I am looking forward to hearing Christian Klein tomorrow as he presents on “SAP Business Unleashed”. In many ways, in his 5 years as CEO he has already unleashed SAP growth especially in stock market valuation. It now stands at over $350 billion, more than twice what it was when he was appointed co-CEO. It has the largest market cap of German publicly traded companies.
While that is impressive, technology market leadership has decisively shifted away from enterprise application vendors (not just SAP) to the Magnificent Seven as I wrote here. Microsoft alone is valued at $3 trillion, and just its data center capex will be more than double SAP’s revenues.
As I start my research for SAP Nation 5.0, I will be doing my usual 360 degree set of interviews with customers, partners, competitors and fellow analysts. I hope to learn more about how SAP plans to unleash even more growth in a dramatically changing world. Christian is sharing the session with several other speakers so won’t have much time, but hope to hear more from SAP over the next few months.
I am encouraged that David Lowson of Capgemini thinks SAP is already looking ahead to 2030.
“I’m pretty confident that SAP's growth and increasing cloud revenues are secure for the next few years. The move to RISE and BTP, and their acceptance in large programs, is driving that. Many large clients have committed to RISE journeys that will last several years of growth. I really think that SAP is using this period of comparative calm to think about what’s next and actually focusing on 2030, not just the end of Q1 2025. “
I would like to see a bit more urgency than 2030 given all the changes we are likely to see in business and in technology and particularly if it wants its market cap to rocket to hyperscaler levels.
Clean Core in ERP – too small a focus?
SAP has been very focused the last few years on migrating on- prem ECC customers to S/4HANA in the cloud with hyperscalers. And there it has been pushing a “clean core” message. While that makes for less custom code and facilitates IT hygiene, it narrows the functional scope to mostly accounting and inventory processes, and encourages customers to “ring fence” S/4 with even more functional specialists than they have in the past. SAP’s own presence in many non-ERP categories has suffered. I was at Paul Greenberg and Brent Leary’s IRL25 conference in Atlanta recently. They used it to announce the award winners in Paul’s CRM Watchlist. That’s not just Paul’s view of the CRM vendor space. He polled 27 analysts for input. I must have been one of the few that nominated SAP for some of the awards. There were 21 categories of awards (16 at the company level and 5 at the executive level and their assistants). Salesforce dominated the company awards, Zoho the executive ones. SAP didn't even make finalist for a single category! Its leadership is similarly challenged in HCM, EAM and many other market categories.
Trump and China impact on business
Trump’s tariffs should lead many MNCs to make and hire more in the US. These are likely to be next-gen manufacturing, logistics etc. with a lot more automation than in the past. His immigration policies will similarly lead to changes in farming, construction, other sectors. His thoughts about crypto, Greenland and Mars should impact fintech, space, mining and other sectors. China’s expansion plans are as ambitious. How is SAP preparing for changes in various verticals? SAP has historically been a leader when it comes to industry depth but many of the industry thought leaders that I had helped profile in “Business as Unusual with SAP” have moved on. I am also seeing a lot more momentum of newer players like Palantir and C3.ai and established ones like Salesforce and ServiceNow when it comes to operational experience in several verticals
The coming blend of agentic AI and humanoid robotics
In our new (fiction mystery) book, The AI Analyst, Polestar is a next-gen vendor which combines agentic AI with humanoid robots, drones, UAVs etc. Not just a software or silicon focus. Polestar also has an expansive definition of its verticals as each of the 800+ occupations the Bureau of Labor Statistics tracks. Their solutions automate limbs, eyesight and other human faculties, not just cognitive skills. Salesforce, Workday and others have already started introducing their agents to customer care, HR and other back office functions. Nobody is thinking yet like Polestar at the micro-vertical, occupational level where productivity and ROI will be pretty easy to quantify. Will SAP?
A rapidly shrinking world
SAP has led the enterprise world in localizing for 60+ countries for changing taxes, payment protocols, customs and other nuances. However, they have had sales and product leadership changes in the last year. And players like Zoho are rapidly growing data center and customer presence especially in fast growing BRICS, Middle East, ASEAN, Africa and other markets. They are selling way above their positioning as a SME focused vendor in those markets at far more competitive economics than Western vendors. Last week at a Zoho event, I heard a Dubai-based company glowingly describe their rollout of Zoho Expense for T&E management across 70+ business units in 50+ countries.
In SAP Nation 3.0 in 2019, I had invoked the US’s westward expansion in the 1800s. The rallying cry used the term “Manifest Destiny” to do so. Trump is now setting the country's visions on Mars and elsewhere as a continuation using the same term. In that book, I had described several markets SAP had missed in that decade. I had also said SAP needed its own Manifest Destiny rallying cry. I hope Christian does that over the next few months. I look forward to cataloging a much more ambitious SAP in Nation 5.0.
