deal architect

SAP Nation 5.0 – in 2025

This year marks the 10^th anniversary of the release of SAP Nation.  It was a wake up call, as I modeled the SAP economy, and importantly described how SAP customers were coping. In the vendor world the focus was on the first, and for some a chance to pick on SAP. Most customers I talk to thanked me for describing various strategies like ring-fencing core ERP with surround cloud CRM, HCM, SCM and other applications.

Since then, I have written 3 more books on the SAP economy.

2.0, released in 2015, looked at the newly released S/4HANA and I compared it to next-gen products from Oracle, Microsoft, Infor and others. I predicted customer adoption would be gradual – not SAP’s fault, most of the competitors have done far worse.

3.0, released in 2019, was a “State of the Union”. I broke the customer base into 4 groups – Risk-takers, Modernizers, Diversifiers and Bystanders. I also described SAP’s progress in integrating tens of acquisitions and several markets it missed.

Business as Unusual, released in 2022 was written for two SAP executives and brought out the massive changes in every industry as a result of COVID, the Ukraine crisis, climate change and big Digital Transformations. I have since had a chance to work with SAP on their continued localizations for markets around the world. You will see some of that content soon.

It’s time to start on the fifth book on SAP.

We are seeing seismic changes in the enterprise software world. SAP is leading some of them, reacting to others

• A dramatic shift from focus on transaction processing to analytics, data and AI
• But TP is not dead - so many new edge applications and localizations have become necessary – by industry, by country. Never in my career have I seen so many new opportunities
• Hyperscalers have replaced SIs as the most influential ecosystem players especially as SAP emphasizes RISE – and they definitely have Wall Street’s attention as many of them chase each other in the trillion dollar valuation club.
• Automation tools are finally gaining traction in migrations like ECC to S/4HANA, upgrades etc.

Customer strategies are often divergent

• Many are sticking with last gen applications – looking to lower maintenance and bolt on modern AI, IoT, vertical functionality
• Too many customers are back to custom developing applications as enterprise software vendors fall dramatically behind in functional coverage
• Not every customer is sold on a as a service model. They would rather pay as they go.
• Many customers have woken up to the fact that they can monetize their operational and other data streams

Why so much focus on SAP? Love it or not, it is the most dominant enterprise application vendor in terms of customer count, country and industry coverage, enterprise budgets and many other metrics. 

Ok, so why wait till 2025?

For my books I take a 360 degree look. I talk to many customers, partners, competitors, other analysts. It’s not unusual for me to end up with 2500 pages of transcripts, slides, white papers etc. From that I condense down to a punchy 300 page final product.

Some of the content will show up along the way in the form of my advisory projects, blogs and video episodes, but the synthesis and trend analysis takes time. Not to mention I need time for my editor and for the creative firm which formats my books.

Another reason for the 2025 release - I plan to release a very unusual (for me) book in 2024.

It is fiction genre. A thriller. Written with a lady co-author.  Involves AI, crime, SV billionaires, industry analysts, the FBI and more.   

More on that soon😊

 

SAP Nation 3.0: Excerpt Chapter 12 - Manifest Destiny?

I excerpt 10% from every book in a series of blog posts. I posted several on SAP Nation 3.0 in April, then took a break after the Sapphire event. This is the final batch I am excerpting. The book is available to purchase on Amazon in print and eBook format here

"In the start of the book, we shared that in his inaugural address in 1801, U.S. President Thomas Jefferson had talked about a nation “with room enough for our descendants to the hundredth and thousandth generation.” A couple of years later, Jefferson instructed Lewis and Clark as they began their pioneering westward trek: “Those who come after us will fill up the canvas we begin ….”

Jefferson was an optimist and helped fire up a country’s imagination for a massive westward expansion. SAP needs a similar call to action."

"McDermott, himself, after announcing the large Qualtrics acquisition, said, “Very few people are aware of the implications of courageous decisions. Especially not if they’re hit unexpectedly …. Looking back in a few years, SAP will have reached a whole new level with the Qualtrics deal. We dream and fulfill dreams. That’s the wow factor that distinguishes an average company from a great company.”

"Of course, SAP is not the only vendor who sees this second wave opportunity. Dave Vellante of SiliconANGLE Media paraphrased IBM CEO Ginni Rometty’s message at her Think conference in February 2019. “Chapter two is about the hard stuff. It’s about scaling AI and creating hybrid clouds. It’s about bringing the cloud operating model to all those mission-critical apps and enabling customers to manage data, workloads, and apps and move them between multiple clouds. This is a trillion dollar opportunity and IBM intends to be #1.”

"McDermott has a best selling book titled “Winners Dream”. On Facebook, he periodically posts inspirational quotes such as “My parents gave me permission to dream big. Do the same for those around you”.

