What happened to the German and European automotive industry has now happened to SAP. The misjudgment of old (combustion engine) and new (e-drive) technology has led to chaos, contradictions, and poor decision-making. SAP has used and positioned cloud and AI IT technology negligently and inconsistently. The European car industry has failed conceptually due to the ban on combustion engines. SAP has hit the wall with cloud and AI technology.
How could proven, successful IT technologies such as cloud computing and AI put the global ERP market leader in a hopeless situation? Here's a brief history of the cloud, AI, and SAP: It all started with the quest for more power. SAP is unique in its design and implementation of business processes. SAP's business knowledge is exceptional. In its early years, SAP did an excellent job of attracting the brightest minds in business administration.
Its collaboration with Professors Plaut and Scheer is legendary. SAP's founders and the next generation understood how to translate this knowledge into Abap code to create a unique ERP system.
The success of SAP R/3 and SAP Business Suite 7 was and is overwhelming. However, SAP wanted more, and as a publicly traded company, it was under significant pressure from investors and the stock market. Those in charge at SAP saw an opportunity in expanding the ERP stack, i.e., the IT layer model consisting of hardware, operating systems, databases, middleware, and so on.
SAP worked intensively on virtualization in partnership with VMware. They came up with the idea to build their own database, which required a specific hardware architecture. The new ERP generation would not only operate with its own database but also consolidate and orchestrate the proliferation of operating systems and databases (AnyDB) from previous years.
Thus, a new ERP stack was created, largely based on Intel processors and the Linux operating systems from Suse and Red Hat, as well as the SAP Hana database. The code conversion of the Abap tables from SAP Business Suite 7 to S/4 Hana then began. This process took around eleven years, and some critics of the S/4 system believe that the complete code transformation has not yet been finished.
SAP does not always use the latest IT tools to convert old Abap code from R/3 and ECC 6.0 (Business Suite 7). Development and reprogramming took a long time and were complex. Many resources were allocated, utilized, and perhaps wasted during the transformation process from ECC to S/4. This meant that there was a lack of capacity to continue working on SAP's unique selling point: end-to-end business processes. Their key strength was neglected!
Initially, the Hana database and the new ERP S/4 were planned as a classic on-premises model. SAP did not initially focus on developing hyperscalers and cloud computing. Transforming the on-premises S/4 into a cloud system cost a lot of energy. SAP gradually developed into a tech company competing with other IT companies, offering many approaches, products, and solutions. This was a new and surprising development for SAP. The ERP's unique selling point evolved into an IT company that faced real competition in the fields of databases, the cloud, and AI.
The end of classic SAP, with its ERP USP and unique business and organizational processes, was sealed. SAP CEO Christian Klein has not managed to create a new USP with cloud and AI technologies. He is trying to be just as good as the competition in cloud and AI, much like the European automotive industry trying to compete with Chinese providers in e-mobility.
The end of SAP as many customers knew the ERP company in its early years is sealed. The SAP Executive Board, led by Christian Klein, has yet to set any new, unique impulses. In the age of composable ERP, SAP is becoming an interchangeable IT supplier because everyone is using the cloud and AI. AI may soon be doing everything on its own.
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