SAP's Shadow Developers

There are many developers at SAP who are not on any official employee list, or who do not enjoy the benefits of an SAP employee contract. These workers are provided by SAP partners and billed on a project cost basis.

According to a survey by E3 magazine, selected SAP partners provide up to 1,000 developers. This means the number of shadow developers worldwide could be well over 10,000. SAP boss Christian Klein’s motivation is likely to be very different: partly due to a lack of expertise, partly due to a lack of capacity.

While Teodor Currentzis, music director, and Romeo Castellucci, stage director, costume designer, and lighting designer, celebrated a triumphant success with the revival of Mozart's opera Don Giovanni—with Markus Hinterhäuser as artistic director—in Salzburg this summer, Don Giovanni had to make do with a smaller virtual and real cast on the stage of the Salzburg’s festival hall. Giovanni’s servant Leporello sings in the Mozart opera: "In Italy there are six hundred and forty, in Germany two hundred and thirty-one, in France one hundred, in Turkey ninety-one, but in Spain there are already a thousand and three. In reality, there were 120 extras in beautiful dresses, and one of them was my partner, so I know exactly what I'm writing about.

What motivates SAP CEO Christian Klein to emulate Don Giovanni and then surpass him in absolute numbers? An experience more than thirty years ago first opened my eyes to the logic of business and the stock market. I was working for DEC, a US IT manufacturer that thought in quarters. If the company announced layoffs in one quarter, the stock price rose in the next.

This causal link between job cuts and share price performance seems to have remained intact to this day. At the beginning of the year, Christian Klein and SAP CFO Dominik Asam announced that 8,000 jobs would be cut. The number was later raised to 10,000. At the beginning of the summer, SAP's share price reached an all-time high. With fewer employees and rising sales, profitability and the dividend will probably increase. But what about the rest?

The SAP community is quite concerned about the future of ERP, and with good reason. SAP CEO Klein is currently focusing on AI and the cloud. Of course, he needs fewer employees for these megatrends: AI innovations are bought and licensed; cloud infrastructure can be booked cheaply from hyperscalers and companies such as Cloudflare. But only SAP's specialists and developers can evolve the content and structure of ERP.

SAP is the world leader in ERP because this business knowledge is not available anywhere else. An anecdote on the subject: a few years ago, there was a restructuring program with a good deal of layoffs. SAP was so generous with the severance program that even experienced and deserving employees accepted the offer because they knew they could quickly find a new job with the SAP knowledge they had acquired. One of these executives was an APO and MRP specialist with extensive supply chain planning expertise. He is currently working as a freelance consultant for an SAP customer with a double-digit customer base. The company was looking for an APO replacement. SAP has retired its on-premises Advanced Planner and Optimizer (APO) product, and its successor, Integrated Business Planning (IBP), is only available as a cloud product. With the help of the former SAP employee, the SAP customer found what it was looking for in another company. An APO-like product is now being customized on-prem!

SAP's human resources policy therefore appears to be counterproductive and geared solely to the goal of a high share price. SAP software is not complicated, but it is complex. The ERP group needs thousands of experienced developers and software engineers—regardless of AI and infrastructure model, whether cloud, on-prem, or hybrid. SAP's customers expect the content of the ERP core to be developed further, whether in S/4 itself or on the SAP Business Technology Platform. Christian Klein is aware of this, but he can rely on the many shadow developers at SAP partners to accomplish said goal. There are probably many more developers than there are positions available.

The end is tragic: Don Giovanni and Leporello meet at a cemetery. As Don Giovanni recounts his adventures, the statue of the Commendatore begins to speak to him. Don Giovanni invites the Commendatore to dinner. Donna Elvira warns Don Giovanni of his downfall. The Commendatore appears. He tries to persuade Don Giovanni to return, but Don Giovanni does not repent and must go to hell. Everyone comes to the conclusion: "This is what happens to those who do evil.” It remains to be seen what Christian Klein’s fate will be.