So, how bold can SAP’s and McDermott’s dreams be? Are they ready to issue the Manifest Destiny clarion call to go from “sea to shining sea”?

The continent of enterprise computing is waiting to be tamed."

SAP Nation 3.0: Excerpt Chapter 12 - From Sea to Shining Sea

I excerpt 10% from every book in a series of blog posts. I posted several on SAP Nation 3.0 in April, then took a break after the Sapphire event. Over the next week I will excerpt the final batch. The book is available to purchase on Amazon in print and eBook format here

"In Ch. 11, we looked at how SAP could become a first mover with its huge incumbent customer base. At the same time, SAP could be thinking much bigger. There are plenty of other markets where SAP could adopt a fast follower approach after missing out on the first wave of opportunity."

"Or take the world of the Industrial Internet and Industrie 4.0. In Ch. 2 we discussed GE’s “Power of 1%”: 1% in fuel sav- ings in aviation and utilities, 1% productivity improvement in healthcare, 1% reduction in oil and gas cap-ex. In just five sectors combined — rail, aviation, healthcare, power and oil and gas — GE had projected US$276 billion in efficiencies over 15 years.” These were only in sectors GE was interested in, where it sold turbines and MRI scanners. There is a far bigger market around connecting other assets, listening to them, delivering predictive maintenance and other tangible benefits."

"Or take verticals. Just take one sector — fintech. According to Deloitte, “264 companies have received a total of US$7.71 billion in investment since 1998. Contrast that with China, where only seven payment fintechs are found, but these are backed by US$6.92 billion in funding. Similar patterns are seen in deposits and lending, investment management, personal insurance, and real estate leasing/purchase and sale." After leading its peers to industry solutions in the early 2000s, can SAP do so again with so much turmoil in so many verticals?"

"If anything, I would like SAP to find a different inspiration from Google and more specifically from X, the idea incubator of Google’s parent, Alphabet.

Astro Teller, Captain of Moonshots at X (seriously, that is his name, title and company name), said in an interview with The Wall Street Journal:

“Nine years ago, if you had written down a list of the problems that Google was trying to solve in the world, transportation wouldn’t have been one of them. In fact, connectivity, what Loon is working on, wouldn’t have been one of them. Health care wouldn’t have been one of them. Other than internally, cybersecurity wouldn’t have been one of them. Those are all things where we said, ‘There’s something important here that’s worth working on whether or not Google is focused on this.’ Google doesn’t need us to solve Google’s problems."

"But to be able to do so, SAP needs its own version of a Manifest Destiny Call."

SAP Nation 3.0: Excerpt Chapter 11 - X’s and O’s

I excerpt 10% from every book in a series of blog posts. I posted several on SAP Nation 3.0 in April, then took a break after the Sapphire event. Over the next week I will excerpt the final batches. The book is available to purchase on Amazon in print and eBook format here

”SAP has the biggest “business applications” laboratory — across business process, geography and industry. However, every few years SAP gets bored with applications and dabbles in platform and infrastructure areas. It seeks out partners and acquisitions to grow its applications’ reach when a better approach would be to partner with its customers. It is sitting on the mother lode of business process and enterprise application innovation and that’s where they need to put their focus. Fahey of Louisiana- Pacific described one such example around IBP in Chapter 3.

The industry desperately needs a business application leader. After two decades, when you look at the global and industry landscape of applications, only about 20% is available in the public cloud. Most application vendors are investing heavily in platforms. In a way, it’s abdication. A good analogy would come from the food sector. You go to a restaurant you really like and the chef says we have changed our business model. We are only serving semi-cooked meals now. Enjoy the meal at home. Or come on in, but be aware we are now offering grills. You bring your own ingredients and cook your own. That’s similar to what SaaS vendors are doing with their emphasis on platforms when they are being paid to deliver “cooked meals” in the form of applications."

" In Ch. 10, Bell of Uptake talked about a new way of selling — one focused on customer outcomes, not TCO or ROI. Even if that is too far a bridge, Sommer challenges SAP to think differently in the current economic model: “While I know there would be substantial backlash to this — from Wall Street for sure — I think SAP needs to get to the point where they EARN a customer’s business every single month. That means getting rid of long-term subscriptions, not charging for software until after the customer is in production, having reasonable renewable subscription pricing, a commitment to ever lower pricing (a la Amazon AWS), etc.”

"As we discussed in Chapter 9 in the section around IA, value in enterprise software has been moving away from transaction processing to analytics, intelligence and machine learning. Automation in the form of sensors and wearables is perform- ing edits and validations ERP and CRM software used to do in the past. Their pricing needs to reflect that shrunk role. Finally, SAP is starting to talk open source in SCP, and as it evolves its developer ecosystem. This brings even higher expectations of very different economics."

