SAP 2010s vs 2020s

Say it quietly but I think SAP is travelling in a subtly different direction in the 2020’s than it did in the 2010’s?, from that they pursued in the ten years before. This is clearly a personal view and I have no insight from SAP on whether this assertion is true.?

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I am not going to comment on whether this is due to changes in leadership, or just the market driving a new approach, but I think there is one!?

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I would like to start with the ERP core which is increasingly be bundled with IAAS , and then talk about the SAAS products that surround it and the PAAS layer, and also that my experience is based on large enterprise clients in Europe.

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ERP 2010’s

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At the start of the decade , ECC was still the only option it’s the best ERP around, but its been sold to nearly everyone of any size and complexity, and it’s a little slow, a little ugly usually overly bespoke and very much on premise.?The usage of the product is probably in decline, not because people are taking it out, but because parts of it, procurement, HR, CRM etc are being put onto SAAS products that surround it, not always provided by SAP. The ecosystem can see that SAP needs to do something , and in 2015 they do with the launch of S4 which along with the gateway, to open up SAP, and Fiori. Initially the solution does not cover the whole of the ECC scope so take up is a little slow mainly centred around finance. The market is also a little slow to move as many clients had only just finished ECC, so even though it is a default for new business, ECC users adopt more gradually. My observation is that the more disrupted the industry they more they look at S4, ie retail?

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By 2018 S4 is as strong as ECC and adoption increases, but without references and experience it is still in ramp up, also the ecosystem takes a little time to adjust to the new ways of working, the new business case etc as do the SAP sales team who still concentrate on core product functionality not end to end.?

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The other fly in the ointment is that its very much on premise, by the end of the decade it common to host it on a hyperscaler but its not got the glow and fashionable air of a cloud solution that CXOs’ hear so much about and SAP competition say is so important?

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ERP 2020’s?

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Things and customer sentiment has changed massively , I hardly hear anyone saying they are not going S4, the move to RISE has added extra momentum and I am sure this will evolve further is to a more consumable product. Lets stop talking about why move to S4 just get on with it!?

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SAAS 2010’s

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In the 2010’s SAP bought a series of SAAS providers, success factors, Ariba, concur field glass and latterly Qualtrics as well as other CX providers, as well as developing new products for example IBP. This was clearly necessary as the ERP core was under pressure from workday , Coupa , Kinaxis, Salesforce etc and the group of products on spend management was market leading. In some cases SAP arrived a little late to market, and lost some market share and I also believe that is certain parts of the clients business’s there was a sentiment that they would rather work with anything other than SAP , largely because they wanted to state independence in their part of the business from the SAP core , and 100% focused marketing and??sales effort from companies like Salesforce and Workday was hard to compete with for someone with an offer as broad as SAP. The markets opinion and the story told by the competition was that SAP SAAS integrated no better than their own products. SAP had a difficult balance to find between be a specialist HR, spend of planning solution and competing head to head with the SAAS pure plays and being someone that was good at everything and this gave the impression sometimes of not being joined up.?

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The SAP technology in many cases was fresher and richer than some of the competition, but somehow that did not come across. (market perception more than anything else)?

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SAAS 2020’s?

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SAP has really focussed on its SAAS suite and getting its products right and improving the integration with other SAP components, I think the market has also worked out that some of the ease of integration messages from the competition were not 100% true and the promise or richer functionality was more marketing led than real. The fear that the some of the SAAS products would break out of their niches into full ERP also seems not to have been delivered.??

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What excites me more about the SAAS space is how SAP is pulling together many parts of its offer to produce a compelling story, for example in Ariba, integration with EAM and Planning can add so much value. It is my belief that clients will change their SAAS platforms more frequently than ERP, maybe every three years and I see some evidence that clients who chose non SAP SAAS components are coming back. I also think more are choosing to stick to SAP and not look at alternatives as the market hears about the relative strengths of the products.?

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I also felt the gloss has come off some of the other SAAS player and start ups, it really doesn’t matter how many times they tell me they are trading on a massive multiple and have just become a unicorn, if they are not very functional and don’t integrate all that well, they will?eventually probably start to grow less quickly , loose funding and get bought up by one of the firms that collects vintage software solutions and sweats the asset not develops it.

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In some cases the SAP offer was not mature enough to compete in the market when it was launched, but SAP has invested and has caught up, so I believe that the tighter integration ie IBP with Ariba as mentioned above will drive more SAP SAAS adoption?

