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At the beginning of each year, SearchSAP likes to survey industry analysts and consultants who follow SAP in an attempt to see what may be in store for customers in the year ahead. This year is no different.
Some of the issues highlighted here won't surprise readers. S/4HANA migrations, which have become a perennial thorn in the side of customers in the past few years, made the list. So did indirect licensing.
But one of the trends many experts agree will take shape in 2019 is the drive to build what SAP calls the intelligent enterprise, enabled by the SAP Cloud Platform. Another is how the SAP C/4HANA customer experience (CX) platform will challenge Salesforce, a development that few, if any, SAP insiders foresaw -- at least in the form that it took.
Here are five opinions on SAP trends and technologies customers should watch in 2019, and some tough love for SAP on where the company should be headed.
Scale can sell the SAP intelligent enterprise
Liz Herbert, vice president and principal analyst, Forrester Research
The intelligent enterprise story that [SAP] started promoting this year is pretty intriguing. SAP's scale gives them permission to play in that arena. [The SAP intelligent enterprise] is about front-to-back, smart, AI-rich ways that can enable customers at the top level, and there are only a couple of companies that can do that because of the amount of scale.
SAP has the scale and coverage across a bunch of areas that matter, but they're also playing a more open ecosystem game, which is pretty new to SAP if you look over their 40-plus year history. All of their acquisitions and all of their partnerships -- with Adobe, Microsoft, Google, Amazon -- have taken a much more open and ecosystem-driven approach at the same time, and that really plays into this intelligent enterprise theme, as well.
Achieving their vision on C/4HANA -- the CX platform -- is a challenge. This has nothing to do with the actual products or features and more that SAP doesn't have a great brand there historically. They've been in and out of various CRM investments for many years. They're not that well-known as a CRM player, although some of their acquisitions, like Hybris, are very well-known and well-regarded in the market.
But, on the whole, SAP is viewed much more as in the domain of the CIO. They're not always viewed as the most innovative or fast-moving, which are things that people want in a CX or customer technology. So their challenge is to continue to build the capabilities, but also to build more credibility and brand affinity with CRM, especially with these line-of-business suppliers who think of SAP as the domain of the CIO and not aligned with what they're trying to do.
Indirect access is still an issue
Duncan Jones, vice president and principal analyst, Forrester Research
SAP leaders still underestimate the damage that the indirect access misselling scandal has caused to customers' trust. And they still haven't fixed the problem.
I still hear clients complain that salespeople have threatened them with indirect access claims if they buy competitors to SAP's SaaS products. That's not an acceptable way to compete. SAP needs to put an end to such tactics and instead fix the reasons why these SAP customers are rejecting their SaaS products.
Indirect access is one aspect of a fundamental question for SAP customers about openness. Intelligent enterprise CIOs should reassess whether SAP is willing to play in their open, heterogeneous, eclectic application landscape. Maybe SAP's products will work better with other products from SAP's portfolio, but will they only work that way? Does choosing S4/HANA for financials mean you have to choose SAP's products in every other software category, too -- CRM, HCM, P2P, field service or CX monitoring?
SAP's messaging advocates complete standardization on their products, but few CIOs want that level of dependence on a single vendor, even if they had the time and budget to replace their legacy systems with SAP's digital core -- which they don't. Moreover, no vendor can maintain consistency across such a broad portfolio. SAP, therefore, needs to make it easier to integrate their products with the rest of the software world, not harder.
Is SAP C/4HANA too little, too late?
Predrag Jakovljevic, principal industry analyst, Technology Evaluation Centers
SAP's C/4HANA suite is the so-called Salesforce killer given that it now includes the former Hybris [e-commerce, marketing and cloud billing], CallidusCloud [sales commissions, configure price quote and lead nurturing], and former cloud CRM/sales force automation pieces from SAP. A major core part of the new CX suite is the former Gigya, which is now SAP Customer Data Cloud and resembles Salesforce Customer 360.
Predrag Jakovljevicprincipal industry analyst, Technology Evaluation Centers
But, is this suite a bit too little, too late to really affect Salesforce, which has largely sucked the air out of the CRM room, especially in the large enterprise market? Perhaps SAP can mark the territory in some markets where Salesforce is not present yet.
