deal architect

SAP Nation 2.0: Customer coping strategies

As with previous books, I have been excerpting 10% of the contents. You can buy the book at several stores (online in paperback at CreateSpace and ebook at Amazon).

2.0 looks at the prospects of S/4HANA which SAP launched in February of this year. Chapter 6 covers over 25 pages, 9 coping strategies SAP customers are trying out.

- Gartner has been talking about “postmodern ERP’
for a couple of years now: While Gartner’s definition mostly focuses on moves to cloud applications and business process outsourcing. in SAP NationI described a wider range of customer coping strategies: two-tier, ring fencing, third-party maintenance, change in talent models, etc.

- Since SAP Nation was published, I have seen a veritable tsunami of other SAP customer examples using these strategies, with some unique adaptations. In many ways, the situation reflects customers doing their own thing to “simplify” and optimize their SAP environments. Many customers started their initiatives before S/4HANA was announced, and with so many questions swirling around S/4, I expect others to join them in crafting their own coping strategies.

- The chapter has details on 9 strategies

• Multiple Hubs
• Ring Fence
• Independent Support
• Two-tier ERP
• Rip and Replace
• Next-gen application management
• Next-gen infrastructure
• Play small ball
• Leverage SAP’s cannibalization

SAP Cloud Powered by Oracle

Let the mud-slinging begin as Oracle starts this campaign

In typical Oracle fashion, it pushes the speeds and feeds button. Better from many CIO’s pov would be to show the lower TCO/risk dimension. No need to wait for talent and systems management tools to mature around HANA. No need to pay for two database environments because few SAP and most non-SAP apps will run on HANA for a long time.

As for SAP, it has been hurting itself via its salesforce and its partners saying HANA is now the “first-class citizen”. On the quiet, however, it has been sharing plans for continued Oracle database versions (including the in-memory switch in 12c) and Engineered Systems. I am sure there is similar for IBM DB2 and Microsoft SQL Server, and for SAP’s own Sybase and MaxDB products.

The sad news is I am finding both SAP and Oracle are at an all time low when it comes to buyer trust. There is a clear vacuum for others to step in.

Wishing the best to Bill McDermott

Bill McDermott, CEO of SAP suffered a pretty catastrophic accident a few weeks ago. He said this in an eloquent Facebook post that I hope he does not mind me sharing

“In early July, I was visiting my father on his 76th birthday. Unfortunately during my stay, I slipped and fell while holding a glass of water, and the injuries caused by falling on the broken glass were significant. I suffered facial fractures, severe lacerations, and extensive damage to my eye.

After returning home from extensive surgery and a week’s worth of recovery time in the hospital, I had numerous additional procedures to repair the facial injuries and multiple surgeries to attempt to regain sight in my eye. Unfortunately, despite doing everything possible, the eye could not be saved and was removed earlier this week. After a 6 - 8 week healing period, I will be fitted with a prosthetic eye. Although this was not the outcome I had hoped for, I feel grateful, optimistic and hopeful.

I feel grateful because I’ve lost people I love, and know that losing an eye is in no way comparable to losing a piece of your heart. I am more grateful than ever for my family, who have been by my side these past weeks—and throughout my life. I am also grateful to the hardworking, committed women and men I have met during these past weeks of surgeries and recovery. Without their talent, I wouldn’t have come this far.

I feel optimistic because that’s who I am. I learned this from my mother, whose indomitable spirit I inherited, and which has always helped me push through challenges. Just as every life experience has made me wiser and stronger, I know this one will, too.

Finally, I feel hopeful in part because of something a friend reminded me: true insight doesn’t come from what we see, but from what we know and feel. I have lost an eye, not my curiosity or my compassion. I am no less capable of leading SAP, or any less committed to the audacious goals we’ve set for the company. Thanks to my family, my friends, and my colleagues, my spirits are higher than ever.

Work has always energized me, and today, I’m more driven than ever to fulfill my duties and promises as SAP’s CEO. I’ve been talking with Hasso Plattner and SAP’s leaders, my colleagues, our partners and customers for weeks, and now that the doctors say I can fly I’m heading to the airport in early October to see my second family, in Germany.

This is an important time for SAP, a company made up of thousands of talented, hard-working people that deserve the spotlight much more than I do. So, enough said. Thank you for your friendship and support. Now, it’s time for me to get back to work.”

SAP is in a state of disarray as my books have pointed out, and sorely needs McDermott to be healthy again. But forgetting the work dimension, at a human level, I am praying for him.

As I wrote in 2.0

In my dealings with him, I have always admired his demeanor—he is polite and attentive, and I doubt he even knows we share birthdays.

Here’s wishing you the absolute best, Bill.

