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The Belly of an Architect: SAP plans to acquire LeanIX to combine with Signavio, Cloud ALM, and Tricentis

SAP will acquire LeanIX, the recognized enterprise architecture manager (EAM), but SAP is confusing cause with effect. The cause of the S/4 disaster is not a missing EAM. The LeanIX acquisition will not achieve its intended effect in IT.
E3 Magazine
18 October 2023
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This text has been automatically translated from German to English.

On the day SAP announced its planned acquisition of the start-up Lean-IX, the SAP share price rose to 130 euros. Financial analysts seem to see this billion euro transfer as a glimmer of hope for the ERP world market leader. The German magazine Handelsblatt was able to report on the occasion of the SAP announcement: "According to figures from the market research and consulting company Gartner from the beginning of the year, almost 70 percent of all customers have not yet purchased licenses for S/4 Hana—despite programs such as Rise with SAP, which promise to make migration easier. And only 20 percent have at least one module in productive use."

With an integrated overview of IT applications and business processes, we accelerate modernization.

André Christ,
Co-Founder,
LeanIX

LeanIX is an enterprise architecture management (EAM) provider, supporting IT landscape modernization and continuous transformation. Its software-as-a-service solutions enable organizations to create IT visibility and visualize, assess and manage the transition to their target IT architecture. Through a data-driven and automated approach augmented by AI, LeanIX helps its existing customers make consolidated decisions and collaborate more sustainably. LeanIX serves more than 1,000 companies worldwide across a range of industries, including more than ten percent of the Fortune 500 and half of Germany's DAX-40 companies. LeanIX is headquartered in Bonn, Germany, and has offices in Boston, USA; London, UK; Paris, France; Amsterdam, Netherlands; and Ljubljana, Slovenia. LeanIX, an unlisted company and has been a strategic partner of SAP and Signavio for ten years. Many CIOs use Lean-IX products as part of their digital transformation.

Enterprise Architecture


LeanIX is an enterprise architecture management (EAM) provider, supporting IT landscape modernization and continuous transformation. Its software-as-a-service solutions enable organizations to create IT visibility and visualize, assess and manage the transition to their target IT architecture. Through a data-driven and automated approach augmented by AI, LeanIX helps its existing customers make consolidated decisions and collaborate more sustainably. LeanIX serves more than 1,000 companies worldwide across a range of industries, including more than ten percent of the Fortune 500 and half of Germany's DAX-40 companies. LeanIX is headquartered in Bonn, Germany, and has offices in Boston, USA; London, UK; Paris, France; Amsterdam, Netherlands; and Ljubljana, Slovenia. LeanIX, an unlisted company, has been a strategic partner of SAP and Signavio for ten years. Many CIOs use offerings from Lean-IX as part of their digital transformation.

SAP entered into an agreement to acquire LeanIX in early September. The planned acquisition is expected to help SAP expand its S/4 portfolio, including Signavio and Cloud ALM, giving SAP customers access to a comprehensive business transformation suite and the ability to optimize their processes using artificial intelligence. The transaction is expected to close in the fourth quarter of 2023, subject to customary legal conditions and regulatory approvals. Contractual details of the transaction were not disclosed.

"Systems and processes go hand in hand," SAP CEO Christian Klein said in early September. "Together with LeanIX, we aim to offer a unique transformation suite to provide our customers with holistic support in their business transformations. Based on our decades of expertise, we will integrate generative AI to offer self-optimizing applications and processes that help companies achieve key goals such as maximizing their cash flow while minimizing their environmental footprint."

With LeanIX, we want to offer a transformation suite to enable holistic support.

Christian Klein,
CEO,
SAP

LeanIX and Signavio are a dream team

LeanIX's generative AI product is on par with Signavio and its generative AI. It will be a great challenge for SAP to harmonize and orchestrate LeanIX’s enterprise architecture management with Signavio’s process mining and SAP Cloud ALM (Application Lifecycle Management) and SAP Partner Tricentis’ automated testing including generative AI. The transformation suite Christian Klein mentioned is meant to grow out of all of this. There is no roadmap for this, but experts hardly expect it to be completed before the 2027 S/4 deadline.

What fits together well technically and organizationally does not necessarily result in strategic and visionary added value. The combination of ERP from SAP, process mining from Signavio, and EAM from LeanIX can add a lot of value to SAP customers’ digitization. When migrating from SAP ECC 6.0 to S/4 Hana, it is necessary for companies to remove old aspects and to digitize their own organizational structure and process organization. Here Signavio can critically scrutinize some ERP processes and perhaps eliminate some Abap modifications. However, as an architect, LeanIX did not only focus on ERP, but on all of a company’s IT applications. The start-up from Bonn is an enterprise architect and not an ERP, CRM, or SCM architect. Seen in this light, LeanIX is a universalist, while SAP is a specialist. Regardless of revenue and number of employees: LeanIX is more than ERP and thus too big for SAP. If the master builder (SAP) now buys the architect (LeanIX), the master builder increases its power and influence. However, this results in no added value for either the architect or the customers (SAP community).


