No Cash-in

The German business newspaper Handelsblatt judged on the occasion of SAP's annual press conference: Bill McDermott is in defense mode. There is more at stake than cloud computing! The overall condition of the ERP world market leader is doubtful.

Now the SAP CEO and his CFO Luka Mucic are trying personnel reform, and they're handing out "golden parachutes" so that employees willing to jump ship can be found.

The last thing would be a slump in sales! There should be no such danger this year or next, because SAP has spent a lot of money to finance its "cloud first" strategy. Sales are growing, but returns remain weak: Financial analysts remain skeptical and shareholders are unhappy.

SAP's numerous cloud investments have confused existing customers more than they have motivated them to pay for new licensing terms. An HR/HCM system in the cloud with SuccessFactors and Fieldglass does not convince all users.

Ariba, SAP's cloud commerce platform, makes many times the revenue of Amazon, but hardly contributes anything worth mentioning to the bottom line. Ariba is a big cloud of dust with no added value for SAP.

SAP's cloud computing licensing terms make existing SAP customers cough and gasp at best. Some users have decided against the "cheap" offerings from AWS, MS-Azure and Google and ordered the expensive HEC (Hana Enterprise Cloud) because these SAP existing customers understood it:

For the prices, which are far above the market, SAP provides the necessary expertise for such an operation. Misjudgment! HEC projects have been aborted and canceled because SAP lacks the personnel (see above) and the knowledge to make such cloud projects fly.

In a second wave that is currently intensifying, more and more existing SAP customers are now switching to local cloud providers that still have SAP expertise. SAP, on the other hand, will have to lower its cloud prices or invest massively in personnel and resources - not good prospects for a satisfactory cloud return.

Bill McDermott may be brilliant as a salesman, but as CEO he's a money-burning machine with dubious ambitions: Will the new SAP CRM, currently on the price list under the alias C/4 as a Hybris offering, really compete with Salesforce? Can Bill McDermott really replace all AnyDB installations with Hana by 2025?

It is to be feared that it will once again burn a lot of money in order to give confused users a clear view of a future ERP strategy. At the moment, the SAP community lacks sustainable orientation in the dust cloud.