For over a decade, I ran the SAP practice in the UK and one of the surprising challenges I faced was how to start the monthly newsletter without repeating myself. I failed and ended up repeating myself! Now that’ I’m blogging, I seemed to have reached that point again, so I routinely insert an inspirational or wise quote that makes it seems a lot more interesting and new. Ok fine, I get my script wizard to do it. Some of those quotes I’ve never heard before!
Most of the large SAP clients in Europe with a significant SAP footprint (not just a GL or HR solution), are already moving towards SAP S/4HANA. Several others are still thinking about it like a trip to the dentist – putting it off for now, but not really trying to move away. This could be me being biased, but if you have a relatively complex business trading in multiple countries, etc., then staying on SAP and moving to the S/4 digital core is the right thing to do.
What I do observe is that the choices being made in the platform around the SAP S/4HANA core are far more varied and complex. SAP has changed over the years from product disaggregation and bolstering intelligence around the core (Success Factors and Ariba instead of ECC HR and procurement, etc.), to new products that were never in ECC (APO and BW, etc.). Some clients have inevitably moved away from the SAP suite of products – most notably to Workday and Salesforce, which have eaten away at the SAP footprint with their cloud and new architecture pitch.
But the move to SAP S/4HANA is giving customers the chance to reconsider their suite of solutions beyond the core, for a number of reasons – from price/affordability, better available functionality, open architecture with no vendor lock-in, and an opportunity to get the best deal from SAP (including the ability to license solutions). Sometimes, I believe this a more emotional decision than a logical one, but that is what I observe the market doing. The point is, most clients will move to S/4 in the next five years, but perhaps they will also move to other products and platforms around the digital core and they do not have to rush to make that change (this is particularly true in BI/BW).
I believe that unless SAP conjures up a comprehensive deal with clients, they will have to fight – system by system and service by service – to secure themselves against other vendors who are virtually offering services free and on very flexible terms and conditions. For example, when we produce our SAP innovations we now use the native IoT services of Microsoft Azure or AWS, or the amazing AI/ML services from Google.
SAP is acknowledging the prowess of their partners and enabling better architectures to speed up clients’ business innovation. Currently SAP is aiming to get everyone on SAP Cloud Platform(SCP), but the devil in the detail is that the hyperscaler platforms more or less have native integration with SAP now. Whatever happens, I think this is where the fight will be – and a really tough fight for everyone.
While I suspect SAP will be going strong 25 years from now in the digital core, how can we be sure that some of the challenging solutions will be available or developed in three, five, or ten years? Unicorn software suppliers (who I am too polite to name) rely on rapid growth and new users to maintain their market capitalization. With share prices dictating the inevitable fate of being an acquisition target, or being subsumed into to a less funky organization with tighter and less friendly commercial approaches, organizations will look for a third or fourth alternative.
SAP will develop new solutions, come up with new commercial models, and innovate. But, will they ever be able to predict every innovation and trend? I don’t think so. Maybe this is becoming like the car or food industry, where suppliers try to increase the percentage of the vehicle or meal they supply and not to provide everything themselves.
Natural selection and evolution will take over. If SAP wants to win outside the digital core, it will need to constantly improve its offer and take on the challengers. But then again, that’s how the company will improve and become more competitive – and that can only be good for the end users of the solution.
To conclude, the battle for the digital core with SAP S/4HANA will be won by SAP in the next five years, while the battle for the surrounding platform will go on for much longer. That is how we move forward! The Renewable Enterprise from Capgemini is the destination and includes an architecture framework and a way of working that is flexible enough to take into account changes in the market and the way in which solutions are procured and provided. I know that the solution is not cast in concrete, but that’s exactly what makes it exciting.
Want to know more? Contact me and I’ll be happy to show you that despite the fight as time flies, you are the pilot!