" For over a decade, SAP has branded itself with its “Run Better” and “Run Simple” campaigns. Indeed, in 2018, in a marketing survey, it was named the most valuable German brand and ranked even higher than BMW and Mercedes-Benz.88   The enduring image, however, of SAP in the enterprise technology world is that of its ERP products, and there, expensive ones. Between the unforced errors like IA (which we discussed in detail in Ch. 9) and the persistence of 35-year-old technologies like ABAP in the customer base, you could argue that SAP actu- ally has a brand challenge. Wright of Accuride, Hortovanyi and others have pointed out that ECC and ABAP are not attractive to young technology talent. As Dennett discussed in Ch. 4, it also has to become better respected in open source and ML circles. Mueller of SAP talks about expanding its image way beyond ERP. All these factors point to a need to rethink the branding."

SAP Nation 3.0 Excerpts: Chapter 11 - Tilting the Bell Curve

I excerpt 10% from every book in a series of blog posts. I posted several on SAP Nation 3.0 in April, then took a break after the Sapphire event. Over the next couple of weeks will excerpt the final batch. The book has sold very well - I should have ordered a much larger first print run, but you can buy small batches on Amazon in print and eBook format here

” SAP could start becoming a first mover with its customer base, and at the same time start thinking on a bigger scale. There are plenty of other markets where SAP might adopt a fast follower approach after missing out on the first wave of opportunity.

Let’s first discuss the first mover option."

" In Chs. 5–8, we classified the customer base into Risk-Takers, Modernizers, Diversifiers and Bystanders, with the last group being the most populous.

What if SAP could turbocharge customer conversations so the Risk-Takers and Modernizers help convert the Bystanders? What if it can turn the tide among the Diversifiers so more of them return to SAP products? In Ch. 8 we highlighted a wide range of strategies customers have been trying out. All kinds of good things could come from such a tilt both for customers and SAP. Next, SAP could entice similar Diversifiers and Bystanders in Oracle, Infor, Unit4 and other customer bases. Many of them have been waiting for next-gen applications for even longer than SAP customers."

"Some say the Bystander group is playing “blink” with SAP. They are betting that SAP will back down on its “end of support dates.”

Mueller of Constellation said, referring to ECC and moves to S/4:

“The next two or three years will show if SAP can create the value proposition. We’ll see how much customers push back. SAP could say, ‘We listened to our customers and we will give you another two or three years (beyond 2025), but you have to pay not 18%, but 21% or 25% or maybe even 30% in annual maintenance.’

However, the writing has been on the wall and for years now. It should have been clear to every CIO that the innovation is happening on the S/4 side. Do you want to be in 2030, 11 years from now, with an ERP system that cannot run machine learning, which doesn’t have a good IoT story and so on?”

Or as Wright of Accuride and Howlett of diginomica have pointed out, it’s tough enough today to recruit younger talent to an ECC and ABAP shop. Can you imagine what it will be like in 2025 or 2030?"

SAP Nation 3.0 Excerpts: Chapter 8 - Bystander Customers

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In chapter 8, I covered the final category in the four customer types in the book - Risk-takers, Modernizers, Diversifiers and Bystanders.

"So, it is not surprising that only a small fraction of SAP’s 400,000+ customers have migrated from ECC, Business One,BusinessObjects and other products to its more modern S/4, SuccessFactors, ByD, HANA and SCP.

In fairness, Oracle, Infor, Microsoft, IFS, Unit4 and other vendors have the same issue with their legacy customer bases. You also have to ask why after 20 years Salesforce, NetSuite and other SaaS vendors have still not converted millions of customers from the on-premise world."

I interviewed several analysts about these Bystanders

Holger Mueller of Constellation

"Now they’re in a similar situation. I think SAP pulled a fast one, saying, ’Oh, don’t worry. We copied all the code. S/4 is not a new system. S/4 is just a new implementation where we simplify things and get rid of old things.’ To some extent, it was a technical argument as you got rid of these non relevant tables. The simplification ran the system better, and you got better business intelligence because there was no need for a data warehouse.

However, for SAP, just copying the code wasn’t that easy. Technically, you had to examine the code and truly simplify it to make it work. Besides, the public cloud is not offering the dramatic TCO advantages that R/3 did relative to R/2.

Importantly, I don’t see the functional equivalency. When SAP was started, Hasso has said, he went to ICI, the launch customer, and met a person in the finance department. ‘He showed me how he worked, and I rebuilt that in software. It took us a few months, and then we had that.’

Today, you cannot go to a finance department and ask, ‘How do you use machine learning? What do you do with data science? How do you use the cloud? What are your FP&A best practices?’ These practices are still being distilled. We’re in the era of experimentation."

