Will my hyperscaler accept me? Rise or Fall?
Rise with SAP could be an interesting offering if it were available to every existing customer in the SAP community. The brave own the world! The SAP existing customer signs a FUE blank check in Walldorf and the next day is in the cloud with optimized business processes - Signavio. But that's not how it was meant.
Christian Klein has failed to create a win-win situation, so the latest initiative from Walldorf is a "Rise and Fall with SAP" for us existing customers. I had a statistic of our release statuses created and took it to my SAP regulars' table.
To put it simply, just under 20 percent of our Group's operational systems meet the requirements for Rise - the rest fail: Rise and Fall with SAP!
Obviously, no one has dared to speak the business truth about the cloud: It only pays off if everything is standardized and no one steps out of line. Ultimately, only the public cloud leads to entrepreneurial profit, see Workday, Salesforce and Qualtrics. No one knows this better than SAP itself.
Of course, Hana, Linux and the Business Technology Platform are a technically sensible step, but SAP benefits much more on the business and organizational side. Now there is no longer any need to keep a wide variety of system configurations in support. The combinations of hardware, operating system and databases are almost unmanageable under R/3 and ECC 6.0 - a Sisyphean task for Walldorf support.
With S/4, there is only one operating system and one database, which simplifies support and thus makes it highly profitable. AWS works no differently - no deviations, no special solutions. Better to do without a business before the standard is softened.
Those who consistently follow this public cloud concept will be rewarded, see Qualtrics, AWS and Workday. Those who consistently follow the standard will be rewarded with a high scaling factor, which has an immediate positive impact on the business.
CFO Luka Mucic has also recognized it and complains in an interview with Euro am Sonntag: "My impression is that SAP is getting a kind of conglomerate discount on the stock market for its existing license business compared to pure cloud providers like Salesforce or Workday. Wrongly so, because this business is also highly profitable and, in terms of maintenance revenue, easy to plan for."
What Luka Mucic doesn't say, of course, is that SAP is anything but standardized - not even consolidated. The incompatibility between SAP cloud offerings, between R/3, ECC 6.0 and S/4, between on-prem and hybrid, private and public cloud costs the ERP world market leader large sums and squeezes margins.
Both the maintenance fee in the license business and the cloud subscriptions can now be planned well, but Walldorf is far from a standardized ERP system. The hyperscalers want the wealthy existing SAP customers in their cloud. But they also know the potential danger of a proliferation of releases and the Z namespace. Accordingly, only SAP systems with the latest release status are accepted.
How SAP intends to escape from this dilemma is completely unclear to us at the SAP regulars' table. Obviously, CFO Mucic dreams of a Rise with SAP, which means licensing (Full User Equivalent) in the cloud at 20 to 50 percent higher costs compared to existing on-prem installations. This also explains the SAP growth he forecasts - Rise.
Those who consolidate their on-prem licenses can save up to 20 percent in license fees with FUE before moving to the cloud - case. If we all do our homework, SAP will continue to exist, but will have to stay grounded. Luka Mucic will continue to look enviously at Qualtrics, AWS, Salesforce and Workday and regret his conglomerate discount. So the effort should be worth it - Rise or Fall?