The stock market likes SAP's new plans: On the day the acquisition of LeanIX was announced, the SAP share price rose to 130 euros. That is the highest value this year.

SAP Transformation Suite


With the planned acquisition, SAP is keen to force the comprehensive transformation suite. This is intended to help SAP customers manage changes in the business environment more easily and permanently improve their business processes. SAP's planned business transformation solution suite is expected to provide customers with a comprehensive view of business processes and applications, including mapping process dependencies and showing the impact of potential transformations on their IT landscape. LeanIX's IT landscape transformation capabilities, combined with Signavio's process transformation suite, Rise with SAP, and SAP Business Technology Platform (BTP), are expected to create a culture of continuous adaptability and improvement.

With the planned acquisition, SAP is keen to force the comprehensive transformation suite. This is intended to help SAP's existing customers more easily manage changes in the business environment and permanently improve their business processes. SAP's planned business transformation solution suite is expected to provide existing customers with a comprehensive view of business processes and applications, including mapping process dependencies and showing the impact of potential transformations on their IT landscape. LeanIX's IT landscape transformation capabilities, combined with Signavio's process transformation suite, Rise with SAP and SAP Business Technology Platform (BTP), are expected to create a culture of continuous adaptability and improvement.

"For more than a decade, we have stood for a very clear customer-centric approach, superior usability and seamless ecosystem integration, making us a leader in the enterprise architecture management category," said André Christ, co-founder and CEO of Lean-IX, in early September. "Our strategy is to enable enterprises' continuous transformation in a rapidly changing business environment. With an integrated, comprehensive view of IT applications and business processes, we accelerate modernization, reduce transformation risks."

There is a video of LeanIX co-founder André Christ and former SAP CFO Luka Mucic. Both openly show their enthusiasm for the other’s company and what enormous advantage for an existing SAP customer can result from this partnership. Reflexively, the viewer thinks of the Berlin start-up Signavio, founded by Gero Decker. Signavio was acquired by SAP for about one billion euros to arm itself against the Munich-based unicorn Celonis. SAP, Signavio and Celonis are a different story. This is about LeanIX and SAP's greed to control everything. SAP just canceled its contracts with hyperscalers because SAP wants to control cloud computing completely with its own data centers. SAP can't do partnership! Now SAP is acquiring the start-up LeanIX, like Signavio before it, for around a billion euros. Because SAP cannot cooperate by nature, there are always only two options: exclude or take over. A cooperation with LeanIX, as Luka Mucic has initiated, would be much more intelligent.

Disinterest and panic


The SAP community is familiar with SAP's reflexive behavior: first disinterest, they sleep through a new development, then panic and wild actionism with often ill-considered actions. Of course, SAP slept through the CRM trend toward customer experience. In a panic, it bought the U.S. company Qualtrics for eight billion euros. Of course, first SAP CEO Bill McDermott and later SAP CEO Christian Klein were not able to solve any problems through said acquisition. So Qualtrics was sold. It is only thanks to the skill of ex-SAP CFO Luka Mucic that this mistake was at least a financial gain. First, the Munich-based startup Celonis was on SAP's price list, then Celonis refused to be bought by SAP. Deeply offended, SAP eliminated the former partner from the price list and, in an act of defiance, bought the Berlin start-up Signavio instead. The integration of Signavio into the SAP universe has to this day still not succeeded. SAP Cloud ALM is still a construction site. But Celonis now has a valuation of 13 billion euros. Of course, after Signavio, SAP needs LeanIX to present a credible cloud computing story to customers. SAP cloud application lifecycle management (ALM) is a never-ending construction site, and without enterprise architecture management from Lean-IX, it is merely an attempt, but not an answer. SAP needs not only Signavio for consistent ALM, but also LeanIX and ultimately Tricentis for automated testing in the public cloud.

sap.com

leanix.net

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

This gives the Competence Center strategic importance for existing SAP customers. Regardless of the S/4 Hana operating model, topics such as Automation, Monitoring, Security, Application Lifecycle Management and Data Management the basis for S/4 operations.

For the second time, E3 magazine is organizing a summit for the SAP community in Salzburg to provide comprehensive information on all aspects of S/4 Hana groundwork. All information about the event can be found here:

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