SAP needs a retread
Among other things, I learned to be a vulcanizer in my youth at the Munich-based company Stahlgruber, an SAP inventory customer and well-known manufacturer of the Tip-Top tube patches for bicycle tires. The vulcanizer knows two main fields of work: repairing conveyor belts and patching tires and inner tubes. One specialty was the retreading of automobile tires. When resources were still valued and valuable and more was repaired than thrown away, retreading car tires was a respected craft: the rubber of the tire is milled down to the carcass, rubber is applied, vulcanized out, and a new tread is cut. As a rule, such tires are approved only up to about 80 km / h, but there are many applications where it is sufficient.
SAP needs a retread! Why? Underlying values and parameters that are not found on the balance sheet are cause for concern. We are not painting a horror scenario on the wall here, but asking you to take a closer look: SAP published its quarterly figures at the end of April and celebrated another success with cloud computing. On the day the figures were announced by CEO Christian Klein and the new CFO Dominik Asam, the share price catapulted upwards by around five percent.
Where does this cloud success come from? SAP is systematically reducing its on-prem offering: the best-known example is APO, Advanced Planner and Optimizer. The supply chain planning tool with an in-memory database for MPR runs has been discontinued. Its successor is called IBP, Integrated Business Planning, and is praised by SAP partners and existing customers for its functionality.
However, IBP is only available as a cloud offering. The step from APO to IBP is therefore also an involuntary step from on-prem to the cloud. But this also automatically increases SAP's cloud revenues on the balance sheet - an elegant no-brainer, isn't it?
SAP is acting disruptively: Existing customers are not being convinced with a better cloud offering, but are being forced to switch off on-prem. As many users as possible are currently trying to resist this compulsion to SAP's cloud computing.
In view of the current price increases for cloud computing from Microsoft, many IT managers suddenly became aware of the dependency this operating model leads to.
The public cloud is therefore the final vendor lock-in for existing SAP customers, and many IT users are currently trying to prevent this disastrous step. They could succeed with a private cloud (on-prem) in their own data center. From the automobile manufacturer BMW from Munich, one hears in the SAP community that supply chain planning with IBP is conceivable, but that a cloud dependency with regard to externally specified maintenance windows for the company's own factories is not accepted. Thus, cloud computing appears to be a disruptive model for many existing SAP customers.
Disruptive fluctuation and persistence are among the parameters that do not appear on the balance sheet and yet determine the success of the SAP community. Sabine Bendiek, still a member of the SAP Executive Board and above reproach as an IT manager, did not make herself at home at the ERP world market leader. She will not renew her contract and will leave the Executive Board at the end of this year. Other board members will remain, even if their presence and balance sheet do not shine any brighter.
SAP currently has no marketing. Corporate communications are non-existent - with or without company spokesman Oliver Roll, who will also be leaving the company this year. Motivation and enthusiasm for visiting one of the Sapphire in-house trade fairs in Orlando, Barcelona and São Paulo are in vain. SAP's 50th anniversary celebrations last year took place largely out of the public eye. A proud appearance in the media and broad communication with the community were missing - SAP marketing is obviously unaware of the insight "Do good and talk about it".
SAP must and will retread: Disruption, fluctuation and disastrous inertia will bring forth the forces for renewal. CEO Christian Klein will build a new team over the next 24 months with new Supervisory Board Chairman Punit Renjen starting in 2024. The experiment could succeed. Former Deloitte CEO Renjen is only about 20 years older than Klein, and he can operate without legacy issues and considerations. Key positions with a Hasso Plattner Institute past can be re-evaluated. Missing marketing and communication will be approached differently by the former Deloitte manager. With Punit Renjen, Christian Klein gets a partner for the retread of SAP.
