deal architect

SAP Nation 3.0 Excerpts: A tapestry of customers and strategies

My new book is now available to buy here in print version, and for pre-order in the Kindle version. As with my earlier books, I will excerpt roughly 10% of the 400 page book in a series of posts on my two blogs. While there is plenty in the book about what Brian Sommer calls "shale-fracking customers' wallets" and Jarret Pazahanick calls the "Wild West" of the SAP SI ecosystem, the bulk of the book is customer case studies.

I personally interviewed the majority of executives who are quoted. They spent countless hours talking to me, reviewing their transcripts (nearly 1,500 printed pages) and their book profiles (distilled down to 250 book pages). For a handful of other customers, I extracted the text from videos of their presentations at SAP and other events or from their quotes in articles.

They are spread across 4 customer categories I used for the book - Risk-Takers, Modernizers, Diversifiers and Bystanders. They represent over 20 industries and over 15 countries, and talk about experiences across a wide range of relatively new SAP products - S/4HANA, C/4HANA, SCP, IBP, AIN and also Salesforce, Workday, Plex, Rimini Street and other surround products and services. They are balanced - critical of SAP where needed. In book, I am also critical of SAP's competitors for their own missed opportunities.

Across these and other customers I noticed a wide range of customer strategies

"Here is a sampling:

• Ring-fencing ECC with many of SAP's own cloud properties, as with SuccessFactors at Terumo BCT and components of C/4 at Pregis.
• Two-tier deployments with SAP ByD and S/4 in their subsidiaries.
• Migration from ECC to S/4 on-premise at Johnsonville Sausage.
• New implementations in the S/4 Public Cloud as at a restaurant chain.
• New implementations of the SAP Analytics Cloud as at the Executive Huddle at the San Francisco 49ers.
• Trying out relatively new on-premise, but impactful SAP functionality like IBP at Louisiana-Pacific.
• Trying out Leonardo ML pilot projects as at Costco and Queensland OSR.
• Developing new ISV functionality on SCP as Vertex has done with their indirect tax app.
• Moving to new licensing and hosting models like Bombardier with IBM.

We also are seeing blends from this growing toolbox of strategies. So, some are moving to S/4 in the cloud, and at the same time have shifted to TPM for ECC support while they gradually migrate. GEBHARDT has been implementing a variety of SAP cloud products around its ECC on-prem implementation. Additionally, it has developed a customer portal and set of predictive maintenance services using Leonardo IoT and AIN capabilities.  

Given the wide proliferation of products and terminology in SAP World, my firm, Deal Architect, recommends (and often facilitates for clients) an intense offsite meeting to help customers take a fresh look at SAP and the broader market. That confab should cover and assess the fit of many of the strategies above, while also evaluating internal and external talent and fit with emerging technology trends."

More excerpts to come over the next few weeks....

SAP Nation 3.0: Early Book Reviews

I got very nice feedback from tech executives I respect who had seen early copies of the book

"Don't be fooled by the title - the book is not just about SAP. It is about drama in enterprise computing. As Vinnie points out, few would have speculated in the late '90s that Apple, near dead or Google, not born yet would have many times revenue of SAP or its peers.  I’ve been fortunate enough to have a front row seat overlooking this market both as executive and as investor. With new startups and developer communities reshaping the industry, SAP’s opportunity to reshape itself is still on the table, but only if it is willing to take a zero-sum approach. Platform vendors have to use their market cap and sales organizations to offer new services.  Otherwise Amazon, Google and Microsoft will within a few years position to operate enterprise workloads, anywhere at any cost. Vinnie deftly brings out the trajectory at SAP and its enviable blue chip customer base, but also its many missed opportunities."

Raymond J. Lane,

Managing Partner, Greatpoint Ventures.

Previous Leadership/Board Roles at Oracle, HP, Kleiner Perkins and Carnegie Mellon U.     

“A prolific writer and prescient observer of technology trends, Vinnie Mirchandani has produced an intriguing look at the many forces shaping enterprise applications today.”

Francisco D’Souza

Vice Chairman and CEO

Cognizant

"In previous books, Vinnie has painted a rather dim view of SAP as an expensive, back-office system, grudgingly accepted by business as a necessary evil. The fast changing and rapidly expanding digital landscape in the enterprise now presents incumbents like SAP a fresh opportunity to move into front-line operations in many industries. Will they be able to dominate this new digital space or will they squander the opportunity? This book does an excellent job of examining this question, taking a somewhat optimistic tone about their chances of success supported by a number of examples. Time will tell how the story ends."

