RISE with SAP - a pivot or a pirouette?

Profile picture for user gonzodaddy By Den Howlett January 28, 2021 Audio mode
Summary:
We analyze what we believe is one of the most important changes SAP is bringing to the market

RISE with SAP - main slide
(via SAP)

RISE with SAP is finally with us. Over the last month, SAP has briefed us (and many others) multiple times on this topic. Throughout our conversations, we have urged SAP not to position this in such a way that it is perceived as HEC 2.0 and Leonardo 2.0. Has SAP succeeded? Kind of. 

We have already talked about the Signavio announcement which we see as a key element in helping customers get a better grasp on their landscapes in preparation for business process optimization. The second plank of the RISE offering is what some are calling HEC 2.0 but which is fundamentally different.

John Appleby, CEO of Avantra and long-time SAP consultant/developer provides the cliff notes on how he views the offering from the vantage point of existing customers. In this analysis, we talk more directly about the reasoning behind RISE and what it means for customers, SIs, and the broader ecosystem. 

First, Appleby is correct when he says that:

Today's problem is significantly more complicated than it was back in 2013. At that time, the problem was just an infrastructure problem.

Today's problem is a people, process, and technology problem. All things being equal, customers would like to move to S/4HANA, but the number of skilled consultants in the market is low, the process to upgrade to S/4HANA is different for every customer, and there is no software automation stack.

SAP has the additional problem that it has lost control of the customer conversation. Hyperscalers drive the move to the cloud, and systems integrators are driving business process optimization and consulting.

To contextualize, in 2013, SAP launched Hana Enterprise Cloud (HEC) but it had two fatal flaws:

  1. It required hideously expensive hardware and services
  2. It wasn't certified or adopted by any of the hyperscalers

I'd also argue that it wasn't really 'cloud' as more broadly understood because SAP didn't believe in multi-tenancy and had no hope of operating a single code line. Instead, HEC was a twist on managed data center operations. Today, SAP hopes to change all that with a subscription offering that at least goes some way towards providing cost relief for SAP customers while also providing SAP with the chance to be at the applications discussion table.

What is RISE?

At its heart, RISE is a bundling of some existing services and new services that broadly comprise Cloud Managed Services, Application Managed Services with an emphasis on process design and remediation via Signavio, and the customer's hyperscaler of choice for infrastructure all tied to a single contract from SAP where the promise is a 20% reduction in cost. There is more in the bundle but in my mind, these represent the most important components.

In the minds of SAP watchers, this appears to be more of the same with yet more rebranding. I am firm in the view that this is both short-sighted and wrong-headed. However, SAP doesn't have all the pieces of the puzzle in place right now. For example, the SIgnavio component doesn't come on stream under SAP's direct control until the acquisition announced during RISE is consummated later this quarter. Nevertheless, SAP reported that 130 companies trialed the offering in the last quarter of 2020, an achievement that went well beyond SAP's expectations. 

Customer first

In the post RISE event Q&A, Christian Klein, CEO SAP was asked to summarise RISE in three words. He chose: empathy, value, speed three words that customers like to hear but which need fleshing out in the detail. But what of users as represented by the groups?

Paul Cooper, chairman of the UK and Ireland SAP User Group said this in an email:

It’s been an extremely challenging 12 months for most organisations, as they have juggled between maintaining ‘business as usual’ operations and accelerating their digital roadmaps.  Our recent member survey revealed that 30% of organisations had delayed their plans to move to SAP S/4HANA due to the COVID-19 pandemic.  We therefore welcome ‘RISE with SAP’ as a package to help customers transform their business by moving to the cloud in a sustainable way that suits them.  It will be interesting to see if ‘RISE with SAP’ also helps customers build a strong business case to move to SAP S/4HANA.  For those customers in the midst of business transformation or those worried about the 2027 maintenance deadline (for ECC6), ‘RISE with SAP’ may be an attractive choice as they evaluate their options.

DSAG issued a long response but the key sections for me are:

A simple "lift and shift" from on-premise systems to a cloud environment is not enough, or is just the first step.

SAP and its partners must highlight the ways in which they want to transfer highly customized systems and processes to S/4HANA cloud environments and provide information on the kind of support required on the customer side. The same goes for the transformation of complex in-house developments and third-party systems that were built in ways that are not "cloud compatible", but that nevertheless exist in many customer systems and are still needed. This is not a technical migration; it's a transformation that really necessitates taking a closer look at a the customer's specific requirements and context and having a holistic view of the system landscape.

At the time of writing, ASUG has yet to provide a detailed response although CEO Geoff Scott says that he is happy to support SAP in this initiative. 

For me, the initial bundling sounds uninteresting until we see where Signavio fits. In the past SAP has struggled to make its S/4HANA simplification message resonate with any real degree of success. SAP says that S/4HANA adoption is going extremely well but the fact remains with five years since S/4HANA was launched, SAP still has to convince a full two-thirds of its core ECC customers that the migration is worth the time and effort. SAP's case is not helped by the fact that customers continue to find there are significant functional gaps that preclude them from making anything other than a risky migration. So where does Signavio materially help?

If SAP can write a contract where it has direct accountability and responsibility for the application landscape then SAP can reference the inefficiencies that Sagnavio can expose as a way of helping customers better understand where a fit to a simplified standard makes the most sense. In SAP parlance, this is a significant component of Business Process Intelligence. Moreover, by not only controlling that process mining and design work but also pointing to the preference for enhancements in S/4HANA rather than ECC, SAP can effectively blueprint customer landscapes, an activity normally reserved for the SI community. 

