People ask me all the time if I have plans for volume 3 in the SAP Nation series. I tell them I am waiting for a turnaround in the SAP economy. A noticeable one. For reference, my models showed the economy running at between $ 200 billion all the way up to $ 700 billion a year if you include end user costs and amortization/write-off expenses. That makes SAP Nation one of the largest economies in the world – and a boat anchor for its customers.
I wrote volume 2 because I thought S/4HANA was going to be SAP’s way to shrink the burden. A year later, with a confusing and very slow rollout and mostly on-premise deployments, it actually threatens to make the burden worse. It could leave customers with a massively fragmented landscape. The irony is SAP conquered the world in the 90s by collapsing hundreds of departmental solutions. Now it is the “fragmenter-in-chief” with its myriad acquisitions, not yet integrated and the gradual S/4 availability. It also threatens more lock-in as it pushes HANA after decades of supporting database portability.
As a result, I am becoming more convinced the turnaround will not come from SAP or its partners, but from actions SAP’s customers take over the next few years. As I go around the country and present at Rimini’s executive briefings and as I meet executives at cloud conferences like those of Plex, NetSuite and Workday, I get more proof points.
I have heard from several Rimini customers two striking things – the moment they switched maintenance away from SAP, their ticket volume went UP. SAP would fight them, would not support customizations and overall took so long to resolve their issues that they quit opening new tickets. Customers tell me their maintenance costs amortized over the few tickets SAP resolved work out to $ 50K or more a ticket. With Rimini they are handing tickets off early and often. The other remarkable thing they tell me is they thought they would save half off the maintenance bill with Rimini, but they are seeing incremental savings from lowered burden on their level 2 help (either their own staff or outsourced), from delayed upgrades etc. The savings are actually 3 to 4 times what Rimini promised. Rarely have they been so pleasantly surprised in SAP world with its usual overruns.
At other conferences I am hearing customers repeat back to me the “coping strategies” I had identified in both volumes – ring-fence SAP with cloud solutions, tw0-tier ERP, rethink talent model, move infrastructure to open source and cloud models.
Trust me if they are telling me their experiences, they are giving SAP plenty of chances to change course. And it’s not just onesy-twosies – its hundreds and thousands of customers. SAP response is to re=negotiate with these customers or threaten them, but not fix the underlying problems.
SAP version of “turnaround” is the Wall Street version measured by whether it can sell more, rather than the customer version – can it reduce the burden they face?. So it keeps pleading its customers to buy more of HANA or SuccessFactors or Ariba when customers want value from their significant prior investment.
Unless there is a significant shift in SAP’s approach, SAP Nation will gradually shrink, but it will become less SAP Nation and more Rimini/Workday/NetSuite/other cloud Nation.
So here’s my big question. Ethically, when I do write that third volume, could I still title it SAP Nation 3.0?