/4. In this way, SAP has moved back closer to its R/3 honeycomb model, which at least longstanding SAP customers still know.

Grouped around the R/3 client/server are the logistics, accounting and human resources module blocks, each with their own submodules such as FI and CO, and an additional area with cross-application functions such as WF (Workflow) and IS (Industry Solutions). The development and expansion of Industry Solutions has been one of the strong drivers of SAP's further development for years.

With S/4, SAP has taken the opportunity, on the one hand, to benefit from past experience and to adopt proven solutions. In a sense, S/4 is the successor to the core of ERP, namely the ERP Central Component (ECC). However, ECC has been "re-cut" and functions from other modules have been integrated, while others are missing.

It is noticeable that important components, such as the acquisitions of recent years, have not been integrated. In the case of the acquisitions, this restraint makes sense, since integration costs a lot of time and money and does not bring enough advantages in the operating models that are common today.

This can be seen in solutions that are traditionally outsourced by companies, such as human resources management (at SAP: SuccessFactors) and travel bookings and expense reports (at SAP: Concur). Solutions around service management and workforce (at SAP: Fieldglass) can also traditionally be operated well independently.

Even if SAP connects its own solutions well, the separation creates opportunities for third-party providers. The situation is different with procurement (at SAP: Ariba). Here, the processes have a deep impact on corporate workflows. Here, SAP will probably shy away from the effort or add "born by SAP" solutions.

This is already being done in part with C/4, which is more or less different from the acquired SAP Hybris. In the case of the new acquisition, the survey platform Qualtrics, the remaining independence of SAP is even emphasized.

Customers who use SAP's Digital Core have a good starting point with this core and a high degree of freedom to connect the other modules that suit them, whether they come from SAP or from other providers.

I borrowed the title of this column from a 1994 book, which was made into a movie in 2003 as "The Core - the inner core". It's about the standstill of the Earth's core, something that I hope never happens to you with your Digital Core.