The Great Cloud Innovation Debate….

There is a lot of chatter at the minute around the Christian Klein announcement that SAP innovations are only going to be available in SAP cloud versions.?

My first instinct was it is rubbish for anyone operating an on premise model. Those die hard SAP large-scale customers are clearly going to suffer - and a rare few (those with slightly more secure network infrastructures) may never be able to reach a cloud platform. It is also a kick in the teeth to those early S/4 adopters. Anyone following this online - the backlash is significant and incredibly vocal.?

But part of me has sympathy for Christian here… Imagine running a company where every single customers has taken your software and customised the hell out of it - to the point sometimes where it is somewhat unrecognisable. Then imagine that every time they choose to do a small version upgrade it takes a mammoth effort to retest and deploy - let alone the ridiculous effort it takes to migrate through a major upgrade. And every time a customer does this, the software vendor themselves takes a reputation bashing for ‘SAP being such a hard piece of software’.?

It really is an unsustainable position.?

Then when you layer that with SAP trying to deliver innovations to the markets, but yet on most of those customers, the innovations either won’t work or take a considerable effort to ‘make them work’ due to the bespoke nature of deployments, it again creates more customer pain. Backward compatibility is almost impossible. Again the reputation of the software company takes a bashing - often not at their fault.?

The problem is one of friction - on both sides. Customers have significant friction around SAP - upgrades, enhancements, add-ons, innovations etc are all ‘hard to consume’. They take too long to deploy, require significant testing and fundamentally cost signifiant amounts. On the flip side - every time a customer goes through an upgrade process SAP's reputation take a hammering. It is 'too hard', 'too costly' and 'too inflexible' - you know the story. ?

As things stand SAP can't win - either way.?

So in a way I admire Christian’s direction on this. He is trying to listen to customers and reduce their pain levels and remove these problems. However, it is clearly it is a painful transition. He is fighting a legacy of versions/customising issues and clearly the backlash is incredibly vocal. He is also trying to keep his company reputation 'positive' and shareholders happy.?

The strategy of cloud first is about convergence. SAP are trying to draw hugely disparate and frustrated customer base onto a common future operating and technical model, which has far less future friction for both customers and SAP. But the journey is hard. Really hard. And the bigger the company the harder the journey. It is likely some may look to evaluate the market again in the process. More problems for Mr Klein and SAP.?

Fundamentally Christian cant win.?

The clear reference model in this evolution is Salesforce . It has a clean core, is upgraded and enhanced regularly, and then has a custom facing container for any customisation.?

This is what SAP want to get to. One product. One code base. And a sensible way to customise.?

Lot's are betting this might determine Christian's fate, but you can't deny he is trying to do the right things here. The challenge is how the transition is managed. We have seen the carrot in spectacular deals and now we are starting to see the pressure/stick. Christian is trying to move people and align them to a future more simple model.?

But... and here is the thing Christian cannot control... companies have their head in the sand.

As David Lowson summarised in his excellent article - ?"People need to get on the bus."?

This is not going to go away, and the longer companies wait, the worse it will get.

Missing the bus, as David describes it, is clearly going to cost organisations more in the long run.

We know change is hard, but we have to continue to innovate on a future technology model. We cannot expect technology and platforms from the 90's to be relevant in 2023. The 微软 paperclip cannot compete with generative AI.

So what next...

Companies have no choice but to bite the bullet on this. At Limelight Consulting we are having lots of conversations with companies and leaders that 'don't really want to, but have to' and are struggling to see the benefits. We are helping them navigate that mental hurdle, bring benefits to the forefront, but importantly, we are helping them understand that the longer they wait, the harder and worse their problems will get.

And that is the elephant in the room here...

The pain curve is exponential. The longer things are left, the worse things will be.

For anyone worried about their journey - reach out. We'll spend a few hours in a workshop free of charge, and help you define and map your journey. It is something you cannot afford to hide from.

Have a great day

N