From SAP’s Partner Summit last month, I dived head-long into the SAPPHIRE NOW main event plowing through a busy schedule of keynotes, executive meetings, as well as a number of partner visits on the vast but highly navigable expo floor. Bill McDermott gave a decent keynote (but if I hear one more endearing pet dog analogy, I think I might vomit ;). He offered up a steady stream of sound-bites that spoke as much to his mission for transforming SAP’s internal culture as educating its customers. Memorable statements included SAP delivering “Simple as a Service”—a play on the well-established acronym, the need for customers to shift from “systems of record” to “systems of innovation,” and the growing importance of C2B (“Consumer to Business”) vs. B2B and B2C approaches.
Some takeaways from the event itself:
- While SAPPHIRE NOW addressed many questions with regard to S/4HANA, it’s apparent that the effort will require a massive multi-year effort to re-write, consolidate and simplify more than 400 million lines of code.
- While S/4HANA has Finance in place with Logistics soon to follow, it’s going to take a clearer roadmap, timetable and strengthened business justification to get the massive peloton of SAP customers on the migration path.
- Just as with its SAP Business Suite, 26 S/4HANA industry solutions will eventually be delivered. Customers need more clarity around their placement in queue. The good thing is that the underlying industry code has been tested and is compatible with S/4HANA.
Customers jumping on the S/4HANA bandwagon today are running a mix of converted and optimized code. Currently S/4HANA has 400 customers with nearly half of those sold by SAP partners. With a big chunk of functionality planned for delivery at end of the year, it will be interesting to see how momentum picks up as we head into 2016. Some customer use cases showcased at SAPPHIRE did a great job demonstrating the HANA database’s power in terms of high speed predictive modeling in critical situations—but more need to demonstrate the value that moving to S/4HANA and the overall HANA platform will bring customers.
Coming away from SAPPHIRE I believe SAP’s overall cloud story while improving, isn’t strong enough. Most of its cloud growth is coming from acquired products. Nothing wrong with that—SAP made some smart investments–but it speaks volumes. The rest of the SAP organization needs to take notes and keep drinking furiously from the same troth as Concur, Success Factors and Ariba.
S/4HANA’s value in cloud deployments will become apparent, but will take time. Give SAP credit for mobilizing and heading in the right direction as quickly as one could reasonably expect. Meanwhile, as I mentioned to Bernd Leukert, Executive Board member responsible for development and delivery of SAP’s product portfolio, SAP has a powerful natively built midmarket cloud-based ERP in the form of Business ByDesign on HANA (“ByDesign”) revved up and ready to go today that is substantially (I might argue inexcusably) under-marketed relative to its potential impact. While SAP works to address the S/4HANA challenges above, it might try putting ByDesign to work in the market in a more aggressive manner. That alone could raise the firm’s overall cloud quotient and credibility.
Today NetSuite has had the SMB cloud ERP market mostly to itself. While others are quickly joining in, a strong, well marketed SAP offering could jump to the front of the pack as a worthy contender. What’s to lose by not doing so? Actually, quite a bit. Beyond the immediate ability to help SAP bolster its cloud image, it loses the opportunity to go after many net-new SMB prospects hoping for more choice when evaluating cloud-based ERP solutions alongside on-premise offerings. Likewise, many of SAP’s own customers seeking cloud-based two-tier solutions and alternatives for divisions and subsidiaries wind up talking instead to competitors.
While S/4HANA rightfully commanded center stage at SAPPHIRE, I believe ByDesign on HANA is a potential sleeping giant that could and should be awakened and more heavily asserted. Aggressively pushing ByDesign on HANA as a midmarket alternative to NetSuite does nothing to diminish SAP’s necessary spotlight on S/4HANA. In fact, I contend it bolsters belief and confidence in SAP’s ability to pull that effort off.
Disclosure: Opinions are my own and do not constitute Gartner’s consensus position on any of the above topics addressed.
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