SAP and Open Source: Do they go together?

If you look at SAP's share price, you can see that the company's success continues unabated. Even in times when many of SAP's prominent customers, such as the German automotive industry, are not doing well, SAP's stock continues to rise. From the fact that the business with ERP systems for SAP has historically consisted primarily of license revenues and maintenance contracts, one could conclude that open source software, i.e. the license-free counterpart to proprietary software, is a fundamental problem for SAP.

The reality looks different: The software licensing business has been developing negatively since 2016. Business with maintenance and support contracts is also no longer growing as dynamically as it used to. A closer look also reveals that SAP has not only financially supported the development of open source software for many years, but has actively participated in its development.

Complementary to ERP

More than 15 years ago, SAP was one of the main contributors to the Eclipse project. For some time now, SAP has also supported the Linux Foundation, an association of the Open Source Development Labs (OSDL) and the Free Standards Group (FSG), with the aim of supporting and promoting the growth of Linux. SAP also publishes OpenUI5, among other things, web frameworks for creating responsive interfaces for business applications. SAP now also has its own website on the subject and a Global Head of Developer Relations in Thomas Grassl.

The SAP GitHub organization currently includes 255 repositories that SAP is involved in developing. SAP's core business, i.e., ERP systems, and an open source-centric business model still have little obvious common ground. The projects in which SAP is involved or which SAP is driving forward should therefore all be seen as strategically complementary to the proprietary ERP system S/4 Hana or the company's proprietary ERP offering.

It remains to be seen whether and to what extent SAP will release further and also larger parts of its business applications developed and guarded over decades under an open source application, or how SAP will position itself in the future in the face of increasingly strong open source competition in its core business, such as ERPNext or especially Odoo.

Open source is becoming increasingly important

Based on the statement "our solution portfolio [...] is growing as we acquire other companies and thereby increasingly use third-party program code, including open source code" from the annual report for 2019 (see page 118), it can be assumed that open source will continue to grow in importance for SAP, at least through corporate acquisitions.

It is to be hoped that modern, comprehensively implemented interfaces to the proprietary ERP basis of S/4 Hana that comply with the OpenAPI standard will be consistently driven forward as part of this expansion strategy. This would sustainably facilitate the simple integration of other application systems with an installed SAP base and would certainly benefit rather than harm the SAP business model.

To answer the question posed at the beginning: SAP and open source not only fit together, the interaction would also result in advantages for existing customers and the company itself.