Thoughts from SAPPHIRE 2018

“Good morning, ladies and gentlemen. Another year… another SAPPHIRE… another speech.”

With those words, Hasso Plattner kicked off his keynote session at SAPPHIRE 2018. Is it just me, or did those words ring a little hollow?

Hasso’s choice of words perfectly captures my feelings on SAPPHIRE 2018 as well.

I’m mixed.

It was a fantastic event. It was great to meet so many of our clients, partners and prospective clients. I bumped into old friends and made a few new ones. Yet, this industry remains unsatisfied when it comes to realistic SAP-integrated ecommerce solutions. The needs and concerns of mid-market B2B manufacturers are not being addressed (which is why Corevist exists, by the way).

Here are my top 7 takeaways from SAPPHIRE 2018. Each one of these could be a post in its own right, but I’ll give you a high-level overview for now.

1. C4/HANA indicates a welcomed shift back towards ERP-first thinking

I’ve been around long enough to remember the early days of SAP’s Internet Sales application.  I know that some of you are still running it because we’re still being asked to replatform those solutions.  While about as ugly a web application as you can imagine (actually, it looks just like SAP GUI only its html), it did the job.  It brought everything in SAP ERP to the web in real time. Many a B2B portal was launched on that technology. Then SAP began to lose it’s way with the advent of Web Channel Experience Management around 2011. That’s when they began to sacrifice simplicity, cost and integration with SAP ERP for an improved user experience. The final shoe dropped with SAP’s acquisition of hybris in 2013.  SAP totally lost sight of their ERP roots and chased the Amazon-like consumer experience holy grail. They dismissed the importance of affordably integrating with the core ERP system as part of providing a truly rich and personalized user experience for the B2B customer.

Until they woke up in 2018 and realized that they’d abdicated the CRM market to Salesforce.com and wanted it back.

Now, all of sudden, reaching back into the core SAP system…which only SAP can do because they “own the core”…becomes a great idea again.

Well, Corevist never lost our way.  We’ve always known that you need both…a pleasant user experience AND the ability to affordably abide by complex business rules.

We’ve always known that a pretty website without substance…without real time pricing, inventory checking, credit checking etc…is simply a pretty website that won’t get used more than once.  

We’ve also always known that not everyone in the SAP ecosystem is super-rich and can afford to fund SAP’s marketing and product experiments (SAP Anywhere is nowhere, SAP hybris Yaas is dead etc.).  

The people that we love working with, and who love working with us, don’t fall for hype. This, as they say, isn’t their first rodeo. They don’t have unlimited resources and unlimited patience. And they don’t fall for marketing hype nor will they be bullied.  They’ve got a job to do and it needs to get done now. Their needs aren’t fulfilled by roadmaps.

They need affordable solutions today. They want to work with proven technology and a trusted partner.  A partner that doesn’t simply tell great stories and throws great parties but will actually be there when the  pressure is on to deliver…day or night.

We’re glad that SAP has returned to their ERP centric roots and has rebranded their suite of customer oriented solutions C4/Hana.

Welcome back to our world, SAP. 😊 We’ve been meeting the needs of B2B manufacturers for 10 years, and it’s precisely because of our real-time SAP ecommerce integration.  

Oh, and good luck integrating (and recouping the cost of) all of the acquisitions that will eventually make up your C4/Hana offering:

Hybris – $1.5B
Gigya – $350M
Seewhy – $(not publicly available)
Callidus – $2.4B
Coresystems – $(not publicly available)

Lastly. FYI. C4/Hana, while it isn’t here yet and has an aggressive roadmap for it’s launch, is only available to you if you migrate to S4/Hana.  More on that later.

Which leads me to…

2. SAP is shifting toward real-time integration, but don’t expect it to be affordable.

For B2B manufacturers running SAP ERP, the biggest question in IT is: “How do you handle data in multiple, disparate systems?”