"To be fair to many of the European CIOs, the vendors also have not done a good job bringing data centers across the ocean. Germany is the largest European economy. Where else should your data center be? There have been so many ones opened in the UK, which makes sense for banking and financial services vendors, but Paris and Frankfurt are much bigger than London. That’s not even an argument."

Cindy Jutras of Mint Jutras

"Anecdotally, the biggest thing that stops them is the perception that they need all their previous customizations. I would argue they probably don’t, partly because new solutions today do more than they did back when they implemented. Plus, they have more ability to con- figure without invasive custom code changes. Partly, it’s because they just didn’t need those customizations. They did it because that’s the way they always did it, and they weren’t willing to bite the bullet and do something even better or different.

I was at a Unit4 conference last year, and I was in a session meant to collect information from customers to help them move to cloud. It was almost like a focus group with product management. The big resistance to moving to cloud is customization, because for so many years Unit4 had the BLINC message — an acronym for “Businesses Living IN Change.” With their SDKs, they actually encouraged code changes, but code changes that would move with upgrades. Now, in a multitenant SaaS solution, even those kinds of code changes are discouraged. But those customers are all sitting on those kinds of code changes, which is making them very resistant to moving into the cloud. I have asked Steve Miranda at Oracle a similar question. Basically, what he said was, ‘I strongly encourage customers not to inventory their customizations and to move forward.’

But I really think it is inertia. People have bad tastes in their mouths from having gone through the blood, sweat and tears of an ERP implementation years ago. I don’t think it needs to be like that today, but that’s the perception."

Frank Scavo of Strativa

"Vendors like Infor and Oracle have tried to move legacy customers to the cloud with initiatives called UpgradeX and SOAR, respectively. The reason you don’t have very many SOAR and Upgrade X customers to talk to is because there are not that many of them. Existing customers do not make that cloud conversion routinely."

"Some of these companies are running on operating systems that aren’t even supported anymore, so they’re running patched versions. They’re not getting vendor support, and they are running in emulation mode. A “last legs” kind of thing — and still, they will try not to make a conversion.

What are the kinds of events that finally force a company to go to a new ERP? There are several:

• We did an acquisition and we’re now on two ERP systems and this is just not tenable for the long term. We’ve got to standardize on one.
• We expanded our business into Asia and this ERP system is not double-byte or doesn’t support localizations.
• We went into a new line of business that has subscription billing. The [current] system doesn’t do this."

SAP Nation 3.0 excerpts: Chapter 7 Diversifier customers

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In this chapter, I covered the third category in the four customer types in the book - Risk-takers, Modernizers, Diversifiers and Bystanders. Diversifier customers. In the first volume of SAP Nation, we had described the early wave of Diversifiers. They were “ring-fencing” SAP with cloud solutions, trying out two-tier models, TPM and private-cloud infrastructure. This group continues to expand and experiment. The big difference we noticed this time around was in some cases they are diversifying back to SAP products.

Here are excerpts from 4 of the 12 case studies in the chapter

'In the hypercompetitive software vendor world, Unilever could be construed as giving up on SAP. Actually, like many CIOs, Moran is merely diversifying her portfolio. Moran told CIO UK, “Working with SAP, they helped us put together the internal business case to move forward with S4/HANA. We’ve found that having HANA on our databases has increased performance five to 10 times when we have HANA sidecars.”47 In that article, she also talked about her other strategic partners: Microsoft, AWS and increasingly Google. Unilever also has a Foundry that, since its launch in 2014, has facilitated 100 pilots between start-ups and Unilever brands — stimulating and facilitating experimentation across the global footprint. It’s all part of diversifying the portfolio, and SAP continues as a key component.'

Andre Blumberg at CLP Group in Asia Pacific.

'The more interesting project which is our focus now, is to look at global disruption, industry changes and technological innovation. When you look at the Apple iTunes store, the Google Play store, Amazon, Alibaba, etc. you see how the platform business model has disrupted many industries. We’ve been looking at what a platform business model could look like for our sector — so what is the “energy internet”? What is the Amazon equivalent for a utility company? We are working on that now and how we can bring ecosystem players together to provide added value for our customers. How can we establish that on a modern public cloud PaaS platform so that any third-party ecosystem player or start-up companies can join our platform and work with us? That way, we don’t limit ourselves when it comes to innovation. That’s a much more exciting discussion and we’re working primarily with proven public cloud companies, particularly Amazon Web Services. It will be interesting to see how the global public cloud providers play out in the Asia-Pacific region over the next two to three years.'

Bryan Bee at EBSCO

'We had a healthy skepticism when we started the process. It took us a while to get our head wrapped around the service provided, the risks, and interoperability issues. As we went through that journey, we became comfortable and we concluded going with Rimini was an acceptable risk. Once we did our initial due diligence, we engaged both our business stakeholders and our developers. We did multiple reference calls and each time it was like, man, this is too good to be true.'