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RISE is bundling more products together and offering holds out the promise if new and innovation options in the SAAS space and as our clients digital process’s mature and become more complex the only answer will be a tightly integrated SAAS/ERP solution. I think this could well apply , across all SAAS areas, but I am most hopeful that it will drive a renewed uptake of SAP CX.

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Leaving us to wonder ‘if’ or maybe the correct term is ‘when’ SAP will start delivering their entire suit as a SaaS, from front to back.

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2010’s PAAS?

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For a start in the world of SAP there really wasn’t a SAP?PAAS in the early 2010’s I am aware from sitting in the office listening to our digital gurus’ that this was happening in other areas but really around SAP it was not such a great thing. SAP ABAP and other proprietary technologies were still being used, and probably being deployed in a pretty old fashioned way. Meanwhile clients attention was being drawn to delivering innovation and differentiation using other products and agile/devops where solutions could be deployed quickly, the technology being used were the ones being used in university’s etc?SAP lost out to a younger funkier generation, where SAP did have offers they were fine, but were harder to buy and consume and if you just want to run a small pilot you are not going to sit in a room negotiating contracts with SAP you can build it the time it takes to do the paper work.?I am not sure SAP lost in these areas on features and functions but lost to Devops, and ease of consumption. At the time I was running a digital business along said and SAP business and I was so aware that I could get the digital solution up and running on my Credit card whilst SAP would be wanting to talk about T&C’s etc I think fashion/age also had something to do with it as well, if you go to a Saleforce event for example it was all craft beer, and crushed avocado whilst SAP was Coldplay and open sandwiches.?

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By the time 2017 came along we had Leanardo and then SCP , and I for one was promoting SAP tech as the layer for doing the new things, but I think I might have been acting as presales for other PAAS products. I do believe there was a danger at this time that SAP could become a very well have become?a fast and robust adding machine Finance and MRP and all the interesting stuff being done on other PASS providers such as the hyperscalers

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Also most SAP clients were not all adopting the new thinking about micro services etc, some were still building in the old ways, with a complex bespoke core, but I think by 2019 most were changing.

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2020’s PAAS?

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The evidence I have is that differentiation in the PAAS is growing 30% faster than the core SAP S4 market (which is growing pretty fast) so clearly the approach message is now landing, and this is the way most clients are delivering. Within that I have the slightly stunning statistic that BTP has grown 400% since 2020, so I can conclude that the PAAS (from any vendor) is becoming accepted and that SAP are doing very well and gaining share. All be it from a smaller base.

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SAP’s challenge in all this is balancing open up the platform and making it easy to connect to and operate, while make sure that SAP BTP stays the platform of choice. But SAP are getting smarter at pricing and bundling the products with RISE means clients will try it out.?I am not convinced that any large client will go 100% on any one platform and that hybrid is the way of the future. I tied to have complete end to end solutions on one provided but after 12 months of trying I ended up taking the best from several for different services and sometimes having 2 of the same thing. However if the total spend on PAAS is 100% then SAP can increase their share and there is some evidence of some clients having a ‘why not SAP’’ policy in this space,?it is where the innovation happens and for that reason they can never have it all in my opinion as people will invent new things. The products that SAP are adding seem sensible and the solution is becoming more cohesive. If SAP add more industry content and create create a truly interoperable cloud and services connection with their partners, Microsoft, Amazon and google in their platform it will be hard to ignore.

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I think the opportunity to sell on in the PAAS must be 100% of the value of ERP solution originally sold, and so it can be a huge growth area as business become more digital and these offers become more complex.

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My hope (from an SAP perspective) is that clients start to realise that to delver a complex digital solution they need a hugely integrated offer from front to back and that SAP becomes a default and comes up with innovative pricing to help share the risks with their clients.

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Conclusion

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I think SAP did what was right expanding the SAAS platform in the early/mid 2010’s but were a little slow to take on the challenge of the PAAS competitors and have a cloud type offer. They were still fighting salesforce and oracle as late as 2019 and the purchase of Qualtics when really the hearts and minds had been won and there were new challengers in the PAAS layer to differentiate and innovate against other people offering consumable services.

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SAP has realised that the battle for clients will not be for the ERP core (they have won this) , or the SAAS layer , again where they are doing well due to the investments they have made in integration and a joined up approach but is now fighting for a share of the PAAS layer that will allow them to grow for the next ten years beyond then end of the S4 wave I personally believe this is very much the right plan.?