Historically, SAP’s best answer was, move it from point A to point B. Keep it synchronized with batch updates.  

Now SAP is moving to a real-time architecture with a centralized data hub. As you need information, ask the data hub for it, and return it to the data hub. Read and write to that hub in real time.

Great! That’s a fantastic idea. That’s always been the core architectural principle of Corevist Commerce. We’ve been doing it for 10 years. Welcome to the mountaintop, SAP. 😊

Let’s see if it’s affordable for manufacturers who are still taking orders via phone/fax/email. (Hint: Corevist Commerce is.) So far, though, the evidence for affordability isn’t good. SAP has announced partnerships with Accenture and Deloitte to “verticalize” their S/4HANA offering. Can you see where this is headed?

3. SAP did a great job of linking their brand with emotions

As a CEO, I can tell you how critical it is to craft and communicate a vision to your team and your clients. SAP did a great job not only of casting a technology vision, but of linking that vision with emotions. You left thinking you would be irresponsible to yourself, your company, and humanity if you didn’t embark on these latest technologies.

As always, SAP drove this emotion home with a slew of celebrity guests. Olympic athletes, major rock stars, you name it. This created a visceral connection with SAP’s message.

As I digested this emotional fud, I couldn’t help but see the practical side of running SAP products. How well does that vision (and SAP’s delivery of products) align with the values of B2B manufacturers? That leads me to my next takeaway.

4. SAP wants you to be bleeding edge, but where’s the trust?

Leonardo, AI, intelligent enterprise—wow! The world of the future is here. It’s amazing what companies like SAP can build.

Of course, bleeding edge is exciting, but it’s often untested. Even on the SAPPHIRE stage, SAP Chief Commercial Officer Franck Cohen’s Enterprise chatbot demo didn’t work. It came during Hasso Plattner’s keynote address. Hasso took the technical difficulties in stride with a great sense of humor. We all understand—it happens. It’s the reality of the real-time demo.

But you won’t find that footage in the edited version even though it happened. I was there, but don’t take my word for it. The Register confirms my story.

This illustrates my larger point. SAP is focusing on bleeding edge, but there is still a massive trust issue here. SAP wiping out that demo bug from the video is a trivial expression of a genetic flaw that SAP has.  SAP believes that trust is a one way street. You have to trust them but they don’t have to respect you.

Aside from trust, consider this: not every B2B manufacturer can afford to be on the bleeding edge. Some, like our clients, want to be fast followers. Because of these trust issues, they may adopt the SAP solution once the kinks have been ironed out and the product has matured across a dedicated install base.

Even then, they may not adopt new technologies. Why would they if they simply don’t see the business case?

Which reminds me, let’s talk about S/4HANA.

5. The market isn’t sold on S/4HANA

Here’s another dark secret I picked up at SAPPHIRE 2018: there’s a disconnect between SAP’s numbers about the adoption of their flagship platform, S/4HANA, and the reality of that adoption rate. Because SAP controls the room and the marketing at SAPPHIRE, there’s a sense of FOMO in the air—Fear Of Missing Out. SAP is saying, “We’ve invested in creating HANA, we’re the best in the industry, there’s no faster database, no fastest product in the industry! 8,000 companies have signed on already!”

Oh, by the way: in 2025, SAP is sunsetting support for ECC. So not only is S/4HANA the fastest and the best, but if you’re not on it yet, ECC is going to die in seven years. Now you really need to upgrade.

Let’s be honest, that’s a tough sell for manufacturers whose IT budgets are already tight. Drop a bunch of cash in the new platform when there’s no business driver except, “our ERP system will die if we don’t?” That’s not good marketing. And as Den Howlett notes in Diginomica (here and here), so far, S/4HANA adoption is sluggish at best.

I want to unpack that a little, too. Yes, there have been 8,700 HANA purchases. But only 1,800 of those SAP clients have launched a production application.

That’s 1,800 out of 300,000 clients. Call it an S/4HANA adoption rate of 0.6%.

