I only made it to the first two days of the annual slogfest that comprises SAP’s SAPPHIRE conference and ASUG’s Annual Conference, which meant that the usual four-day forced march was blissfully condensed to a quick two-day trot. But those two days turned out to be enough to get what I think is the big picture looming over the nuance and details of SAP’s future strategy and its customers’ ability to ingest the strategies that were announced at the show.
As it happened I spent day one with the ASUG community going over how not to let the past impinge on the future, and then spent day two watching SAP present a future that risks being deeply proscribed by the past. What is clear is that despite what appears to be a bright future SAP has a lot of work to do overcoming its own past and the collective past of an enterprise software industry moving through a massive shift to a more customer-centric future.
Here’s the Cliff Notes Guide to SAP’s future:
- The past history of failed products (CRM, HCM, SCM/APO) and failed implementations (defined as: failure to achieve expected outcomes, which is a solid majority) still haunts SAP. Implementation failure in particular continues to stalk the company as the GSIs and other partners can’t seem to stop themselves from mucking up customers’ attempts to migrate to the cloud. And SAP is complicit, unfortunately, in this ongoing train wreck. You’re either part of the solution or you’re part of the problem, and SAP has to take a firm stand on the right side of the issue.
- The historical damage to SAP’s reputation among LOB influencers needs to be redressed, and a raft of shiny new products and roadmaps is just the beginning. These influencers remember those “failed” implementations and are wary of signing on to SAP’s new LOB vision, and instead tend to favor products that – while equally challenging to implement – are free of the perception of complexity. I’m talking Salesforce.com, Workday, and Kinaxis, to name just three. These influencers need a new promise from SAP to be better than the old SAP, and better than the most-favored non-SAP LOB products as well. Or those critical LOB influencers will keep pushing for non-SAP solutions to problems SAP can now solve for them.
- SAP needs to stop overselling the ease with which integrating the user experience and business processes in SAP’s cloud suite and its on-prem products can be implemented today. While the potential is definitely there, and in terms of breadth and depth SAP has probably the best in cross-process experiences to offer, there is a ton of work to do getting SAP’s many cloud properties – including the largely non-integrated components that make up C/4 HANA – working together in the seamless way the current positioning implies is now possible. The platform to do the work exists in the form of SAP Cloud Platform, but that today mostly defines the starting line for the majority of the integration scenarios that SAP is basing its future on. How hard that is for SAP to execute, and for its partners to implement (see above) is not being discussed as openly with customers as it should be.
- SAP apparently has trouble moving beyond a fantasy world where the majority of its customers are just waiting for an excuse to rip and replace their multi-cloud, multiplatform infrastructures with wall-to-wall SAP. That “excuse”, depending on which member of the SAP family you talk to, is the intelligent enterprise, digital transformation, S/4 HANA or just plain old HANA, Leonardo, C/4 HANA, and business networks, among others. But none of this is going to actually make that fantasy come true: heterogeneity is the past, present, and future of the industry. Bill McDermott made one tiny-teeny comment about integrating with non-SAP apps, but this has to be shouted to the rooftops, not buried as a single line in a 90-minute keynote. Rob Enslin also made mention of the concept when it was his time to bat, promising that LOB’s “can buy the solutions they want and SAP will shoulder the responsibility.” So we know they both get it, now they have make sure their customers know it. Loud and clear.
- SAP knows how to do customer centric policy in a way that no other vendor does, and the company needs to extend that know-how as broadly as possible. The process SAP put in place to turn around the indirect licensing disaster should be a model for tackling other sticky problems – such as pretty much everything I mentioned above. The model is simple – admit there’s a problem, put some of your smartest people on it, embrace input from ASUG (where I was on day one talking about indirect licensing) and the other user groups on what is wrong and what needs to be fixed, and iterate through a solution that, like the industry we now live in, will be a continuous work in progress. Finally, and here’s the hard part, show the industry how real customer centricity is often about the stuff that’s sometimes hard and the opposite of fun, not just the cool stuff we see in chirpy product demos and feel-good testimonials. Being there for the customer needs to be about killing the culture of mediocrity, fixing the LOB perception problem, being more honest about what’s possible and what’s coming later, and acknowledging and supporting the heterogeneity of the customer.
Other than that, piece of cake….