Paul Wright at Accuride

'Functionally, there’s no doubt in my mind that with SAP, we’d be compliant anywhere we wanted to go in the world. In today’s world, that’s important. We had a choice when we were going to Russia. I had a choice. I could have said, ‘Let’s figure out how to do with this with Plex and Workday. Or, let’s do this inside SAP.’ I mean, at some point, unfortunately, the government regulations are going to drive what you can and cannot do as a business, and it was just too risky to do something else in Russia, even if we wanted to, so we stayed with SAP.'

The joys of book reviews

I saw an article aimed at authors and publishers on how to handle critical reviews. And I chuckled to myself  "I could have written that myself"

I took most heat for the first volume of SAP Nation - mostly from SAP fans and partners. It was actually a generous history of SAP as it grew from small German vendor to global powerhouse. What I drew attention to was its poor handling of partners and the massive costs and project failures in the ecosystem. Five years later, I can say with some pride that it had a significant impact. The strategies I highlighted in the book like ring fencing with cloud, two-tier ERP and third party maintenance have gone mainstream. Also, in writing volume 3.0 I saw customers have become cautious in their use of large SIs, they are minimizing change as they move to S/4 etc. That to me is gratifying. I was talking to the customer audience and many of them have benefited from the book.

I was criticized for not being alarmist enough with Silicon Collar. The book came out when prominent Oxford profs and Gartner analysts were screaming about catastrophic job losses from automation.  Mine was a tone of optimism - automation makes us safer, smarter, speedier workers. Machines typically impact repetitive tasks not complete jobs. Automation takes time to mature, it is not cheap. History has proved me right so far. Very few job losses from machines. We are pushing back dates for autonomous vehicles, for payback from machine learning. Two disappointments from the book- I had hoped SIs and outsourcers would automate their own operations - but they are mostly sticking to labor intensive models. The other was software vendors would reshape processes to reflect growing drones and telematics in logistics, sensors, 3D printing and wearables on the shop floor, robotics everywhere but it may take a wave of greenfield vendors to come along to do that.

I am starting to hear criticism I am "too nice" to SAP in the latest, volume 3.0 of SAP Nation. I am actually pretty tough on SAP in a number of chapters. What I do point out is how little its competition has evolved in the last 5 years. So many missed opportunities. Some of the criticism is coming from them for highlighting their performance. To me, again, that is background noise. The book gave me a chance to highlight 200+ pages of case studies talking about a slew of new SAP products. Hopefully, the customer audience benefits from that and sees that this is not "your Dad's SAP". And the competitors realize the clock is reset and they can show much more progress by the time I start to write volume 4.0 in the series.

I tend to be a tough critic myself. The New Polymath was one of my best reviewed books and it was gratifying to get a number of comments about people wanting to expand their own skillsets. What I had hoped in addition was it would spur Polymath organizations like the GE Global Research Center I described in the book "Conversations in the cafeteria, in the hallways, and at the 40 - room lodge attached to the center effortlessly drift from pathology to holography, from one “ aha ” to another. The Global Research ethos is “ Innovation occurs at the intersection of disciplines. ” So, put chemists, mathematicians, engineers of all stripes, and biologists in close proximity and who knows where the conversations will lead."

The New Technology Elite was about smart products (analog products made digital with software, sensors and satellite support)  and covered design, IP issues, the application of Moore's Law, a need to plan multiple releases, product documentation and training and a number of other dimensions. I see so many smart products launched in the last decade which could have used that advice. You wonder, for example, how things would have worked out if Boeing had provided better documentation and training around the MCAS software and the Angle of Attack sensor on the 737 MAX.  

I write books to stay in touch with practitioners - my case study heavy style makes me reach out to over a hundred for each book. They provide me the reality checks and validations for the themes of each book. They also provide fodder for our advisory work. The ultimate compliments and criticism also comes from them, not from social media. Nothing is more pleasant than a note from a client which says "thank you from saving us from a $50 million mistake" or "you forced us to consider couple more scenarios we had not factored"

Having said all that, I happily sign my books, and enjoy presenting on themes from my books especially to audiences on campuses. See you at an event soon. 

SAP Nation 3.0 excerpts: Chapter 4 A Massive Pivot

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In this chapter, I summarized a wide range of conversations I had with SAP execs and watchers from trends in developer communities, to UX to CX to SAP openness. I saw so much change that I am not that surprised with recent layoffs and executive moves. 

"Cohen’s argument about retiring customizations makes a lot of sense, but bear in mind many of those modifications were written a decade ago or even further back. Will standard SAP software reflect 2009 practices or that of 2019? In the last decade, the shop floor has seen automation in the form of robotics, wearables, 3D printers, etc. As we will see later, global companies are moving plants across borders at startling rates and need agility they did not a decade ago. In fairness to SAP, Oracle and Infor have the same challenge. Also, many customers don’t want to make big moves in ECC and then make a second transition to S/4. They would prefer a single move.

