SAP Cloud Double Whammy

Strategy update from SAP CEO Christian Klein

SAP CEO Klein has done it again: at the start of the new year, he sent an email that was both motivating and admonishing to all employees, where he states that a paradigm shift in SAP's strategy will put the global ERP market leader in the same league as Microsoft, IBM, Amazon, Oracle and Google. This will require the entire SAP team's discipline, skill, and courage.

Christian Klein wants to transform the global ERP leader into a leading IT company in cloud computing and artificial intelligence (AI). This will be a tall order, as SAP's USP has been its business and organizational processes. Now, however, massive use of technology is needed to ensure survival and profit. Christian Klein focuses on two IT areas: cloud and AI.

Cloud double whammy

SAP CEO Klein has reorganized his Executive Board to make cloud computing a success model for SAP as well. Executive Board member Thomas Saueressig will be responsible for customer satisfaction and efficiency to ensure a positive customer experience in the cloud, while the new Executive Board member Muhammad Alam will take over Saueressig's responsibilities and further develop cloud solutions.

The goal for both Saueressig and Alam will be to convince SAP customers that the public cloud is the best of all possible operating models. The moral wake-up call in SAP CEO Christian Klein's email is aimed primarily at the European sales organization. In Europe, the hope for sustainable cloud success melted like snow last spring. The S/4 public cloud concept exists only in small doses in Europe.

SAP is now pinning all its hopes on the American market. In the U.S., IT users have a much more open and positive attitude toward cloud computing. It is therefore no surprise that the new SAP Board Member, Muhammad Alam, previously worked for Microsoft in the US for 17 years and still maintains his SAP office in the US.

Cloud hopes for US market

At the end of last year, SAP began working with selected SAP partners in the U.S. to make public cloud a success, at least in this market. However, an SAP partner familiar with the discussions noted that, to break the ice, SAP will have no choice but to use the the benefits of the S/4 public cloud concept to persuade a large U.S. industrial company.

Even though the US market has a much more positive attitude towards cloud computing, this sympathy does not necessarily extend to SAP, but primarily aimed towards the hyperscalers as well as Oracle and IBM. As the global ERP market leader, SAP is a beginner and a follower in technical areas such as cloud computing and AI.

A cloud boss without a team

Christian Klein's motivational email at the beginning of the year and before the traditional FKOM (Field Kick-off Meeting) was correct and logical. However, it remains to be seen whether it will have an effect, since a study last year showed that only about half of SAP employees trust the top management body. Klein's e-mail may suffer the same fate.

At the moment, the reaction to Klein's e-mail at SAP Germany is muted. Many employees prefer to keep their heads down, cancel external appearances, and wait to see what remains of the big plans at the end of the day. The attempt to get public cloud into the heads of European customers has gone on for too long: signs of weariness and resignation are evident. Additionally, new topics such as SAP's Business Technology Platform are not being communicated openly or convincingly.

BTP lifeline

SAP has the expertise and knowledge to revolutionize the ERP market again. But Christian Klein needs a team that is courageous, enthusiastic, and self-critical in its approach to the market and customers. With the Business Technology Platform as a tool, the turnaround could be successful. But it will take staying power and enthusiasm to reach that goal.

The SAP Business Technology Platform is not yet a sure-fire success, but neither was the legendary SAP SolMan developed by former Board Member Gerd Oswald. But Oswald had the courage, perseverance, and strategy to make SolMan a unique SAP success story. Something similar could happen with BTP if all SAP employees are disciplined, courageous, ambitious, and believe in their own company—as Christian Klein called for in his New Year's email.