To be fair, I want to call out the fact that implementation failure and the culture of mediocrity, the over-promising of UX and process integration, and indirect licensing are issues that are industry-wide, and for which all major vendors bear varying degrees of culpability. While SAP is alone in publicly addressing the indirect licensing issue, all vendors and their customers are suffering from the culture of mediocrity and the lack of concerted efforts to unravel it, the integration problem is bedeviling even the most Teflon-coated cloud vendors (witness the recent acquisition of MuleSoft by Salesforce.com), and the overhyping of digital transformation, ML, AI, IoT, continue unabated across the industry. (Okay, so I didn’t mention that latter point in my Cliff Notes Guide – but it’s worth a mention nonetheless.)
In case you’re thinking that it’s all sour grapes and cranky pants, here’s what I liked about SAPPHIRE, Cliff Notes version:
- I like the C/4 HANA strategy, I think CRM as a category desperately needs disrupting and that Salesforce.com is talking a disruptive game at the top but playing a legacy game in the field. SAP has made some very strategic acquisitions and built a compelling narrative here, and that’s good. The braggadocio that accompanied the announcement, particularly the bit about overtaking Salesforce.com, is a distraction. This is a one-deal-at-a-time rebuilding opportunity. Once the product vision is proven SAP can start talking about the damage it hopes to do to Salesforce. That credibility will have to be earned the hard way.
- I also like the emerging SCM strategy and the potential value of harnessing S/4 HANA, Ariba, IBP, and a host of other assets in pursuit of supply chain excellence. This is another area where SAP will have to work hard to make amends for a previous product – APO – that drove customers away. The basics look pretty good, however, and I’m looking forward to watching this new strategy unfold.
- SAP Cloud Platform and SAP HANA Data Management Suite are looking and smelling more and more like the path forward to solve customers’ heterogeneity problems. The Data Hub approach – leave the data where it is, and access it as needed – is the right way to go for a heterogeneous customer base. While others can do this – Microsoft’s Common Data Services (CDS) is one example – imitation in the service of the customer is fine with me.
- I like how Leonardo’s messaging has evolved to be focused on embedded services, instead of a standalone line of business trying to drive top line revenue. Whew. All that nonsense about multi-million dollar corporate initiatives running on wall to wall Leonardo was making me itch.
- SAP is doing some great things with its ecosystem. The company is finally rationalizing its online stores (as in plural, as in more than one is too many) and putting more emphasis on developers, ISVs, and their needs, which include revising the online experience to align it with field sales efforts, provide a fuller 360 degree buying and deployment opportunity, and making consumability the goal. The stage is well set for success here: The capabilities in SCP should be enticing to anyone looking to harness a seriously large library of dev tools and business processes in the cloud, either as standalone apps or extensions that help customers remain true to the “thou shall not customize” cloud commandment. This is another thing SAP needs to sell better to its customers, and more importantly, to developers, startups, and other innovators.
- S/4 HANA is starting to grow up, with coverage in for 25 industries, though the cloud edition is still limited largely to two industries – professional services and component manufacturing, as well as general purpose finance. But S/4 HANA’s role as the core of the intelligent enterprise and intelligent suite makes sense, even if the juxtaposition of these two pseudo-brands may end up being more confusing than enlightening.
I think the way forward is clear, albeit challenging: Despite all the good, the bad and the ugly still need to be dealt with. This is why I think a new promise to the customer is in order, one that focuses on changing the definition and expectations of customer success. Mediocrity needs to go, replaced with a new dedication to full lifecycle success. That means no more accepting the fact that major projects miss two, three or even four go-live deadlines, and “it’s okay.” No more overselling, no more letting SI partners run rampant over customer good will and then duck and cover when the blame is being assigned. No more pretending SAP’s responsibility ends when the sale is executed, or the project goes live or, frankly ever: as a modern cloud vendor, living in world defined by “renewals or death”, SAP needs to make a new contract with its customers, one that pushes the accepted culture of mediocrity out the window and replaces it with a culture of success.
That’s hard to do, and it will be mean major cultural changes from the top to the bottom of SAP. But, with the indirect licensing fix as a model, SAP can do this, particularly because it has a willing partner in its user community. ASUG CEO Geoff Scott perhaps said it best in his later-in-the-day-than-it-should-have-been keynote:
“We do have some pain in our community, and probably not as much gain as we think we deserve. The pain of those projects (whose) success is doubtful from the very beginning. The pain felt by the end users who can’t quite figure out how to put all this technology to work for them., The pain of consultants and contractors who promise us one thing but deliver something less.”
Anyone listening? For the customers’ and the industry’s sake, I sure hope so.
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