Cohen talked about a multinational customer who asked, “We love your public cloud but you have to offer us 189 countries localization out of the box.” “I told him, ‘I have only 64 today.’”

Customers don’t want to regress from functionality in ECC and other current products. And they don’t want multiple projects and change initiatives. As fast as he and SAP are moving, many of his customers want him to move faster."

"Atzberger is fighting plenty of cynicism. Reaction from a couple of customers to the C/4 announcement: “five years too late” and “CEO McDermott arrived at SAP from Siebel 15 years ago … what took him so long?” Several analysts reacted to my post, “Salesforce is Vulnerable” by adding “Yes, but not by SAP.” One snarkily wondered if SAP’s branding team had vetted the fact that C4 is a plastic explosive.

SAP is going after the CX market differently this time. It has lots of differentiated features, especially through its acquisitions of CallidusCloud, Coresystems, Gigya and hybris. The sales function is being redefined with Callidus’s revenue recognition and sales commission functionality. Meanwhile, hybris Commerce, CPQ and NBA functionalities are much more relevant for newer outcome-based business models and a world where digital and physical are merging. The Coresystems acquisition offers customers an Uber-like plat- form to find available field service technicians in real time. So a customer like Siemens can use SAP functionality on a per-user basis for its own techs and pay for a marketplace for crowdsourced techs on an occurrence basis. Leonardo IoT capabilities allow for new service models as industrial assets get smarter and allow for more predictive versus scheduled maintenance. The Gigya acquisition, with its customer identity and access management capabilities, is more relevant for a world which is moving past email blasts and overused cook- ies. SAP CEO McDermott stood shoulder to shoulder with Shantanu Narayen, CEO of Adobe, and Satya Nadella, CEO of Microsoft, to announce their Open Data Initiative. It was also a vivid display of “coopetition”: Adobe and Microsoft compete with SAP on many a CX opportunity."

" The world of designing the user experience is mind-blowingly complex — mobile trends on iOS and Android; social/ collaboration trends driven by Facebook Workplace, Slack and others; digital assistants like Alexa, Siri and SAP’s own CoPilot.

Listening to Cabahug, you see that expectations change dramatically as you move within an enterprise. Customer-facing marketers are far more UX-demanding than workers on the shop floor. As you move around the world, you have to reflect expectations of chat and emojis common in China."

” Grassl agrees:

“When I talk to my peers at developer relations in other companies, I get the same feedback. It’s a very tough market to get and keep developers interested in your products.”

He then countered with the following:

“Let’s start with who do we target. Does it make sense for us to go after a broad, less-professional developer? It doesn’t help us to get a developer who knows HTML and can create a small app for a web page. We drive programs to show them the [enterprise] career path — but it also requires work on their side, to learn and build up the skills.

At SAP, we accelerated our focus on developer relations about five years back. There are a lot more things available from SAP than in the past. Also, we use the term “developer” very broadly at SAP. It includes sys admins, technical people and business user-type developers. We have focused on three main activities."

" Matthias Steiner, Head of SCP Evangelism, explained the move to me:

“We are articulating that this is not your grandfather’s ABAP. It still uses a lot of the common technologies that have been floating around within the SAP ecosystem for a while, like HANA core data services. Of course, we recommend using UI5 and Fiori, so it’s just a stepping stone. It’s just making it a little bit easier for our one million ABAP developers as they up-skill.

We still believe that for all those hesitant customers, the best way to get started with cloud is this whole topic of user experience, because the elephant in the room is data, security and information privacy. If you leave the data where it is and just use the cloud as the catalyst to expose this data to the outside world, make it accessible to the end users, and typically this is what we do with Fiori-type applications, then you can familiarize with the technologies. For these things, pick something which is not mission-critical, so you have a little bit of time and no pressure to familiarize with cloud.”

"Klein is now using that experience to help market S/4 and SAP cloud properties to other global companies seeking similar transformations. He is on a quest to help them become what SAP calls “intelligent enterprises.”

“We are tackling the whole value chain at SAP. We are looking end to end, looking at marketing, sales, finance, service and support, cloud operations and the cloud infra- structure. That’s the first aspect of our transformation. Next, we are infusing machine learning, IoT, predictive analytics and these new technologies to bring the intelligence into play.

It’s about adapting business processes to the new digital age. It’s about fixing the data architecture. Last but not least, it’s about change management, and taking the people with you. In the end, everything that we do in the cloud impacts our 90,000 employees and our 400,000 customers.""

" Fanelli says she has the opportunity to move partners from a historic focus on reselling and implementations towards a broader role in helping customers become Intelligent Enterprises. Partner performance will be measured on customer lifetime value and their success.

