DSAG, the German-speaking SAP user group, is not your typical user group - and they like it that way. Most user groups are quiet networkers - DSAG has an undeniable knack for the promotional bullhorn.
But when you look at any dialogue between customers and SAP that required customer advocacy, from enterprise support to indirect access, DSAG is right in the middle of that too.
Last year, board member Andreas Oczko gave me DSAG's gut-check in Beyond Sapphire Now - DSAG on how SAP licensing must evolve. This year, we broadened the scope of our discussion.
So in addition to Oczko, I met with two other DSAG board members in Orlando, including DSAG Chairman Marco Lenck. The board members are all volunteers, with full time roles in their own organizations, but the meeting was hosted by full time DSAG staff member Mark Kuhse, DSAG Group Executive.
I won't go into details on SAP's Digital Adoption Access Program, as I already covered that with an ASUG board member in SAPPHIRENow 2019 - Ron Gilson on SAP's indirect access news, S/4HANA and more.
Indirect access and licensing cost predictability
Overall, I thought it was a mixed bag of a Sapphire Now. But one of SAP's smartest moves in Orlando was having ASUG and DSAG break the new licensing news. Given the users groups' central role in this licensing dialogue, that's where we began. What is Oczko's take?
I think really the biggest achievement is an extraordinary step SAP made after now 18 months - and that was something we proposed in 2017.
The big step? Recognizing that when customers come to the table for the new licensing plan, there is, as Oczko put it, a "line in the sand" on past access charges (see DSAG's full position on customers' new options).
I see the progress, but my concern is that SAP will put licensing and data access pricing issues on the back burner, when the job, as I see it, isn't done yet. But there does seem to be more cost predictability on licensing expenses. Does Oczko agree?
Definitely - and secondly, one should never forget, SAP accepts that "do nothing" is a valid option, because [for some customers], it makes no sense to move to the new licensing.
DSAG members' top issue is... integration
With that, what's the biggest issue on DSAG members' minds? Lenck was unequivocal:
Integration. In all our discussions with SAP here, there is integration and colonization of master data structures. These are the top two issues that we have in that area, because SAP products came with different data structures. Mostly, the [acquired products came] with an integration out of the box, which is not sufficient. SAP recognizes that problem - and there is a high commitment to solve that.
After the DSAG Technology Days member sessions in February 2019, DSAG issued a release prioritizing integration. The focus of the event? cloud transitions. DSAG came out with a "cloud first, yes - cloud only, no" position. DSAG says the fast pace of innovation requires both end-to-end automation, and far better integration. In the release, DSAG board member Steffen Pietsch, who also attended our Orlando meeting, says:
On the whole, I see the SAP standard as offering too little support for the end-to-end automation of development and operational processes.
Given that today's business processes pull from multiple (cloud) applications, DSAG is calling on SAP to provide an API-first strategy for SAP's application functions and data. Pietsch says:
This is where integration is the decisive factor, both on a technical and semantic level.
Lenck echoed a point I've heard from many customers across many vendors this spring. Whether you're in the cloud or not, vendors must assume more integration chores. Yes, APIs matter, but they are not magical. Nor are they enough on their own:
Exactly. If I buy several products from SAP, I expect that they are already integrated. It should not be the customer's effort to integrate either from a technical point of view.
And yes, that extends to third party integrations - even with competitors' products, though DSAG is less demanding about the extent of those types of integrations, as long as robust APIs are in place.
One key to this future: SAP Master Data as a Service. This was an initiative we heard about from SAP during the fall TechEd season, but it seemed to fade from public view in the midst of SAP's spring reorganizations. However, it hasn't escaped DSAG's agenda. Lenck:
That was the first initiative that launched last year during the Sapphire. We are now getting the first results.
And is DSAG seeing the progress?
Yes - for customers, we see progress, but we are not at the end. We see many more objects which have to be included.
But hold up - "Master data as a service" is the kind of fancy-sounding stuff that tech marketers salivate over. Why does it matter to SAP customers? Lenck:
With master data as a service, it should be possible to integrate the system out of the box. And there's the clear definition where the master data has its home. It's the single point of contact for every system to contact that service, and get the right data. So the single source of truth is realized, even if the data distributed.
It fits the idea of a common data model. The original data model may reside in original solution, and it now comes together where they need to.
So you don't have to go back to pull data out of each solution.
Exactly, in addition SAP cannot afford to change the data model in each and every system they acquire.
And how will DSAG measure the results of this initiative? SAP began with the customer data object, which makes sense - given the C/4HANA push. DSAG will measure SAP's progress as more objects are addressed, e.g. material and supplier objects. To call it good, a roadmap with all relevant objects must be defined and completed.
S/4HANA adoption - where do we stand?
The issue of S/4HANA adoption is at the forefront of SAP's concerns, and for good reason. ASUG has published some important stats on S/4HANA adoption challenges, as has DSAG. Recently, my colleague Den Howlett posted iTelligence UK sees accelerating SAP S/4HANA demand.
DSAG's member data shows a good news/bad news situation for SAP. The bad news? S/4HANA adoption, year over year since 2017, is not increasing. Lenck:
What we see is the investment in the Business Suite is decreasing. So the budgets for the investments in the Business Suite are decreasing, but these investments don't go in the same way into S/4.
According to Lenck, one adoption obstacle is project complexity. But on the good news side for SAP, most DSAG customers do have S/4HANA on their roadmaps. As DSAG wrote:
5 percent aim to migrate this year, and 39 percent plan to in the next three years (+6 percentage points). A further 30 percent want to do it after this period (+10 percentage points). "All but one-quarter of companies have made the decision to migrate," says DSAG's Marco Lenck, highlighting the results.
So based on this data, what is DSAG's message to SAP? Oczko:
The message to SAP is very clear. Help the customers to move better, to move faster.
Yes, SAP's S/4HANA migration tools and support are improving. But when I asked if these stats, indicating migrations could be a few years out, are something of a cry for help from customers, Lenck said:
Is the right consulting knowledge is on the market, or do I get help from SAP? Do I get help from SAP partners? Do I have enough resources in my own company? How much assistance do I have? How much locations do I have to move over?
But as Oczko points out, there is a deeper issue customer are grappling with. Before customers consider S/4HANA, they must take a position on digital transformation, and how SAP will fit into that:
I think at the moment, the most important issue in the market is the digital transformation, not system migration from the ECC to the next level. Take care of the digital transformation. That's the question.
The wrap - on Qualtrics, Elliott Management and what's next
We talked briefly about Qualtrics, the heavily-debated acquisition that clearly shaped SAP's unify experience and operations Sapphire Now messaging. Judging from their comments, DSAG's board will have to be won over on the need for Qualtrics. For Lenck, solving operational data integration is the SAP's pressing concern:
Right now in most companies, there is no need for bringing up all this XO data together. Maybe this will change in the future. Of course, there are a lot of good reasons to bring that all together, but if you don't do your homework in the "O" data, then you don't go for the need to bring all the XO data together.
I felt the pre-Sapphire Now news that activist investor Elliott Management has taken a one percent stake in SAP - potentially influencing restructuring and margin talk - was the issue hanging over Sapphire Now that SAP didn't adequately address. I didn't get any big concerns there from DSAG, but they re-iterated that when SAP loses track of customer priorities, then market troubles are sure to follow. Oczko:
I think SAP was always wise to rely on their real value, and this is their understanding of the customer... If you try to get money out of the customers without solving their problems then in the short term you will reach your goals, but in the long run you will lose.
My translation: DSAG will be watching.