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Sapphire 2024: Safe and sound

SAP is doing well if you look at the share price. Up 40 percent within a year; Oracle jumped almost 20 percent in mid-June and Salesforce still managed 13 percent after a slump at the end of May.
Frank Naujoks, PAC
July 10, 2024
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This text has been automatically translated from German to English.

But why is the stock market more positive about SAP than its customers? The topics and announcements at the two Sapphire customer conferences in Orlando (USA) and Barcelona (Spain) must seem boring to the stock markets, which are thirsty for news. Artificial intelligence (AI) has actually lost its hype glamor, now is the time for implementation.

The use cases shown range from the creation of job advertisements - rather boring - to Joule for Consultants. This could become a game changer and threatens legions of programmers hoping to make a living by switching to Hana.
Then money is also being spent to supplement the SAP portfolio: the purchase of WalkMe announced at Sapphire USA costs around 1.5 billion dollars. This software, originally developed for training and onboarding, is intended to help end users make meaningful use of the newly introduced SAP software, which is already supported by SAP Signavio and LeanIX.

"WalkMe builds on a company's application landscape, recognizes where friction arises and provides the tailored support and automation the company needs to get the work done directly in the workflows and in all the applications involved," reads the SAP press release on the purchase. But there is no real fuel for the share price.

But perhaps it is the missing piece that makes end users more convinced of the SAP strategy. According to a DSAG survey conducted in the spring, 31 percent of respondents had a negative view of the S/4 Cloud strategy for their own company, with one in six being very negative. Only twelve percent are positive, one percent even very positive.

With so many headwinds, you would expect SAP to use the customer conferences in Orlando and Barcelona to explain its strategy and inspire customers with new or at least relevant topics from a customer perspective. However, this does not seem to be working. Rise with SAP is also getting an enterprise architect to help customers make the switch to the cloud. According to SAP, 6000 Rise contracts have already been signed; this is pretty much in line with the statement from the DSAG survey, which assumes that every sixth SAP ERP user is planning to use it or is already using it.

The market for SAP consultants is expected to continue to grow until 2027/28, with pressure from the end of maintenance and a conversion rate of less than 50 percent ensuring a constant increase in demand and prices. The Damocles end of maintenance in 2027 will also ensure that the majority of new migrations will be in the brownfield or bluefield area - the opportunity to start afresh on a greenfield site and really cut off old habits will of course be missed.
That leaves the Business Technology Platform (SAP BTP), which is set to become the control center of the transformation. Partners are already using the tools, as is SAP of course, but customers are still a little less euphoric; the pricing model appears to be too expensive and opaque.
What remains of the two conferences? It was solid work - perhaps not bad in rather turbulent times. But it would have been nice to feel a little more enthusiasm and a spirit of optimism. SAP will not disappear for the time being, the financial part and the areas surrounding production are too irreplaceable.

The license model and the corresponding contracts - also in the cloud variant - continue to ensure regular income. However, at SAP's Walldorf headquarters, it is fair to ask why companies such as ServiceNow and Workday have been able to grow so big and take an agile approach to the more "new" topics.

pacanalyst.com

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Frank Naujoks, PAC

Frank Naujoks, Principal Analyst, PAC


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Working on the SAP basis is crucial for successful S/4 conversion. 

This gives the Competence Center strategic importance for existing SAP customers. Regardless of the S/4 Hana operating model, topics such as Automation, Monitoring, Security, Application Lifecycle Management and Data Management the basis for S/4 operations.

For the second time, E3 magazine is organizing a summit for the SAP community in Salzburg to provide comprehensive information on all aspects of S/4 Hana groundwork. All information about the event can be found here:

SAP Competence Center Summit 2024

Venue

Event Room, FourSide Hotel Salzburg,
At the exhibition center 2,
A-5020 Salzburg

Event date

June 5 and 6, 2024

Regular ticket:

€ 590 excl. VAT

Venue

Event Room, Hotel Hilton Heidelberg,
Kurfürstenanlage 1,
69115 Heidelberg

Event date

28 and 29 February 2024

Tickets

Regular ticket
EUR 590 excl. VAT
The organizer is the E3 magazine of the publishing house B4Bmedia.net AG. The presentations will be accompanied by an exhibition of selected SAP partners. The ticket price includes the attendance of all lectures of the Steampunk and BTP Summit 2024, the visit of the exhibition area, the participation in the evening event as well as the catering during the official program. The lecture program and the list of exhibitors and sponsors (SAP partners) will be published on this website in due time.