SAP Nation 2.0: The Bigger Story

I am writing the sequel to SAP Nation to update it for the launch of S/4HANA. I analyze the launch and also delve into the history of next-gen products in enterprise software over two decades to provide some perspective on how S/4 may evolve and how the customer base will react to it.

That I thought would be the bulk of the book.

Actually there is a bigger story.  Seemingly out of the woodwork, in reaction to SAP Nation I started hearing from/about many SAP customers. The common thread was “wish you had talked to us when you wrote the book – here is what we (or so and so customer) are doing to optimize our (their) SAP environment”

The fragmentation in the customer application portfolio is not surprising as I had described customers trying “ring-fence with clouds”, “two-tier ERP”, “third party maintenance” “sidecar” and a variety of other strategies. Still I was taken aback to see analysis from Panaya, the tools vendor:  “More than 50% of SAP shops have 40+ satellite applications. Of these less than 10 are SAP applications”. I accessed analysis of ABAP customizations at 80 major SAP customers by CAST Research Labs has – most of the customizations are sizable, and many high-risk by their benchmarks. Little chance they can be retired or modernized anytime soon.

Then there is the fragmentation in SAP’s own product portfolio. which has exploded with nearly 50 acquisitions in the last decade, many still waiting to be integrated. Mark Hurd, CEO of competitor Oracle has sarcastically commented about that “I guess we could buy a Dairy Queen.”

Additionally, there is organic product growth. There are growing number of custom Fiori apps. SAP has released over 50 country-specifically localized SAP All-in-one baseline solutions on the latest SAP HANA enabled enhancement package . BusinessOne, with over 50,000 smaller customers around the world, is not exactly dead. Even BusinessbyDesign (ByD) which has suffered from a series of SAP missteps has been called “alive and kicking”. At SapphireNow in May, SAP Digital announced a new set of products including a CRM solution at $ 29 a user a month. SAP announced updates to its Lumira visualization software for growing sensor and other IoT data. It showcased the “Boardroom of the Future” . Over the last few years, 9000 people have been part of SAP Code Jam events in 119 cities around the world! SAP claims 17 million Jam users. Most of these products individually contribute 1-2 % of SAP revenues but keep adding to the sprawl.

Finally, there is significant churn in the partners. There are many newer smaller Fiori and HANA focused consultants. Over 2,000 HANA startups and many new private cloud hosting providers. Application management is morphing as those providers automate and move to as-a-service business models. The acquired companies like SuccessFactors and existing products like Business One are seeing changes in their implementation/reseller channels.

The wide diversity in SAP’s portfolio and its customer base is vividly on display in its advertising budget which varies from radio spots aimed at small businesses for the Concur product to SuccessFactors billboards at competitor events to corporate branding at hockey stadiums and in 3 page spreads in the Wall Street Journal.

I am a student of ecosystems so I find all this stuff fascinating. But I would be lying if I told you I understand all the cross-currents these represent.  I certainly would not call it “running simple”.

I use an analogy in the book of another country. In a few weeks you will get to see what the state of SAP Nation reminds me of.

(Cross-posted @ Deal Architect)

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