Phiroz Darukhanavala (Daru)

CTO , BP (Retired)

"We are in the midst of massive digital transformation.  Software companies are not immune.  The shift from on-premises to cloud and now the shift from clouds to data driven digital networks will leave some vendors behind as the industry consolidates and evolves into digital duopolies.  Vinnie’s book looks at the shift and asks key questions about how SAP and other software vendors will make this transition.  More importantly, he raises the question on how the software market will look like post a financial engineered world,  asking what strategies they should take, where they should invest, and whom they should partner with.  A must read for those who want to know how the software market will evolve in the next decade."

R “Ray” Wang

Founder and CEO of Constellation Research

Author of Disrupting Digital Business

As usual, Dennis Howlett was the first to publish a media review on one of my books. His summary "SAP Nation 3.0 is very much a book of its time that will surprise, delight, infuriate and more." 

Dennis did not, however, get the first review in on Amazon. Marco gets that honor.

"This is the third volume in Mirchandani’s unfurling saga of the SAP software juggernaut and its ecosystem of clients, app providers and other partners. As in the previous two installments, he manages to *animate* the enterprise computing space like no other commentator I’ve encountered. His secret weapon is that he is attuned to – and integrates throughout the book – all the key aspects of the Big Picture: the technological dimension, the business side, user experience, market behavior, vendor dynamics, etc. While this approach succeeds at dramatizing this ongoing technology/business story, and even instilling an element of intrigue – will the software giant rally and prevail? – Mirchandani does not shoehorn the narrative into any pat conclusions, but rather lets the dozens of sharp voices of the interviewees tell the tale in their own words. He subtly emphasizes what the subjects bring up, such as how SAP has or hasn’t succeeded at addressing individual vertical markets or cloud deployment and what styles the firm uses in negotiations, etc. As with any picture drawn with great detail, the eventual image is loaded with complexity and yet it is coherent. This detail is culled from many dozens of diverse participants from throughout the business and technology value chain … and for anyone with a stake in enterprise or application software, the insights they continually offer are gold nuggets. Perhaps the book’s biggest takeaway – and the main reason this work could be vital to the whole C suite, not just CIOs and CFOs – is the myriad ways that technology is driving innovation and business success."

There will be plenty more reviews. I am sure there will be reaction from SAP, its partners and its competitors.

As one of the sections in the book says "It's not your Dad's SAP". I see a lot of one-dimensional commentary on SAP - related to rumors of its recent restructuring, about its Indirect Access stance, its SI ecosystem. To me, SAP Nation is a fascinating, complex, evolving organism. It deserves a fresh look every few years. I hope I start that process this time around for a number of readers and with customer executives I advise. 

Here comes the sun...and the book

It is a glorious Spring day and I heard the Beatles this morning - this song cheers me up no matter what time of the year. Then I got an email from Amazon "Congratulations, the paperback edition of your book "SAP Nation 3. 0: Manifest Destiny" is live in the Amazon Store." 

It's available on the amazon.com site here. It may take a couple of days for Amazon sites around the world to show as available. This is the print-on-demand version and works best for orders in small quantities. If you want 25+ copies at a much better unit price please send me a note. Corporate Graphics is running a bulk job and those copies should be available by the end of April.

The Kindle eBook version should be out by early April. You can pre-order here.  Many other channels are serviced by Ingram-Spark and they also have a print-on-demand version uploaded.

Whew! As the Beatles sang "Little darling, it feels like years since it's been here".

This had the longest gestation period of all my books. I wanted to explore many dimensions of the ever-changing SAP Nation. I started the book thinking it would mostly be S/4HANA focused - that gets plenty of coverage, but so do many of SAP's new products including C/4HANA, SCP, AIN and IBP. My last few books have averaged 250 pages - several readers told me they liked books they could finish on a long flight. I broke that rule for this one - it is 400 pages long. I would be remiss to shortchange the 35 case studies which make up 250 pages in the book. As it is, their raw transcripts are five times as long.

I personally hope lots of customer executives read what their peers told me over the countless hours they spent with me. And that they revisit their view of SAP and their own investments in software and talent.

"Given the wide proliferation of products and terminology in SAP World, my firm, Deal Architect, recommends (and often facilitates for clients) an intense offsite meeting to help customers take a fresh look at SAP and the broader market. That confab should cover and assess the fit of many of the strategies above, while also evaluating internal and external talent and fit with emerging technology trends."

In the meantime, thank you to the village which helped bring the book to  life. As the lads sang "I say, it's all right". 

