Mind the Gap With SAP

SAP has lost its unique selling proposition

SAP R/3 had it, SAP Business Suite 7 had it too, but S/4 Hana in the cloud is just another ERP product without a unique selling point. The Hana database is a good SQL product with interesting engines for graphs and vectors. However, Hana is not a unique selling point, and it poses a significant challenge and expense for SAP customers who operate other databases from IBM, Microsoft, or Oracle.

S/4 is undergoing a transformation to become a new SAP Business Suite. The new SAP suite, with its planned end-to-end processes, strongly resembles a composable ERP that experienced customers can build with other IT tools.

SAP speed versus community inertia

For many years, SAP has not listened to its customers. CEO Christian Klein only considers the competition and financial analysts when making business decisions, not the welfare of his SAP customers. All SAP market communication is geared towards the forementioned groups. For a long time, SAP's share price was soaring. Analysts believed Christian Klein and CFO Dominik Asam's story.

Despite losses, SAP quickly moved into the cloud and toward AI with SAP BTP (Business Technology Platform) and BDC (Business Data Cloud) serving as a "surfboard." SAP operates in spheres that partners and customers cannot reach. For example, SAP partnered with Databricks to improve its SAP BDC platform. However, some SAP partners and customers have been using the Databricks IT platform for years. SAP is a latecomer! Six months after the SAP-Databricks partnership, there still isn't a free test system for partners, despite the promise of perfect service to the SAP community.

SAP's share price benefited from the quick announcement of the partnership. A suitable service for the SAP community has been a long time coming. Mind the gap between SAP's vision and ERP reality.

2025 and SAP cloud computing

While the entire community almost unanimously agrees that "cloud computing" is the future, SAP lacks knowledge of the complex decision-making processes of its customers. The path to the cloud requires technical offerings, such as RISE and GROW, as well as compliance and governance. For SAP, business and organizational framework conditions do not appear to be relevant.

Many SAP services will be shut down by the end of this year. SAP claims to have communicated the end-of-life in a timely manner, yet it completely ignores the ERP business and organizational reality for users. Mind the Gap: SAP is forced to repeatedly revise its plans, which makes it seem unreliable. Currently, 2033 is the "last order" for S/4 Hana—after 2025, 2027, and 2030.

IT platforms and composable ERP

SAP is forging ahead and doing many things right. However, because SAP's pace does not align with the ERP needs of customers, competitors have many opportunities!

The SAP Business Technology Platform (BTP) is a decent product, but its licensing terms are completely unsuitable for a platform economy. Many BTP functions can be accomplished using open-source software or third-party providers, such as Boomi.

The same applies to AI agents and LLMs (large language models). SAP's offerings lack a unique selling point; they are expensive and complex to operate. It then seems only logical for customers to switch to third-party providers. However, the composable ERP is just around the corner: Salesforce, Workday, Celonis, and ServiceNow are ready and waiting.

Recent interviews with CEO Christian Klein reveal no signs of self-doubt, uncertainty, or impending danger. There is only one problem: SAP's customers are turning to other ERP providers more and more. Users do not understand SAP, and vice versa. Mind the gap—as one SAP partner told E3 magazine: "SAP and customers live in completely different ERP universes."