SAP has a long history of building similar apps ecosystems around Fiori apps, HANA apps, mobile apps, etc. This time around, the customer access is much more digital. SCP leverages a lot more open source, and the barriers to partner participation appear lower.

At this point, it is a fledgling in terms of revenues for both the ISVs and for SAP (Fanelli says focus is adoption prior to monetization), but there is significant promise.

This time, she has new platforms to benchmark against. In the last decade, Apple has generated tens of billions of dollars in revenues for its partners and for itself from its iOS store. Amazon with its fulfillment engine has done the same. She can help SAP dream much bigger in this round."

" A few months earlier, I had seen him next to Jon Bon Jovi at another event. The hugely popular musician opened up about going through a very dark, personal phase. He was openly vulnerable. McDermott, in contrast, was positive as ever, quoting from Teddy Kennedy’s “the Dream shall never die” speech. There was no mention of his own personal tragedy.

It’s not just this accident; the man has also navigated being a cross-border CEO."

" I am only describing the tip of the spear — these executives are just a small handful of the 95,000 worldwide SAP employees. The pivot at SAP in the last five years has truly been massive. And the pivot will accelerate, as SAP announced in January

2019 a restructuring where it “will reassign some employees and offer early retirement to others, but still expects its overall head count to exceed 100,000 by the end of 2019.”

SAP Nation 3.0 excerpts: Chapter 2 The Enterprise Computing "Continent" in the 2000s

My new book is now available to buy here in print version, and for pre-order in the Kindle version (will be released on Friday). As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

Chapter 2 focuses on missed opportunities for SAP competitors over the last 5 years to deliver a knockout punch while SAP was distracted and vulnerable. It also covers 8 very large markets that SAP and its cohorts missed out in the last two decades.

"SAP looked vulnerable when I wrote the first volume of this book series, five years ago. Besides the runaway costs and massive project failures at some customers, even more concerning was the fact that the competition was circling around.

Oracle had a decade’s lead with its Fusion cloud applications over what SAP was working on — S/4. Microsoft had already invested billions in its Azure cloud data centers, and could have used them to significant advantage in business applications. Infor had a new management team that was focused on vertical applications for many industries.

Customers were using Workday, Ultimate Software and Salesforce to “ring-fence” SAP, and were deploying lighter cloud applications, like NetSuite, in global, two-tier ERP settings. Those SaaS vendors had introduced the efficiencies of multitenancy to the overpriced enterprise applications market. They bundled software, application management, hosting and upgrades into one contract, which was priced as a per-user service.

TPM vendors like Rimini Street, Spinnaker Support and Support Revolution, with their cut-rate pricing and, especially, their support for customizations, threatened to hollow out SAP’s highly profitable ECC maintenance revenue stream.

S/4 has not been a runaway success, but SAP’s competition has not exactly gone for the kill either."

"But from a customer perspective, you cannot run your enterprise without order entry, billing, manufacturing, logistics and industry-specific functionality. There is only so much you can do with Salesforce, Workday or ServiceNow. You can do even less if you are outside the U.S.

It is a bit like the aviation sector. Southwest is one of my favorite airlines. I love it because it flies nonstop to over 30 cities from my home airport in Tampa, FL. But flights on its 737s average only two hours, and that cannot take me on global treks . If I lived in Germany, Singapore or Rio, it would be even less interesting because Southwest has chosen to stay focused on the North American market.

Partly because SAP’s competitors did not target it aggressively enough, and partly because its own cloud acquisitions and developed products afforded it a shield, the company has come through the threat of the last five years relatively unscathed. In fact, when you look at the mob of strong competitors that it had to fend off, it has done remarkably well. In those five years, SAP’s customer count has actually increased by 50%. Wall Street has not been as generous to SAP as it has to cloud vendors, but the existential threat that SAP faced has passed."

"My Deal Architect blog focuses on enterprise tech — so I could see what SAP, Oracle, Salesforce, Workday, etc. were doing. My New Florence blog, on the other hand, had a broader STEM focus and covered innovations in health tech, clean tech, consumer tech and other emerging markets. In 15 years, it has catalogued over 6,000 posts. It also gave me the ammunition to write a number of books that profiled hundreds of case studies. This contrast between the two blogs allowed me to see several trillion-dollar markets emerge — markets that SAP and its cohorts have mostly ignored. The following eight subsections will describe those missed opportunities:"

" The new rock stars were product designers like Jony Ive at Apple and Yves Behar at fuseproject. Contract manufacturers like Foxconn, Jabil and Flex and design firms like IDEO benefited from this massive new market. But SAP, Oracle or even Indian outsourcers? Not so much. In fact, based on the attractive design increasingly prevalent in consumer markets, enterprise vendors started to be scrutinized for their own poor UX. I have heard Mark Hurd, co-CEO of Oracle, quantify these trends in his presentations. He says consumer spend on technology has caught up to enterprise spend — annually about $1 trillion each — and is growing faster. Even more dramatically, over 80% of enterprise tech is spent on keeping the lights on, not innovation. In contrast, the consumer is getting almost pure innovation for her dollar. What Hurd does not point out is that because of Oracle or at his previous company, HP, or peers like IBM, software maintenance, EDS outsourcing and other charges have been large contributors to the enterprise tech stagnation. They have delivered nowhere near the price/ performance improvements or innovation that consumer tech has seen. It should be no wonder then that the tech the consumer gets at home on Sunday night or in her car is so much better than what she finds at work on Monday morning."

