SAP Must Deliver on Integration Promises

Integration has always been SAP’s promise to its customers. In fact, a key reason for the success of R/3 and all its downstream products is their ability to tightly integrate core modules to support integrated standard processes. That’s why many companies are still opting for an ERP system from SAP.

Integration at ERP level is no longer enough

However, the situation has changed. Although ERP software plays a central role in corporate IT today and will continue to do so in the future, a number of other topics are coming into focus. Companies are investing in additional solutions for modern personnel management in order to attract, retain and develop talent. Investments are also made in customer experience management software.

Today, methods and tools for data analysis are compulsory in almost any digitization project, and more and more artificial intelligence methods such as machine learning are being added. SAP users are also interested in platforms that enable them to create applications that integrate networked devices, machines, and vehicles—the Internet of Things.

s is well known, SAP is now involved in all these solution segments; on the one hand to meet customer demand and on the other hand not to leave the business to the competition. Through acquisitions, the ERP vendor now owns a large number of different systems, including Ariba, SuccessFactors, Hybris and CallidusCloud. And with Qualtrics, SAP bought a whole new category of customer feedback management solutions. Like many other analysts, we do not expect this to stop and expect further acquisitions to follow.

Much purchased, too little integrated

There is no question that SAP’s acquisitions are justified. And the solutions find their buyers. Both customers and SAP itself must take into account a dynamic market, customer demand, competition and technological innovation. However, each of the systems acquired by SAP has its own data model, a different technological structure, management functions and user interface. This requires good integration.

So far, SAP has invested more time in acquiring than in harmonizing the different products. But seamlessly connecting the many systems is critical to the long-term success of SAP, its partners and its customers. The reason why SAP’s portfolio has been and continues to be so successful in the market is simple: it offers real advantages over competing products through integration that allows end-to-end process control from the backend to the function-specific processes in sales, marketing, and service. SAP’s own applications for customer experience management and human capital management do not always perform better than their competitors’ offerings.

If the integration effort for the SAP product is not much less than for a competing product, SAP can’t really deliver on its promise to provide everything from a single source.

Standardized end-to-end processes

SAP praised improvement. Starting with five core processes, including “Source to Pay” and “Lead to Cash”, the software company wants to demonstrate that it knows how to interconnect its own and acquired systems to support end-to-end processes. Integration includes synchronizing master data, enabling data exchange between programs, connecting application functions and harmonizing user interfaces. It took a while, however, and it took the criticism of many customers before SAP started to deliver on its integration promise. Now, the devil is in the details: How elegant will the implementation be? How will customers benefit? What will be the effort and cost involved? Time will tell, and we will remain curious.