Conversations with ASUG

Merriam-Webster defines ecology as a "branch of science concerned with the interrelationship of organisms and their environments". If ecologists were to study today's software vendors they would be fascinated not just by how the core organism functions but by the tapestry of their environments. Their halo includes layers of resellers, systems integrators, hosting firms, ISV partners, platform participants, developer communities, analysts and other influencers, media and other watchers. And then you have user groups. SAP alone lists 38 user groups around the globe.

In my long career as analyst, advisor and author I have interacted with most of this "surround" environment around software vendors. Honestly, the one element with which I had the least interaction is user groups. I am on mailing lists of a few, and I periodically reach out to their leaders but never could get a continuous conversation going. I blame myself for not trying harder.

That changed last year. I approached Geoff Scott, CEO of ASUG to see if we could talk every few weeks. Geoff's wonderful assistant, Kim made sure we didn't ignore each other. She would diligently reschedule calls if needed and made sure we talked. So talk we did, openly, off the record about what we were seeing in the SAP ecology. 

As I was writing SAP Nation 3.0, I asked Geoff if he could describe from his vantage point, on the record, how SAP and ASUG have changed in the last 5 years. I liked his first draft so much that I asked him if he could reshape it as a foreword to the book. I am glad he agreed. The book is about customer conversations - 35 case studies over 250 pages make up bulk of book, so the foreword from the head of one of SAP's biggest user groups is like the cherry on top of the dessert.

Here is an extract from his section

"As SAP has changed to become more cloud-centric, ASUG has changed, too. We invested in new ways of learning and connecting like-minded SAP customers and partners, and we launched new programs and services all with the goal of helping our customers maximize the return on their SAP investments.

The process has taken time and energy, and key to it has been the involvement of our members, including our 12-person Board of Directors and more than 300 volunteers. Which leads me to an example from 2017-2018, one that is emblematic of how much the relationship has changed and how it’s benefited SAP customers. The topic? SAP licensing and indirect access (IA) of SAP software."

It went further. He introduced me to several executives from his Board who ended up describing their companies and their SAP investments. Very honest feedback about the software and the relationship with SAP - on the record, as you will see in the book.   

Tom Wailgum, part of analyst relations at ASUG, facilitated those interviews. He later told me 19 of the companies profiled in the case studies (most I had identified from other sources) are ASUG members. He also identified a few journalists I have since sent a media review copy of the book. He also shares with me periodic ASUG research like he did this week about the "State of the Community". The extract below is a small fraction of the long infograph - check here for full graph. Drill down here and you get more detail below the infographic. Even then, it is a very high level summarization of the nitty gritty of what users do on a daily basis. And the conversations they have with each other. That's what ASUG facilitates -  as their site says

"From the outside, we’re a huge organization of more than 100,000 members from thousands of companies—from global enterprises to startups—spanning traditional and emerging industries across North America. But the real power of ASUG lies in informal partnerships formed through knowledge-sharing and commitment to a common cause."

In the book, couple of CIOs talk about how they find it easier to find answers to their questions by networking within ASUG than going through their contacts at SAP. ASUG is a mother lode of information that I hope I get to mine further in coming years.

Having had this experience with ASUG, I hope I can open up conversations with some of SAP's other user groups around the world. Even more, I would love to start conversing with user groups of other vendors. That is if they can be as open as Geoff and Tom have been at ASUG.

 

SAP Nation 3.0: Those who ignore history.....

The book is available for advance purchase on Amazon here. I am sending out media review copies this week. Over the next few weeks, as I do with all my books, I will share about 5%  of the 400 pages in posts on this blog.

I recently summarized the book for a SAP Executive. I told him there were three waves of history in the book:

a) The ongoing turnaround at SAP since the first volume of SAP Nation 5 years ago has been impressive and in many ways unrewarded by Wall Street or analysts. Most of the 35 customer case studies talk about SAP products that did not exist/had not been acquired. Many of the SAP executives I profile in the book have a sense of urgency I find lacking in its competitors.

b) When you look at the industry from a 20 year lens, however, SAP does not look that impressive. Many, many missed application opportunities while SAP has been distracted with platforms and databases. I also cover plenty of "unforced errors" SAP has made like its Indirect Access licensing policy. As the book says "Few of us would have speculated that Apple, near dead or Google, not born yet would have many times SAP's annual revenue. The market is fragmented—waiting for fast followers who missed out on the first wave of opportunities."

c) I also profile the race in the North American Continent in the 1800s. There is plenty for SAP and its cohorts to learn from how that history evolved. Two extracts from book:

• In 1800, the United States, then the original 13 colonies, was a young, skinny country. Two-thirds of the population lived within 50 miles of the Atlantic Ocean. You could have placed bets on who would win the race for North America—would it be the Americans, the Spanish, the British, the French, or maybe even the Russians or the Dutch? Over the next few decades, Americans had the biggest market share.
• (The Louisiana Purchase) was a major risk for President Jefferson but it doubled the real estate of the young United States. What if the population had just yawned and clung to the Atlantic Coast and not moved to the new territories? That's a good analogy to what SAP faces. It has new real estate in the form of S/4, Leonardo, SCP, HANA and its cloud properties, and yet the majority of its 400,000 customers are clinging to the "coast" of legacy products. Helping them migrate is SAP's major short-term opportunity.

