SAP Can Do More

SAP has grown enormously in recent years, as have the challenges it faces. A large ERP offering, both in terms of breadth and depth, has emerged in this mixture of defending market share, protecting investments for customers, innovating, competing with IT competitors, and cooperating with partners.

SAP started out as an ERP programmer. Its focus was on standard business software. SAP left tasks such as data storage and management to database providers, including Oracle, IBM, and Microsoft. The necessary middleware was available from IBM's WebSphere, among others, before SAP NetWeaver was introduced. SAP R/3's software modules were well-organized and manageable.

Over the years, SAP demonstrated its ability to offer more than just an ERP black box system. NetWeaver middleware and the Hana database were visible to everyone. However, this is also where the problems began. First, NetWeaver was ABAP-oriented; then, Java was added; and finally, there was the "famous" dual stack, which was subsequently dissolved with great effort. SAP can do almost anything, but often lacks orchestration and value.

Small steps in SAP's labs incur high costs for customers. Even minor adjustments to the ERP strategy require repeated testing, adapting external interfaces and legacy programs, and extensive user training. SAP can do a lot, but not always to the benefit of its customers.

What for a computer scientist at SAP constitutes an elegant algorithm may cause an entire organizational structure and process to collapse for a user. Driven by competitors and financial analysts, SAP is often unpredictable for customers, causing the positive sentiment of "SAP can do more" to change into the opposite sentiment. Furthermore, SAP is increasingly suffering from a lack of communication! Trust and communication between SAP and its customers have been damaged for years.

This year, the DSAG user association and SAP invited current customers to participate in the annual investment survey. There were just over 200 responses from the entire German-speaking region. What does the silent majority of SAP customers think? Have those who refuse to communicate already switched to Oracle, Workday, Salesforce, or ServiceNow?

The SAP share price is cause for joy and hope. However, upon closer inspection, it's clear that SAP has the capacity to do more and is as innovative as it was at the beginning of its history. What's next? The ERP offering has multiplied in recent years. However, the communication and transmission of this good news is dwindling, which ultimately costs market share and business success. As the English-language business magazine The Economist has noted, "AI agents are turning Salesforce and SAP into rivals. Artificial intelligence is blurring the distinction between front office and back office."

Market research company Gartner assumes that, between 2020 and 2024, competitors such as Workday will reduce SAP's ERP market share from 21 percent to 14 percent. Despite efforts such as SAP C/4 Hana (where the "C" stands for CRM), CRM sales declined during this period while Salesforce maintained its 20 percent share of a growing market. What is happening here? 

More than a quarter of companies in Germany assume that AI will lead to job losses within the next five years. Companies expect structural change to be accelerated by AI.

SAP has formed a promising AI partnership with Nvidia. With BTP (Business Technology Platform) and BDC (Business Data Cloud), the ERP provider acts as a platform supplier. Users in the IT sector will find graph and vector computing engines at SAP alongside the Hana database platform. SAP can do more!

However, they are not currently offering many innovations to customers because they are busy with S/4 conversions and license agreements. It's difficult to see the forest for the trees, and there is no clear SAP roadmap. The challenge lies in translating the resulting productivity gains of the SAP offering into broad prosperity without causing major disruptions to SAP customers' business structures and processes.