Along similar lines, is the SAP Cloud Platform going to attract and evangelize ISVs [independent software vendors] and individual developers? It has all of the right pieces but lacks the market share and mind share of Azure, Force.com and even Oracle's PaaS.
As for S/4HANA on the ERP side, the number of 1,500 customers is not that impressive, and SAP will have to offer a better value proposition for thousands of old SAP ERP customers to migrate. Oracle seems less desperate about the old ERP migrations than SAP does.
Oracle can offer NetSuite and Oracle ERP Cloud to new and existing customers but is happy with developing legacy ERP solutions, too -- as long as the customers pay for maintenance, buy new modules, etc. Siebel, JD Edwards and PeopleSoft clients are happy for not being pushed onto Fusion, but some will eventually migrate. I'm not sure whether SAP can be as relaxed as Oracle about it.
S/4HANA shouldn't be a flagship
Josh Greenbaum, principal, Enterprise Applications Consulting
The SAP train is definitely headed toward trying to rationalize the line-of-business assets with the larger S/4HANA and C/4HANA assets -- which are presented as more horizontal assets -- and then to build on that momentum. The big struggle for 2019 is going to be how to keep the fires lit under S/4HANA growth because that's what the markets are going to be looking at. There's a lot of confusion in the market that SAP's really going to need to straighten out in terms of why you need to upgrade to S/4, what's the intrinsic value to the customer and what's the upgrade path.
SAP can use the assets they have on the edge [such as Ariba, Fieldglass, SuccessFactors and Concur] as a means to pull S/4HANA forward as opposed to what they've been doing, which is to use S/4HANA as a flagship.
One of their big problems is they risk being hoist on the petard of public vs. private cloud. It's a little confusing to the market because there's a tradeoff between operational costs and functional breadth. There's no doubt that if you're running a public multi-tenant cloud, you're going to save costs and be able to pass those savings onto the customer. But the reality of how large enterprises run SAP is that it's going to be really hard to think about what a large global company needs to do and create a multi-tenant cloud version of it that has a big enough addressable public market.
When you look at some of these super important functions like risk management in oil and gas, the total addressable market in large enterprises is dozens of companies. So to turn that requirement into a multi-tenant product is significantly more complicated than maintaining it as a single tenant product.
SAP is erring on the side of -- correctly -- dividing those two ideas and saying, 'For this fit-to-standard world where we can sell a lot, let's go multi-tenant and we'll really knock the price down.' For the big companies, for these very strategic requirements, cost and price isn't the issue anyway -- it's getting it right or not. These big companies don't care for the orthodoxy of multi-tenancy -- they need that functionality. What's stalling them in terms of acquiring S/4HANA is not single-tenant vs. multi-tenant, it's that they need the functionality for their business.
SAP needs to raise the bar
Dana Gardner, president and principal analyst, Interarbor Consulting
The zeitgeist around cloud has to move past the dog-bites-man level. For 2019, SAP must reinterpret the cloud-helps-business narrative away from infrastructure perks to how only a cloud-adept solution and ecosystem working in concert can raise the bar on unprecedented business outcomes.
SAP can continue to redefine what a pan-business process solution is, move closer to intelligent process enablement, and give enterprises the best data-driven help they need to make the best choices on total spend, HCM efficiency, logistics optimization, and user experience enhancement strategies.
SAP will be successful in creating the productivity hub of an intelligent enterprise in a way that businesses feel comfortable with as a partnership. The more successful SAP is in this, the more successful its customers are, and vice versa. That's what happens when you combine data, ecosystem services and a common drive for efficiency. It's not about the systems or the cloud model -- it's about a virtuous pattern of ongoing insights that begets efficiency, that begets productivity and that instills innovation.
Risks for SAP are that it erodes rather than burnishes their place as the primary value-adding relationship with Global 2000 customers for the advancement of the intelligent enterprise. That pole position for the SAP intelligent enterprise should be at the confluence of business logic, best-in-class analytics, and roles- and context-aware process refinement -- not in cutting storage costs or generating better KPIs for data center performance. SAP must elevate their relevance to the enterprise even higher in 2019 and keep it there.