deal architect

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."

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.