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SAP disintegrates

SAP is considering code splitting for S/4 Hana because many existing R/3 and Business Suite 7 customers distrust the promises of cloud computing, and SAP apparently gives hybrid ERP little chance.
Peter M. Färbinger, E3 Magazine
January 12, 2023
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This text has been automatically translated from German to English.

Hybrid computing

A year ago, SAP still firmly believed in cloud only, or at least cloud first. SAP has not yet cancelled the "Rise with SAP" concept. The ERP world market leader believes in success in the cloud. But SAP is ERP world market leader and not a technology company like Google, AWS, Apple and Microsoft. SAP's unique core competency is standardized business processes. SAP knows a lot about end-to-end processes, but very little about IT infrastructure and computer architectures. SAP's forays into the regions of cloud computing are still incomprehensible to most experts today.

Thus, the failure of a cloud-only approach in Europe with its longstanding SAP tradition was predictable. Existing SAP customers with legacy R/3 and Business Suite 7 cannot and do not want to move their intimate business processes to the cloud. In the fall of 2022, there was an offer from SAP to their European users, they should be appeased with a hybrid concept. For new S/4 customers, the cloud-only approach will not be a problem in the future, thus code splitting could make a lot of sense.

On-prem computing

Your own data center doesn't have to be better than cloud computing. Many existing SAP customers use cloud services from Microsoft, Google and AWS. But many existing SAP customers want SAP to focus on business problems. There is concern that SAP is consuming a lot of resources with its own cloud experiments and thus neglecting its own core competence. The discussion in the SAP community is thus not on-prem or cloud, but concern about the future of ERP. Will SAP continue to surprise its existing customers with innovative processes such as BRIM, Billing and Revenue Innovation Management, and IBP, Integrated Business Planning?

S/4 code splitting

Apparently, SAP also has certain doubts about a hybrid ERP architecture because on-prem and cloud probably do not really harmonize. At SAP, the cloud-only faction now seems to be gaining the upper hand and taking on a life of its own with code splitting. One possible scenario would thus be an S/4 cloud-only that could evolve very quickly and successfully, free of hybrid demands and legacy R/3. This S/4 cloud-only app could even leave behind the not-so-fresh Abap and become a Java- and open-source-based answer to cloud competitors like Workday, ServiceNow and Salesforce. So if SAP were to break into two parts, each group could be much more focused on its own technology and existing customers.

Carve-out

Code splitting would thus create an on-prem-Abap faction and a cloud-only faction. Probably both parts would be very successful, but both parts would also move away from each other at the speed of light. SAP would have to bury the hope right at the start that orchestration between on-prem and cloud could be possible in the medium term. Experience already shows that synchronizing on-prem and cloud development is virtually impossible. Code splitting at SAP would therefore not be dissimilar to a carve-out. Whether the SAP community would support this experiment is an open question. What is certain, however, is that a hybrid ERP does not guarantee a successful future either. Cloud computing or code splitting is therefore a decision between plague and cholera. SAP can thus disintegrate in a positive or negative sense.

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Peter M. Färbinger, E3 Magazine

Peter M. Färbinger, Publisher and Editor-in-Chief E3 Magazine DE, US and ES (e3mag.com), B4Bmedia.net AG, Freilassing (DE), E-Mail: pmf@b4bmedia.net and Tel. +49(0)8654/77130-21


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Working on the SAP basis is crucial for successful S/4 conversion. 

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