We need SAP S/5 Hana
Of course, SAP has meticulously planned the successor to Business Suite. Professor Hasso Plattner developed the concept of an in-memory database in Potsdam, with the goal of creating a modern financial system. Simple Finance with the Hana database was the first major success. It is an on-premises system with the business know-how born from decades of successful SAP history.
And then SAP boss Christian Klein took a wrong turn. Instead of sending the S/4 ERP system presented in 2015 into a well-deserved retirement after twenty years, it is now being kept alive artificially—on life support —in intensive care until 2040. In the fast-moving world of IT, this time span is completely unrealistic and counterproductive. This lifespan is not a proof of quality and service, but rather an innovation killer.
A lifespan from 2015 to 2035 would have been perfectly adequate for SAP's last on-prem system. S/4 with the Hana on-prem database on an IBM Power architecture could have been a success, like R/3 Enterprise and Business Suite 7 that before it, because it would have met the needs of SAP customers. S/4 could have been the crowning glory of on-prem ERP development.
Of course, SAP would have had to endure the ridicule of young cloud entrepreneurs and financial analysts’ pointed and critical questions. But where would SAP's share price be then? It is impossible to answer that question. But a recent report on the German bank (Deutsche Bank) in Manager Magazin, a German magazine, shows once again how little a share price says about the true state of a company.
Deutsche Bank's Postbank debacle should be common knowledge for anyone in Europe. Manager Magazin writes, among other things, about the management board: "How is the team of eight men and one woman supposed to take the bank to the next level? If the bank is already failing to integrate a subsidiary that it is quite familiar with, which has been part of the company for more than a decade? Manager Magazin online continues: "The share price performance in recent months does nothing to change this. The shares have risen by a good 40 percent since last fall and are now at their highest level during Sewing's tenure.” Christian Sewing is the CEO of Deutsche Bank.
It is clear that much, if not everything, in the professional IT scene is moving to the cloud. One could argue and discuss whether SAP has missed another megatrend, but this is an academic argument, because SAP is not a start-up or an end user software manufacturer. SAP's customers include some of the largest and most successful companies in the world.
SAP customers have completely different expectations of their organizational structure and processes. Cloud innovations from young start-ups are essential for the next generation of ERP. Today, however, agility, stability, reliability, and performance are what count. SAP's relevance is measured by different parameters than those familiar to end-users in the office or gaming space. This is where SAP fails with S/4.
The latest survey by the German-speaking SAP user association (DSAG) shows that the ERP product Business Suite 7 is still very popular with users and that SAP is losing much of its relevance by lagging behind, wasting time pursuing current megatrends such as AI and cloud. SAP is the leading provider of global business software that must produce millions of orders, contracts, and invoices every day. There is no substitute for reliability and stability in structure and process organization. Experimenting with the cloud is counterproductive.
But without the cloud, SAP has no future, which is why SAP customers need an S/5. The successor to a successful on-premises S/4 must, of course, be a cloud system. However, S/4 must enter the IT world as cloud native from the ground up. S/4 was born as an on-prem system and has been bent to fit the shape of a cloud system over the years. This has no relevance for users, as the DSAG survey has proven. However, a cloud S/4 based on the wealth of knowledge from R/3 Enterprise, SAP Business Suite 7, and S/4 would be worth a try. Perhaps SAP CEO Christian Klein will come to his senses and end the costly life-support measures keeping S/4 alive until 2040. It's time to think about S/5!