Webinar on SAP S/4HANA

Pleased to be part of a joint webinar with Panaya Sr. Director of SAP Product, Nir Paikowsky, on the truth, complexity and trends behind S/4HANA. 

We will discuss:

• Market trends behind customer moves to S/4HANA and Business Suite on HANA
• Growing range of SAP customer "Coping Strategies"
• How your current version of SAP influences your path to S/4HANA
• What is a realistic time frame and cost of an S/4HANA upgrade?
• What proactive steps can you take right now to prepare for S/4HANA?

Panaya is offering registrants a free upgrade assessment using its highly respected tools. Registrants will also get a free copy of my new book, SAP Nation 2.o. 

Register here for the sessions on Tuesday, September 29

10am PST/1pm EST
10am UTC/11am CET
1pm AWST/4pm AEDT

Look forward to seeing you there.

Announcing SAP Nation 3.0

Availability  - summer of 2017. Or later.

Seriously, as I conclude in 2.0, S/4HANA will need to go through significant morphing and maturing

I want to advise and observe customers implementing the 9 strategies I have in 2.0 to optimize/diversify their SAP investments.

I have also communicated to SAP I would like their active involvement in the next project

Each of those will take at least a couple of years if not longer to play out. Without those, 3.0 would not be a substantial body of work.

In the meantime, I have promotional activities over the next few weeks around 2.0. But more importantly, there are so many other innovation areas to focus on. I already have 2 book ideas I am evaluating.

One last point - If you have a budget to use up before year end , I am taking pre-orders for 3.0. Delivery - Fall of 2017

User Groups and Customer Advocacy

Somebody asked me recently what was the toughest part to write in my  SAP books. Without hesitation, I said Chapter 7 of  the first book. It cataloged 20 years of project failures. I had forgotten about the steady drumbeat of massive, publicly disclosed SAP failures and the chapter forced me to revisit several every single year.

There has been a regular stream of “compliance” stories – games big vendors play to shake down even more money from customers as described, as an example, in this article around Oracle. In the SAP world, there used to be whispers about the dreaded “indirect clause”  - I think I first encountered it with a client in 2005. Now firms like UpperEdge openly talk about SAP’s “indirect access assault team”

Some of us have been talking about third party maintenance for over a decade. Rimini now has over 1,000 customers.

Each of these is a significant “mega trend” in the ERP customer base, but here is the baffling issue. Why have customers been telling analysts like me about these issues for a while now? Yet, why do so few user groups seem to want to highlight them? They seem content to hold local gatherings, run training courses and conduct surveys.

Where is the customer advocacy voice of the user groups?

In SAP Nation 2.0 I wrote

I had interviewed executives at ASUG and DSAG, the user groups representing North American and German-speaking SAP customers, respectively. They are the two largest in a global network of such groups. DSAG has been particularly forceful in challenging SAP every time it has tried to charge customers more for software maintenance. But that only accounted for roughly $10 billion out of $204 billion a year in our SAP economy model. Neither user group has focused much on all the additional “surround costs” in the SAP economy. Customers should rightly expect more advocacy from the 30 such regional user groups around the world.

I am advising more large customer executives to talk more regularly and one on one to their peers and set up their own “informal user groups”. Let the official user groups keep conducting their surveys and doing other low-impact activities.  Customer advocacy does not appear to be high on their agenda.

SAP Nation 2.0 Excerpt: The Bastards Say, Welcome

The sequel to SAP Nation came out in book stores a week ago (print at CreateSpace and ebook atAmazon). As with previous books, I will be excerpting 10% of the contents over the next few weeks. Here is some from Chapter 5:

“In the Pulitzer-prize-winning The Soul of a New Machine, Tracy Kidder wrote of an ad that Data General produced but never ran. It read:

"They Say IBM's Entry Into Minicomputers Will Legitimize The Market. The Bastards Say, Welcome"

Jason Blessing, the CEO of Plex, a cloud manufacturing vendor (and before that an executive at Taleo, a cloud HCM vendor), similarly told me:

"Strange as it may sound, I am pleased to see S/4. First, SAP's cloud delivery promise and those of other major vendors like Oracle validates cloud computing, and what we have been doing at Plex for years now. Second, any time a company announces a next-gen product it puts their incumbent customer base in play. Customers know they have to re-platform and therefore re-implement their old SAP applications. Any effort like that becomes an opportunity for Plex to show what we can do for customers in the cloud.

SAP may say S/4 is coming soon, but as we know, enterprise apps are complex. Look at Workday and Oracle Fusion - it's taken them a while to mature their cloud offerings. Additionally, SAP will need to adjust to our changed industry with the pay-as-you-go business model and more modular application sales. Our customers are poster children for those trends in the industry. They often start with a single plant and expand from there. Our private equity, cloud savvy investors embraced the subscription model a long time ago. Our partners think small and sell based on their operational knowledge not their big brands.