That’s a little scary. Why aren’t people jumping on the S/4 bandwagon? Here are the reasons.

• The cost of the conversion.
• The lack of functionality available on S/4.
• The fact that a lot of what’s in ECC won’t get ported to S/4, so people have to license SAP’s newly acquired products that aren’t integrated well.
• All of that requires additional consulting to make it work.
• No one has a good answer as to why they should do it, other than the fact that SAP is telling them to do it.

Yikes. Rimini Street’s value prop is looking better and better all the time. They’re all about stabilizing ECC so you can end costly SAP maintenance and innovate with 3rd party apps.

6. The User Groups are worried about the lukewarm response to S/4Hana

Even more interesting was a conversation I had with leaders at the highest levels of SAP’s User Groups. They confessed to me that one of the top things on their agenda is the adoption of S/4HANA. They later went public with their views as documented in Jon Reed’s interview here. Simply put, they’re worried about it. They feel as if the entire SAP ecosystem is in jeopardy if SAP doesn’t really improve the adoption rate for S/4.

I asked them why.  

Essentially, they feel as if SAP has bet the farm on S/4HANA. (And there is zero doubt that they have.) If it doesn’t work, if they can’t convert their install base and deliver value on S/4, then everyone is in jeopardy. In that worst-case scenario, SAP itself is at risk and that isn’t good for anyone.  I was fascinated to hear that the SAP ecosystem has evolved to a place where they are assuming responsibility for SAP’s future success as a way to protect their own future. I hope SAP understands, and appreciates, the importance of that dynamic.

7. IA – Indirect Access (aka Innovation Antagonism) isn’t settled yet…not by a long shot!

This deserves its own blog post, so I’ll just touch on it here. After SAPPHIRE, the IA problem isn’t settled. In fact, I’m going to stop calling it Indirect Access and start calling it Innovation Antagonism.

Why? Because everyone walked away from the conference with less clarity and more confusion, fear, and uncertainty. Yes, the definitions of “use” are becoming clearer, but pricing isn’t.

Where there is uncertainty there is no investment. Where there is no investment there is no innovation.

I got the sense that SAP feels that all that is left is to educate the market on their new and innovative document pricing model and all will be well.  

Well, not so fast.

First of all, SAP continues to normalize the fact that the anti-trust laws in the US and EU forbid a monopoly from engaging in these “we’ll charge third parties to access our software but it’s free if you buy from SAP” practices. I’ll have more to say on that in future posts.

Secondly, no one has seen the pricing implications of the new document model in practice. Early indications are that IA is going to be a very profitable money-maker for SAP and it might not be cost effective to abandon your old contracts.

Unfortunately for everyone in the industry… and this is why IA = Innovation Antagonism… SAP customers are frozen with uncertainty.  

Where there is uncertainty there is no investment.  Where there is no investment there is no innovation.

This is not a sustainable situation for anyone in the SAP ecosystem.

The Takeaway

SAPPHIREs have always been an emotional roller coaster for me. Going in, I’ve always felt a little subversive because while my product integrates with SAP ERP it competes with some of their own offerings. Then I wonder why I should feel that way because I have been certified by SAP and I am helping some of their largest and best clients to get the most out of their SAP investments. Those companies have made informed, conscious choices to do business with me instead of buying SAP products. I’m humbled by that.

Yet when I walk through these halls, I get the sense that SAP has no room for me. Everything SAP is saying and doing is essentially anti-choice, anti-3rd party, anti-value-add for the install base… unless of course, you’re willing to buy into the S4/Hana vision lock, stock and barrel.

Time will tell what path SAP takes.  They have to make decisions that they think are right for SAP.  So do SAP clients. Our existence is living proof that the SAP market wants a choice.  Corevist remains unwavering in our mission to offer the best SAP-integrated ecommerce solution in the world without the world-class costs, complexities and risks.

Onward! :)

 

Sam