What happened to the German and European automotive industry has now also happened to SAP: the incorrect assessment and incorrect positioning of old (combustion engine) and new (e-drive) technology led to chaos, contradictions and wrong decisions. SAP positioned and used cloud and AI IT technology in a negligent and contradictory manner. The European car industry has conceptually failed due to the ban on combustion engines. SAP has hit the wall with cloud and AI.
How could a proven and successful IT technology, such as cloud computing or AI, put the global ERP market leader SAP in a hopeless situation? A brief history of the cloud, AI and SAP: it all started with the quest for more power. SAP was and is unique in the design and implementation of business processes. SAP's business knowledge is outstanding. In its founding years, SAP did an excellent job of gathering the brightest minds in business administration around it.
The collaboration with Professor Plaut and Professor Scheer is legendary. The founders of SAP and the following generation understood perfectly how to transfer this knowledge into Abap code and use it to create a unique ERP.
The success of SAP R/3 and SAP Business Suite 7 was and is overwhelming. But SAP wanted more and, as a stock corporation, was naturally under massive pressure from investors and the stock market. Those responsible at SAP saw a way out in the expansion of the ERP stack - i.e. the IT layer model: hardware, operating system, database, middleware, etc.
SAP worked intensively on the topic of virtualization in partnership with VMware. The idea arose to construct its own database, which in turn required a specific hardware architecture. A new ERP generation should not only be operated with its own database, but also consolidate and orchestrate the proliferation of operating systems and databases (AnyDB) of previous years.
A new ERP stack was created: largely based on Intel processors, with the Linux operating system from Suse and Red Hat and the SAP Hana database. Now the code conversion of the Abap tables from SAP Business Suite 7 to S/4 Hana began. The process took around eleven years and some critics of the S/4 system believe that the complete code transformation has not yet been completed.
SAP does not always use the latest IT tools to convert the old Abap code from R/3 and ECC 6.0 (Business Suite 7). The development and reprogramming took a long time and was complex. Many resources were blocked, used and perhaps wasted at SAP during this transformation process from ECC to S/4. However, this meant that there was a lack of capacity to continue working on SAP's unique selling point, the end-to-end business processes. The core competence was neglected!
Initially, the Hana database and the new ERP S/4 were planned as a classic on-prem model. SAP did not initially focus on the development of hyperscalers and cloud computing. The transformation of the on-prem S/4 into a cloud system in turn cost a lot of energy. SAP gradually developed into a tech company that was in competition with other IT competitors with many approaches, products and solutions. For a long time, this was completely new and surprising for SAP. The ERP unique selling point turned into an IT company that faced veritable competition in the fields of databases, cloud and AI.
The end of classic SAP with its ERP USP and unique business and organizational processes was sealed. SAP CEO Christian Klein has not managed to create a new USP from the cloud and AI. He is honestly trying to be just as good as the competition in the areas of cloud and AI - just as the European automotive industry is trying to compete with Chinese providers in the area of e-mobility.
The end of SAP, as many existing customers know the ERP company from its founding years, is sealed. The SAP Executive Board around Christian Klein has not yet set any new, unique impulses. In a composable ERP age, SAP is increasingly becoming an arbitrary, interchangeable IT supplier, because everyone is now using the cloud and AI. And AI may soon be doing everything on its own.
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