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SAP's carve-out

The S/4 code is to be split and Business ByDesign outsourced. A proof of SAP's lack of imagination. Why doesn't Business ByDesign become open source and S/4 finally become hybrid?
Peter M. Färbinger, E3 Magazine
26 January 2023
This text has been automatically translated from German to English.

Carve-out without strategy

Older members of the SAP community have experienced the clean-up under ex-SAP CEO Léo Apotheker: Everything that could not demonstrate a double-digit contribution margin was thrown out of the SAP portfolio. It was a carve-out without strategy, vision or imagination. Among other things, the SAP Business School in Klosterneuburg near Vienna in Austria fell victim to the red pencil. Naturally, an educational institution could not contribute a double-digit contribution to SAP's profits, but it was the only institution in the world that was run by an IT company and awarded a recognized MBA degree - a first in the academic world. Léo Apotheker was unaware of the charisma and significance of an "SAP MBA" or didn't value it.

Now it's SAP CEO Christian Klein's turn, and his clean-up and carve-out at the group leave nothing to be desired - it's just a shame that his approach is very unimaginative and short-winded. SAP Business ByDesign may not be the best product on offer, but long before the hysterical cloud computing era, Professor Hasso Plattner and his then SAP Chief Technology Officer Peter Zencke had a revolutionary idea: a consistent ERP, hosted in the SAP data center as a rental model for users with no interest in Abap and other IT tasks.

Business ByDesign was way ahead of its time and had numerous teething problems. If SAP had invested a little more love, commitment and time, there would be no Workday, Salesforce or SuccessFactors today. SAP kissed the market awake with Business ByDesign and prepared it - others have reaped the harvest.

Now SAP CEO Christian Klein is embarking on the second capital mistake: Instead of further developing Business ByDesign in the spirit of the times - see Red Hat and IBM - SAP is ending further development and handing over maintenance to the Indian group HCLTech. Existing customers are thus on the safe side, because HCLTech is a very reputable, family-run company (the majority of shares are owned by the family) and maintains the best relations with SAP, but Christian Klein misses an opportunity of the century: Business ByDesign should now become an open source product!

In doing so, Christian Klein would not only surprise the market and stimulate the share price, but also attract thousands of open source developers for fantastic innovations. SAP's own developers should develop a Business ByDesign S/4 conversion program for those users who have found Business ByDesign too "small". And Hana should naturally become the new database for Business ByDesign, which brings us full circle, see Red Hat.

And it's not the only opportunity SAP CEO Klein is currently passing up: What's not new is that IS-H is being discontinued, SAP's industry solution for the healthcare sector. IS-H is to continue to be maintained and possibly further developed by an SAP partner. Currently, IS-H plays only a minor role in the SAP orchestra because it is mainly used in Germany, Austria and Switzerland. In the Alpine Republic, however, IS-H is so successful that over 90 percent of hospital beds are managed with the SAP software.

Christian Klein's decision to discontinue IS-H weighs doubly heavily: Many hospitals in the DACH region are again evaluating the S/4 release change and instead of starting a global rollout with IS-H know-how and thus countering Oracle/Cerner, SAP is saying goodbye to this lucrative market.

Oracle acquired the service provider Cerner a year ago for about 28 billion euros, because apparently Oracle CEO Larry Ellison believes in success in the healthcare industry. Ex-SAP CEO Bill McDermott also announced an initiative to digitize the healthcare industry after his accident in which he lost an eye. Now, however, Hasso Plattner and Christian Klein seem to disagree.

The list of discontinuations and sales does not want to stop at SAP at the moment up to a code splitting for S/4 and thus the creation of an on-prem Abap and a cloud BTP faction for Hana and S/4.

But it could also be that Hasso Plattner and Christian Klein have taken a liking to the concept of the carve-out. It would be the spin-off and sale of parts of a company as part of an SAP restructuring plan. Companies often sell off individual parts of their business as part of their focus on their core business. In this respect, the term carve-out covers both the sale of profitable and unprofitable parts of a company.

The timing of SAP's carve-out is well chosen: The SAP community is probably facing the last year in which Professor Plattner is still Chairman of the Supervisory Board, and Christian Klein has to position himself against the new and very accomplished SAP CFO Dominik Asam. He represents a significant counterweight to the youthful gang of Christian Klein, Thomas Saueressig and Jürgen Müller. It should be an easy game for the veteran Asam and perhaps we will already see the new SAP CEO here.

Peter M. Färbinger, E3 Magazine

Peter M. Färbinger, Publisher and Editor-in-Chief E3 Magazine DE, US and ES (, AG, Freilassing (DE), E-Mail: and Tel. +49(0)8654/77130-21


  • Hallo Herr Färbiger,

    danke für ihren interessanten Beitrag. In der Tat hätte ich es auch für strategisch äußerst zielführend erachtet wenn SAP mehr Open Source anstatt weniger macht, den der Zug ist schon zu 7/8 abgefahren.

    Sie nennen in ihrem Artikel SalesForce, Workday und SuccessFactors (als Beispiele für erfolgreiche Wettbewerber, wobei SF ja ein SAP Unternehmen ist) was sicher nicht falsch ist, es gibt aber mit Odoo eine echtes hybrides Open Source ERP System, das seit vielen Jahren in Konkurrenz zu den Mittelstandsansätzen von SAP (u.a.) entwickelt wird.

    Es ist jahrelang unter dem Radar geflogen, hat aber seit geraumer Zeit ein exponentielles Wachstum zu verzeichnen. Mittlerweile hat das Unternehmen einen Buchwert von geschätzt 3 % der Marktkapitalisierung von SAP (ist jedoch nicht öffentlich gehandelt) und zieht neben 7 Mio. Nutzern weltweit mittlerweile selbst die Big-4 Unternehmensberatungen magisch an.

    Also interessierter Beobachter und Investor bei der SAP bin ich ähnlich gespannt wie Sie, was die Zukunft bringt, glaube aber auch das SAP viele historische Chancen der Transformation längst verpasst hat. Das früher so zielsichere Gespür für gute Geschäfte an vielen Stellen hat es dabei leider verloren hat. Die jüngste Abkündigung von IS-H verstehe wer will, ich nicht. Gerade der Health Markt ist so ziemlich das Krisensicherste was es gibt. Danke ihnen für den interessanten Beitrag

    Gruß F. Kramer

    • A
      Peter M. Färbinger, E-3 Magazin

      Hallo & vielen Dank für Ihre Stellungnahme. Ja, SAP hat einige Chancen ausgelassen und bekommt Konkurrenz, siehe Odoo. Interessant war in diesem Zusammenhang die Bilanzpressekonferenz von 26. Januar 2023, siehe Link: Hier gab es kein Wort über IS-H, Business ByDesign und den ungelösten Konflikt zwischen On-premises und Cloud Computing, siehe S/4-Code-Splitting. Es bleibt spannend & liebe Grüße …

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