SAP Smooth and Relaxed?

Let me start off by saying I am really pleased I went to SapphireNow this year. I saw what I called the “dawn of intelligent applications” with Leonardo. I liked CEO Bill McDermott promising to do more for customers about toxic contract terms. I liked that the partner booths appeared much smaller than few Sapphires ago – books have been written about the massive and expensive ecosystem around SAPSmile

But I am not sure customers want SAP to be “smooth and relaxed” as Dennis Howlett puts it after the recent earnings call. From a customer point of view there are areas where SAP should chill, others where it needs to be more assertive.

a) Be nice if SAP accepts that S/4HANA adoption in the incumbent customer base will be nice and gradual, as the product functionality incrementally evolves and the product becomes more stable. In volume 2 of SAP Nation, I presented the industry track record on next-gen products – at Oracle, J.D. Edwards, Infor, Microsoft and even at SAP with NetWeaver and I concluded:

a next-gen product takes years of development and maturation. Migrating a legacy customer base takes even longer. Those are just the laws of physics. SAP may be able to bend these laws slightly with S/4, but will likely not be able to break them.

So, personally, I have had modest expectations of S/4. SAP , or at least its marketing, does not agree and they claim it is “the fastest adopted product in SAP history (and) is available for all industries” Much of the adoption has been with smaller new customers. Existing customers are feeling the pressure to migrate when they find incumbent technology pretty stable and the migration costs, like a re-implementation, hefty. I would rather SAP savor S/4 progress like Charles Phillips, CEO of Infor commented about cloud adoption in his customer base in response to my note “If you hadn’t heard the 90,000 (total customer count) number, by any measure you consider over 8,000 individual companies (in the cloud) in 3 years a success.” S/4 is breakthrough in-memory, next-gen UX product. SAP has done well with sales so far. They should relish the progress not overhype its scope or coerce adoption within incumbent customers.

b) On the other hand, not sure SAP should be comparing itself to Workday and saying things like “And I can only tell you that based upon the way they’ve been purporting themselves in the market with letters, with fake news to customers and things like that we’re bringing our A-game.” Let analysts like me deal with such behavior, if true. Customers don’t want SAP fixated on Workday. They expect SAP to be aiming much higher – creating next-gen versions of hairy industry-specific books of record – retail merchandising, healthcare electronic medical records, utility billing – not being content with back office functionality. They expect it to be catching up to consumer tech leaders like Amazon and Google when it comes to data centers and artificial intelligence. In fairness, it’s not just SAP – for the amount of money customers pay enterprise software vendors, they need all of them to aim much higher.

c) Customers want SAP to be hyperactive in other areas. They have been loyal given the stability of the products particularly of R/3/ECC. But many are not happy with the cost – value from maintenance is low. The indirect access clause and other toxic contract disputes are frustrating many of them. Most have heavily customized SAP and surrounded SAP with cloud solutions. It is good to see SAP deliver tools like Transformation Navigator, but feedback from customers is they are aimed to help SAP sell its new products not as much un-tangle the hairball they find themselves in. Two decades ago, customers used SAP to replace tens, even hundreds, of departmental applications. Now their SAP landscape has become just as complicated.

SAP is doing lots of good things. It needs to do other things better. The end goal should be that customers feel “smooth and relaxed”.

(Cross-posted @ Deal Architect)

Article source: https://www.enterpriseirregulars.com/117241/sap-smooth-relaxed/



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