SAP's sleight of hand
Cloud computing is a megatrend, but with each new quarterly report SAP shows its own difficulty in using this trend positively. Once again, balance sheet figures relating to cloud have risen significantly in SAP's quarterly report. What is presented as a success is merely an ingenious sleight of hand. Real life takes place in the SAP community and among DSAG members, where few want to hear anything about cloud computing.
SAP's sleight of hand - a thought experiment: On the street where you live, there are two restaurants that both have the same owner. A simple calculation shows that the restaurant owner could earn considerably more if he operated only one restaurant - regardless of the food he offers. The catchment area remains the same and the competition was negligible in the past.
Thus, the restaurant owner decides to reduce the service in one of his establishments, the toilets are inadequately cleaned and the prices are significantly increased. Oh wonder - the hungry people from the street increasingly turn to the other restaurant, even though the food there is also bad, but the toilets are clean and the service is good. At the end of the story, the restaurant owner has achieved his goal: a restaurant with a veritable profit margin! The other restaurant, called "On-prem," is about to close. This is the deconstruction of a market segment.
And SAP?
The ERP world market leader has the best business algorithms, proven and well thought-out business processes. When SAP discontinues APO, Advanced Planner and Optimizer, which has been running well for many years, and offers only the cloud as an alternative, it seems hardly surprising that many existing SAP customers (have to) choose IBP, Integrated Business Planner, the successor to APO.
Why is SAP IBP a success story?
Not because, but despite cloud computing! IBP goes far beyond APO and has numerous innovative enhancements to offer. This impressively demonstrates the old SAP unique selling point in the area of standard business software. IBP's functions, algorithms and processes are unique - so SAP's existing customers are willing to put up with the cloud, including difficult-to-manage maintenance windows.
By its very nature, there can be no talk of a voluntary switch to cloud computing or of the cloud's persuasive power. If only one restaurant is open and hunger is pressing, then the SAP existing customer will accept this offer without alternative. In the end, however, it seems embarrassing when SAP executives boast of their cloud competence and celebrate a supposed cloud computing success.
The trick is simple and transparent
SAP offers only one database for future ERP systems, namely Hana, and then enjoys the success that more and more existing customers choose Hana as their database - is there an alternative? Well beyond 2040, when really all SAP existing customers have converted to S/4, the Hana database will show a one hundred percent market share - technically it will not be possible otherwise. But then SAP will again praise itself and say that no other database vendor has one hundred percent market coverage. Well, don't trust any statistics that you haven't falsified yourself.
Resistance futile
Due to a great past, SAP has the market power to apply the presented sleight of hand without consequences.
The trick with the database raised a lot of dust, but it went unpunished. Why? Ultimately, it is not decisive for business success in which SQL database one's own data lies dormant. Another database may be faster, cheaper and more efficient, but the difference is in the very low percentage range. It is not worth the effort to go to the antitrust authorities over Hana or to initiate antitrust proceedings in Brussels. The challenges for an existing SAP customer lie elsewhere.
The end of SAP's success is in sight, although not yet within reach. Like the IT scene, the SAP community is heterogeneous. In hybrid landscapes, not only on-prem and cloud change, but also the app providers. For many existing SAP customers, sourcing CRM from Salesforce and HCM from Workday is a given. This agility is good for the market and a challenge for vendors, along the lines of coulda, shoulda, bike chain. And one more interesting news item to end on: More and more voices from the SAP community think that the new SAP CRM is superior to the no less successful Salesforce in terms of usability and user interface. Which proves that the issue is not cloud computing, but functionality