"CRM vendors are increasingly focused on the entire customer experience and CX is the new byword for this sector. And yet, most of these vendors (with exceptions like the Adobe Advertising Cloud and Salesforce’s Datorama acquisition) have missed out on some of the biggest budgets in the CX segment — digital advertising. In the last two decades, digital advertising has grown from near zero to over US$200 billion a year. Eons ago, digital advertising had already outrun print advertising. Now it has overtaken TV advertising. Marketers have moved to programmatic advertising, where machines, more than humans buy advertising. Google, Facebook and increasingly Amazon are the big beneficiaries of this shift in marketing dollars. With the massive growth in digital advertising, Accenture Interactive has aggressively acquired digital agencies, making it now the biggest agency in the world. It would be fair to say it is influencing CX trends as much, if not more, than the early- generation CRM software vendors did. Accenture Interactive has little in common with its traditional IT outsourcing brethren. Accenture’s IT outsourcing group does plenty with ERP and CRM software vendors. Interactive does fine on its own and includes as clients the chief marketing officers (CMOs) of over three-quarters of the Fortune 100. It does not need to chase after Salesforce or SAP."

"GE had talked about the “power of 1%”: 1% in fuel savings for aviation and utilities, 1% of productivity improvement in healthcare, 1% reduction in oil and gas cap-ex, etc. The payback they described was in the hundreds of billions. You hear similar claims from IT vendors, but somehow the tiny 1% factor made it much more believable.

GE has since had a meltdown over issues related to its capital and power business units. But the presentation I saw back in 2012 woke up executives in every industry to the power of listening to machines. And it has led to a batch of smaller vendors like C3 and Uptake as well as other industrial asset companies like Siemens and Schneider Electric that are helping companies realize that 1% payback."

" I hear similar comments from CIOs around the world: Facebook, Amazon and Microsoft — who expected them to be so innovative with data centers and networks? This was a technology infrastructure market where IBM, HP with EDS, Oracle with Sun and large telcos around the globe had dominated. They should have been leading this market in investment and innovation, but for years chose not to do so. Now they are play- ing catch-up, and others should give up as Blumberg suggests."

" Other enterprise vendors have similarly struggled to keep up with these industry changes. This has led to opportunities for new players. For example, the fintech sector is fragmented with many promising start-ups and offerings from large institu- tions like Goldman Sachs, but little from the major application vendors. In China, mobile apps like Ant Financial’s Alipay and Tencent’s WeChat now enable half-a-billion Chinese people to access a dizzying array of financial services to make payments, get loans, monitor investments and credit ratings, pay for taxis and book travel."

"Most enterprise vendors are now talking about AI and ML, but not automation on the shop floor, in logistics or in the oil patch. Also, if you peel their ML onion, you realize many are merely leveraging voice or image recognition technology from Amazon, Google or Microsoft. When you look at the massive amount of image and vocal-accent data their machines had to be trained on, you wonder where enterprise vendors will get their own training data, given that most of it is squirreled away in on-premise customer data centers. They have been creative with branding — Salesforce with Einstein, IBM with Watson and Infor with Coleman (as in Katherine Coleman Goble Johnson, the NASA mathematician profiled in the movie Hidden Figures) — but with limited enterprise impact. Indeed, when Salesforce and IBM announced Einstein and Watson would work together, IBM CEO Ginni Rometty chuckled in an interview with Fortune that “It’s good comedy.”"

" Most of these vendors have brilliant technology visionaries: SAP has Dr. Plattner; Oracle has Larry Ellison and Thomas Kurian (till he moved to Google); Salesforce has Parker Harris; Workday has Stan Swete. The list is long. However, they don’t have enough process visionaries who can dream up next-gen shop floors, emergency rooms or warehouses. So you see the industry continue to invest in infrastructure, platforms and tools."

" By 1820, Americans were well ahead in the race against other global powers like the British and Spanish in the effort to dominate the North American continent. Five years ago, it seemed improbable, but by 2020 SAP will have a similar opportunity to lead the enterprise technology “continent.” It is build- ing momentum, and has been going through massive changes."