In 400 pages, I cover a lot of ground - actually, the customers in the case studies do quite a bit of work for me. If you want to hear gossip about SAP's recent restructuring you wont find too much in the book. Nor will you find too much adulation about the $8 billion investment in Qualtrics. Both are there as milestones in the journey.

There is plenty on how the enterprise software industry continues to morph.  And as I ask in the book

"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."  

Look forward to your input as various formats of the book become available for purchase throughout April.  

Stop the speculation, folks

Amazon has just started to take advance orders for the eBook version of SAP Nation 3.0. It shows release date of April 15, but we are trying to get it out by March 31. The print version should also be available around that time.

In the meantime, I am seeing tweets and other social media speculation about the book, so allow me to give you a sneak preview.

It is a celebration of customers

35 case studies, representing over 20 industries and 10 countries, make up half the book. The book is for their peers to learn from their experiences. The dedication at the front of the book shows my gratitude to the executives who spent hours talking to me, reviewing transcripts and their profiles:

This book is dedicated to buyers of enterprise technology. They are the unsung stakeholders who pay the big bills and still do the bulk of the work delivering measurable outcomes.    

 The foreword to the book is written by Geoff Scott, CEO of ASUG. I am honored he agreed to do so - it adds to the customer voice in the book.

A note to SAP Detractors

No, this is not like the first volume. It is actually pretty generous to SAP for what I show is an on-going turnaround. The majority of the case studies in the book talk about products that did not exist 5 years ago. You can feel the vibrancy in the pipeline diversity.

The majority of SAP execs I profile were not there or not that prominent 5 years ago. You can feel the urgency in their voices.

To SAP Fans

No, don't expect a cake walk. I am tough about a number of "unforced errors" SAP continues to make. Some of the case studies talk about diversifying away from SAP. Overall, though you will have plenty to admire.

And to SAP competitors

Many of you do pretty poorly in the book. I talk about a lot of missed opportunities. After 20 years of cloud applications, less than 20% of enterprise customers have moved to new solutions. We have a huge challenge with older systems - they are heavily customized, awfully expensive, are security and compliance risks and are increasingly unattractive to recruit and retain talent around. As an industry we need to urgently "tilt the bell curve".

It is a cameo of a market in transition

Even though the book is SAP-centric, it brings out a wide range of industry trends. It highlights developer communities and startups in Silicon Valley, China, Germany, India and elsewhere. It showcases opportunities across the enterprise - in marketing, product engineering, logistics. It highlights changing economics in software.

It is my longest book to date. It also took me the longest time to write. I felt the constant pain of my transcriptionist, Tina Pham as she navigated a vast array of product names and TLAs in German, Aussie, Canadian, French, Indian and several other accents. I am pretty proud of the end result and the balance I have achieved.   

Few more short weeks. Thanks for your patience. Then we can have long debates, not speculate :)   

SAP Nation 3.0 - cover input, please

Would like reader input on some cover concepts I am being shown as we approach the end of the book edit cycle and move into the design phase.

Do you like the one on top or bottom? Below is the context for the US wagon trail, westward expansion metaphor.

Thanks for your input.

"Welcome to the third volume of the continually unfolding saga at the world’s largest application software company. When I wrote the first volume of SAP Nation, five years ago, SAP looked vulnerable. Besides runaway costs and massive project failures at some customers, SAP appeared preoccupied with its HANA database and almost bored with enterprise applications. Much more concerning, a wide range of competitors was circling around. Indeed, right after S/4HANA was launched in early 2015, co-founder Hasso Plattner was quoted as saying, "If this doesn't work, we're dead. Flat-out dead. It's that simple.”

As this book will show, Dr. Plattner's worst worries have not materialized. S/4 has not been a runaway success but SAP's competition has not exactly gone for the jugular either. SAP's product portfolio and customer base has grown significantly and the stage is set for the next few phases.