Being the last major software vendor to re-platform for the cloud, SAP does have the advantage of learning from the mistakes of others. On the other hand, being late puts more pressure on them, and likely they will only cosmetically refresh what they have today."

Kustoff, (the CIO) introduced in the previous chapter, agrees:

"This is the third major architectural shift I have seen in my IT career. Just like SAP capitalized on the move to client/server computing in the last wave, other vendors without a legacy and client base to support will pour in to take advantage of this shift."

What starts in Vegas today, will not stay in Vegas

A US District Judge will preside over a trial starting today in Las Vegas related to a $209 million copyright lawsuit Oracle has filed against Rimini Street.

Having been an expert witness in a few software cases, I know both sides will have copious amounts of filings and expert reports. The questioning and the testimony will be outright  boring at times, bombastic at others and the attorneys will mine a sentence or two out of that Big Data of millions of spoken and written words.

I find myself with my mind made up. Not pro-Oracle, or pro-Rimini (though both are blog sponsors), but as always pro-customer. I am a big believer in choice. For over a decade, I have written in my blogs and books about third party maintenance and compared it to independent auto dealers, and that the tech industry has a long history of third party options like plug-compatible mainframes.

What I like is the 3PM value proposition keeps evolving to the benefit of customers. What started off as a 50% off type offering, now has many other attractive features

From my new book, SAP Nation 2.0

“Many customers also find attractive the 30-minute guaranteed response for urgent issues, highly personalized service from what Rimini calls a Primary Support Engineer (PSE), support for customizations at no additional charge and the ability to run the existing SAP release with a promise of 15 years with no required upgrades.”

So, over the next few weeks we will hear bunches of boring and titillating software industry gossip, but in some shape of form, I hope the software vendors and providers like Rimini keep evolving software maintenance. It deserves to reflect the new world of ring fences and satellite apps that many vendors have acquired, and those customers have themselves implemented not just support for 20+ year old core software, it deserves better SLA and it deserves to be much cheaper especially for that 20+ year old core software.

Stunning Singapura

I love what I call déjà vu travel – to go back to a place 10 or 20 years since my last visit. I like to see how towns and cities have evolved and innovated along the way. In the last couple of years that has meant trips to Galway in Ireland, Edinburgh in Scotland, Madrid in Spain, Nashville in TN, Austin in TX, Long Island City in NY, Lake Louise in Canada among others.

Last week, I had a chance to go back to Singapore and the rate of positive change there since my last visit in the early 90s is nothing short of stunning. On New Florence I have a series of blogs on some of the changes I saw.

Gardens by the Bay

Marina Bay Sands

Changi Airport at 50

Taxi technology

The best airline in the world

I wish Margaret had joined me on this trip and forced me to spend more time in the touristy parts of Singapore. Would have made for an even more fascinating visit.

SAP Nation 2.0: Economy as large as Israel

As with previous books, I have been excerpting 10% of the contents. You can buy the book at several stores (online in paperback at CreateSpace and ebook at Amazon).

2.0 looks at the prospects of S/4HANA which SAP launched in February of this year. Chapter 5 revisits over 10 pages the model of the SAP economy I had developed for book 1.

I adjusted the model to project for the potential impact of Fiori, HANA and newer SAP acquisitions. The major adjustments are

• As in previous upgrade cycles, there is often a shortage of qualified partner resources with customers having to pay premiums for such support. Often they end up using SAP’s even more premium-priced consultants.
• At its Global Partner Summit in June 2(115, SAP shared that it had 13,000 partners worldwide. While many surely have a relatively small number of consulting staff (compared to a partner like Accenture), I have added an average of 25 staff for 12,500 of those partners I did not previously have in the model. SAP had provided feedback on the model but chose not to disclose I had underestimated that count.
• With the growing sprawl in the SAP product portfolio, I am seeing more customers invest in master data management middleware and other internal projects with related staff. They are also having to invest in duplicate IT staff as they transition to HANA and Fiori while continuing to invest in existing technologies.
• In the model in “SAP Nation,” I did not have Concur customers as the acquisition had only recently closed.
• I added a new line for ‘end users,” using the assumption above that 30 million users will each need 20 hours of training a year.

I could have added much larger end-user costs growing costs of non-human users like smart meters, and amortization costs but let me repeat my guiding thought during SAP Nation:
What’s the point of presenting an even gloomier model? The revised model already puts the GDP of SAP Nation at over $300 billion a year—close to that of Israel.