In the runup to this year's DSAG annual conflab, DSAG released research on digitalization progress among members along with commentary and the SAP 'To-Do' list that characterizes these surveys that serve as the debating backdrop to the main event. The surprise to me was in reading that in important ways, SAP and DSAG are more or less on the same page for ERP technology's future. What do I mean?
Putting aside the highlight announcement that:
More than one-third of members of the German-speaking SAP User Group (DSAG) feel they have made good or excellent progress with digital transformation (a 3 percent increase on 2017). This was the finding of an online survey conducted this summer*. The most important factor here is developing digital skills within the workforce, followed by Artificial Intelligence/machine learning and projects around the Internet of Things.
I was drawn towards the following:
Digital business processes are, above all, connected enterprise-wide and run in real time – which makes standardized data models essential. Conventional heterogeneous standard solutions are no longer sufficient; the architecture of the future should instead be based on simple, clearly defined functions. “Here we are calling on SAP to provide us with solutions based on standardized data models, with extensive integration capabilities. Only then will end-to-end processes be truly possible,” explains DSAG chairman Marco Lenck, highlighting the task in hand and the challenge facing SAP.
This dovetails well with what Derek duPreez heard about the Open Data initiative at SAP's recent CX event. Quoting Moritz Zimmerman, SAP’s CTO of Customer Experience, duPreez noted that:
The idea is really to create one common data model, starting with the customer entity. It’s a lot of work in progress. The big insight, the thing that allowed us to create this partnership, was to recognise that we do compete on the application, and sometimes on the infrastructure, and we will continue to do that, but to not to make that part of the discussion. Everyone might have their interpretation of where to store the data, or what to do with the data, where the data should best sit, but let’s make sure it’s portable.
How this works out is very much a work-in-progress and a topic we shall be observing closely given past failed attempts at integrating Microsoft Office with SAP under the Duet Project. Moving on, DSAG say:
A fundamental element of the architecture of the future is versatile platforms that allow business processes to be rolled out enterprise-wide. Increasing process digitalization makes cross-platform networks essential. What’s new is that these service networks are no longer based on a single provider. For SAP, that potentially means no longer being the only player in the picture. For this reason, SAP platforms must be open so that they can be easily integrated with other platforms. “Digital processes need independent, interoperable standards,” explains Marco Lenck. “Conversion processes and complex interfaces hinder the speed, and therefore the success, of a company’s digitalization projects.”
Again, this dovetails to what Zimmerman said:
There’s a desire for more openness. Companies are realising that IT has changed from supporting a little business process, making a sales team be a bit more effective, to a core value proposition. And the lock-in aversion becomes much more critical now. Companies have gone through these painful exercises, where they’re reducing their footprint year over year over year, yet they pay more and more and more. What’s the other alternative? Go open source.
Among SAP Mentors, there is a small but vocal group of open source advocates who, for some years, have pressed SAP on this topic. So it is good to see SAP finally getting its act together. Jon Reed picked up on this at the recent SAP TechEd event in Las Vegas:
Yes, these “open SAP” ideals walk a tightrope with the Wall Street revenue dance, but, for example: SAP Cloud Platform is increasingly aligned with Cloud Foundry; SAP didn’t try to build their own Kubernetes imitation, but went with the industry standard, and so on.
All barbs aside, there has been a long-running debate inside SAP about whether the company should have a more friendly approach to open source. As a proprietary system, albeit providing ABAP, the preferred programming language for SAP landscape, SAP has been somewhat schizophrenic on open source. That has clearly changed, helped in no small measure by the fact that some SAP executives have decamped to the likes of Google.
To wit Björn Georke tells me in response to my teasing Tweet:
Why not, Dennis? We’re fully Into k8s — not just consuming but contributing. We’re modularizing SAPUI5/OpenUI5 to allow for reusing Fiori HTML rendering with react and Angular. Or whatever is to come. But whatever we do has to sustain over a decade for the enterprise. https://t.co/xqtg8ioH3D
— Björn Goerke (@_bgoerke) October 6, 2018
Of course, nothing is quite that simple in SAP land as the ensuing debate among SAP'pers on Twitter confirmed. More will surely follow at SAP TechEd but for the moment, SAP should be given credit for the work it has done to date.
Not all good news
However, there are plenty of remaining questions both technical and philosophical for SAP to answer, not least the ongoing Indirect Access issue which almost certainly impacts every open source sidecar for SAP systems. But it's not all good news. According to DSAG respondents:
...for the most part, core processes are being left in ERP, with only 10 percent of the respondents moving them to the cloud. Which leads to a further request on the part of DSAG. “We need fewer cloud-only developments and expect functional developments in terms of maintenance, not a new cloud subscription,” urges Marco Lenck. “Functions within core applications must remain integrated.” Only then can business processes be modeled efficiently.
This will be a tough one for SAP to swallow with its mantra of 'Run Simple,' a euphemism for discarding gobs of unique process code in favor of standardized processes run in SAP's cloud. But then Vijay Vijayasankar, IBM finds similar sentiments, especially among large customers:
I really don’t know how this will play out - no consistency in point of view across the IT leaders I work with. For now, most of them have no worries enhancing on prem.
In one sense, SAP can breathe a sigh of relief as it counts up the annualized maintenance fees it will c0ntinue to record as revenue in the coming 5-10 years. On the other hand, customers will need a LOT more by way of openness from SAP plus there are clear needs where cloud has to be the way to go. Machine Learning is an example cited by Steve Miranda, executive vice president of Oracle Applications product development in a recent conversation with me:
You can't realistically deploy ML in an on-premise fashion because there is no adequate mechanism for testing against bias across large populations. This is a vital element in what will make ML potent - the cloud is your only real option.
Elsewhere, Miranda noted that the pace of innovation and especially in CX is making on-premise deployments redundant:
Without cloud, there's no other way to keep up with four updates per year bringing fresh ands needed functionality and, more importantly, achieve adoption among large numbers of users.
That makes perfect sense to me but I wonder whether SAP has grasped the significance of those scenarios to the point of separating the threads that drive adoption of one solution approach over another? Right now it is sticking to its S/4HANA on SAP Cloud Platform messaging with tidbits thrown towards the on-premise customers. That won't be enough.
DSAG always does a good job of holding SAP's feet to the proverbial fire in ways that other SUG's miss. The most recent set of survey results is a good case in point. It provides me with plenty of talking points when I go to Barcelona for SAP TechEd next week. But let's give credit where due. The clear alignment in important topic areas for the burgeoning ERP crowd is something that has been notably missing the last couple of years and holds up the promise of a much healthier debate between SAP and its customer advocates about roadmaps that align to business need.