Pros and Cons of SAP With or Without S/4

The corporate and IT strategy is usually used as the foundation and starting point of a transformation, whereby the system architecture (on-prem, cloud or hybrid) also plays a major role. The ERP market has changed massively in recent years. Many local providers in the midmarket have been able to reach larger, international companies by offering innovative cloud strategies and new technologies.

However, international U.S. providers such as Salesforce, ServiceNow and Oracle have also found their way to Europe and broadened their portfolio. For this reason, it is appropriate to take stock of SAP’s position in the current market environment. As of its 50th anniversary this year, SAP can still call itself the ERP world market leader. What are the reasons for this success and where is still an urgent need for action?

SAP established a strong market position with the first release R/2 and the concept of customizing. With the client-server technology in the R/3 release, the success story really began to take off, and customers can still benefit from the many years of experience. The deep, holistic business orientation in the development of standard software across all modules played a major role. SAP achieved its goal of becoming the world market leader by programming and providing ongoing support for all local business and tax legislation for over 100 countries and in their languages. This internationalization has also been accomplished for many industry solutions. From my personal point of view and experience, this is one of SAP’s greatest strengths compared to competitors.

SAP also recognized very early on that for a software developer, customer communication is crucial for quality assurance. To this end, the “Online Service and Support System” (OSS) was developed and subsequently expanded in Solution Manager (SM). I think that with this extensive experience, SAP has a big head start in the market and this solution is essential for all customers. 

Unfortunately, this success story is also contrasted by negative developments. Many customers have the subjective feeling that SAP has not only stopped being down-to-earth due to its market position and size but has also lost its proximity to customers with the Hana strategy.

With the many acquisitions to achieve the necessary growth, its original key to success—a fully integrated standard software—was given away for the time being with S/4. The now following S/4 Hana and cloud integration still costs a lot of time and money. The necessary S/4 technology change with the simplifications of the data fields and the new programming logic has a major impact on in-house developments. However, it was unfortunately neglected to standardize all software interfaces. This is not “state of the art” in comparison with other providers and is not well received by customers.

With the S/4 transformation, obsolete technologies are carried over, and their implementation itself is very complex and lengthy, which also often leads to questioning of the economic viability. The many S/4 Hana releases lead to uncertainty because of SAP’s unknown ERP strategy thereafter. SAP is currently living off the “old generation” of customers, with the “young generation” of new customers also open to competing solutions. In the various ERP market studies, the background of customer loyalty to SAP would be interesting: Are customers really satisfied with SAP? Or do they just lack equivalent alternatives? Is changing provider simply too expensive?