The setting today is similar to that when the young nation of the United States acquired Louisiana from France in 1803. Real estate area instantly doubled, but the population was still mostly concentrated along and around the Atlantic Coast. SAP's product real estate has similarly grown, but the majority of its over 400,000 customers are clinging to their previous "homes." Migrating this customer base is SAP's first big opportunity.

In addition, even bigger opportunities await. The U.S., energized by a Manifest Destiny call, expanded all the way to the Pacific Ocean. SAP has missed out on many markets in the last two decades. With its own version of a Manifest Destiny call, it can dream much bigger. New vistas await from sea to shining sea across the continent of enterprise computing."

Update: I am glad I asked for feedback. Couple of you suggested I continue with the design of the previous 2 books in this series. There is something soothing about continuity, and the neutral tone does not distract from the words on the cover. So, I have another choice to consider.

 

SAP Nation: More of the same

Somebody asked me recently if SAP was surprised by the many customers who spoke out loudly in the two volumes of SAP Nation. I said I did not think so – I had been telling SAP executives in person about the issues for years. They were unable or unwilling to manage the runaway economy that has grown around its on-premise products.

If anything, I was even more discouraged in 2015. The massive cloud investments SAP has made (acquisitions of SuccessFactors, Ariba etc) in the last few years are not changing the company’s revenue mix dramatically (prelim 2015 numbers show cloud  revenues at 11% of total, up from 6% for 2014). A majority of its new S/4HANA customers are NOT looking at the cloud option. They quote immaturity of SAP’s cloud, no migration support for previous customizations, and the confusing rollout of S/4 functionality.

Mercifully, SAP has started to de-emphasize “Simple” in its product naming, but the branding genius has replaced that with intuitive names like “edition 1503” and “1511”. In a humorous note, Kuen Sang Lam helpfully suggests they add the auspicious Chinese number 8. (btw, I was rolling on the floor when I read his comment cautioning early adopters “I have eaten “fugu” and it was great, but I was the number 259,366,487th person who has eaten it and staying alive to tell you about it here.”)

Before you try to figure out if 1503 or 1511 were picked because they are prime numbers, save your brain cells to make sense of this note by Monika Patel about what’s in and not in “1511”. I bet every CIO is clamoring to try out that fugu!

End result – SAP will continue to be an on-premise, Business Suite haven for years to come. Nothing wrong with that, if the economy around that was not running at over $ 300+ billion a year. In fact, it is music to the ears of SAP’s traditional partners.

Barring some miracle, I do not expect SAP to do much better in 2016. What that means is customers will have to watch out for themselves and accelerate the 9 strategies I described in SAP Nation 2.0 – ring fence SAP with clouds, 3rd party maintenance, two-tier ERP etc. to shield themselves from the continuing-to-run-away SAP economy.

Like I said – more of the same. 

Announcing availability: SAP Nation

This weekend I emailed preview copies of my new book on the SAP economy to select media around the world. I have attached below the “front matter” for my blog readers – the table of contents and the preface.

In time for Black Friday, Amazon is taking pre-orders for the Kindle version here or via their badge on left.

Softcover and other eBook formats will follow. Hardcovers are only being planned for bulk (25+) orders – if interested in that format please contact me.

As with my previous books, I will excerpt portions of the book on this blog as a way of thanking my regular readers. I look forward to your feedback over the next few weeks. In the meantime, Happy Thanksgiving!

“SAP Nation

From its humble beginnings in Germany, SAP skyrocketed to become a global powerhouse and the technology backbone for tens of thousands of enterprises. The economy around it grew even faster, and “SAP Nation” now approaches the GDP of Ireland in size. This book documents both trajectories, based on decades of research and interviews of hundreds of customers, market analysts and competitors.

SAP’s influence has declined in the last decade, as enterprises invest in cloud, social, analytical and mobile technologies and in custom development of “systems of advantage” in their products, channels and business models. Yet, shockingly, customer spending in SAP Nation remains stubbornly high. The model in the book estimates post-recession investment at more than one trillion dollars (yes!).

This book brings out loudly the voice of SAP customers as they cope with this runaway economy. Twenty-five case studies showcase a spectrum of strategies – some are “ring fencing” SAP with Workday, others are switching maintenance to Rimini Street, yet others are insourcing, while still others are evaluating newer SAP products like HANA and acquisitions like Concur.

Part root cause analysis and part strategy manual, this book is a must-read for anyone with interest in SAP – as customer, employee, partner, investor or competitor. It is a fast-paced look at decades of what SAP has done well, and what it could have done better.

Executives everywhere, even those in non-SAP settings, will benefit from the strategies described in the book to migrate inefficient back-office IT dollars to front-office innovation.”

Download SAP Nation Front Matter