My expectation, therefore, is that in successful RISE engagements, customers will have a much faster time to value. This comes with a huge caveat. The reality of today's S/4HANA projects is that they are expensive when implemented as brownfield and eyewateringly expensive when implemented as greenfield. Apart from the expectation that SIs will put armies of people on an S/4HANA project, the skills shortage has already led to rate hikes. Then there is the problem of SAP's lack of a proper toolchain with which to move customers to the cloud. Google and Microsoft have those capabilities but even then, if the roadmaps I've seen are an indicator, the technical lift to cloud operations is anything but trivial. 

While I disagree with DSAG's emphasis on customizations I understand the importance of that topic. But again, if SAP can get direct control through RISE then as I said in my review of the analyst Q&A, SAP has a better chance of questioning the value of outdated or highly customized processes, especially in finance which is the real core of SAP's ERP. Internally, SAP will have to drill that message into the solution architects SAP plans to include in every engagement. These will have to be people with deep product AND industry experience. Does SAP have enough of those folk such that customers can be convinced? I doubt it but am prepared ot be pleasantly surprised. 

A question that was raised in the Tweetstream asked whether existing customers that have already made the S/4HANA switch will find RISE of interest? As confirmed by at least one person willing to put their head above the parapet, the answer is likely to be 'no.' They're already locked to existing arrangements which likely keep them contracted well into this if not next year. The situation is different for those firms that have bought S/4HANA but have not yet contracted their cloud and ALM provider. As for the rest, only time will tell whether the offering is considered sufficiently attractive.

Here, SAP's vision of continuous improvement may play well. After all, the pandemic has amply demonstrated the fragility of many supply chains and the need not just for reconfiguration but also rethinking. And SAP is right to say that envisaging future state business models must imply business process change. 

What about the SI community?

SI winners and losers

In the run-up to the announcements, I spoke with a handful of SIs. The initial knee jerk reaction was largely negative. The application management component is something that SIs like to think they own as part of their business relationship with customers. For the reasons outlined above, I believe SAP is right to at least get a measure of control over the SI community and this is one sure-fire way to do so. Since SAP will have the means to show customers the best process practices based on data SAP collects, it has an advantage of scale the SIs do not. Provided of course that customers are willing to allow SAP the privilege of data access.

In my view, SIs should not be afraid of what SAP proposes. If they see RISE as an opportunity to build fit to standard solutions while also building out extensions that add value then they end up winning. Simply standing back and refusing to play ball makes no sense to me. 

For its part, SAP got quotes from all the leading SI's and some of the tier-2 players. Typical among the quotes is this from Brad Little, Executive Vice President, Global Head of Application Services, Capgemini.

RISE with SAP brings simplification to our clients and our business. With this offer, clients can enjoy a simplified cloud commercial model. When paired with Capgemini’s capabilities, this unlocks SAP’s value to support our clients’ business transformations with industry cloud and bundled services from SAP.

Caspar Borggreve, Global Lead for the SAP Business Group, Accenture is vaguer but buzzword-compliant in saying: 

RISE with SAP provides a path for clients to transform into intelligent enterprises. With Accenture’s experience with SAP solutions and cloud deployments, we bring an exceptional combination of industry and functional expertise and innovation at scale to power transformation across every facet of the business. We deliver 360ᵒ value through a smart approach that uses automation, existing investments and modern implementation methods to deliver solutions with greater speed and less disruption.

Matt Schwartz, Global SAP Practice Leader, IBM chimed in with: 

IBM is excited to partner on RISE with SAP, which provides new flexibility to help our mutual customers chart their best course to the Intelligent Enterprise aligned to their organizations’ needs. Leveraging SAP Business Technology Platform and packaging solutions around IBM’s AI-powered industry intelligent workflows and Accelerated Migration Factory offerings give customers more options to accelerate their digital transformation journeys.

Quite how that will work in the context of SAP's Business Process Intelligence is anyone's guess. I suspect the answer is 'not too well' in the short term but we shall see. 

Developers

Regular readers might know I have a certain fondness for the SAP developer community. As an SAP Mentor alum, I've made many friendships over the years and those people represent the largest group among my social network connections. So it was with a sense of dismay that I saw many among this group either downright disparaging or apparently confused with what RISE means. 

I believe the confusion starts with the fact that RISE was firmly aimed at a business audience and not the technical people who have to make RISE real. If anything, the reaction to RISE among some left me wondering about the extent of the gap in understanding between the SAP business buyer or user and the SAP technical community. That has to change.

Here, SAP faces a dilemma. The SAP developer community is not what it once was. It is a topic Jon Reed and I raised during a pre-briefing call with SAP wherein it was acknowledged that Salesforce Trailblazer now represents the gold standard for developer community relations.

SAP is pouring resources into its developer community to good effect but a big part of the mindset shift has to do with encouraging the building of extensions rather than solving implementation problems. It's not as though SAP doesn't try. For example, Juergen Mueller posted a story in the community blog titled: A Robust Platform for RISE with SAP where he described some of the results that customers have achieved as a prelude to announcing a brand name change. As Reed and I said on a pre-briefing call, brand shifting at SAP doesn't float our boat although the confirmation of one platform for integration, extensibility, and data-to-value provides comfort. What didn't come across in Mueller's story was the potential for SAP developers to actively help in refactoring inefficient processes. That was something of a miss in my view. 

If SAP is serious about 'fit to standard' and, longer-term, a true SaaS model, then S/4HANA will eventually be closed off and represented by a component architecture that's configurable and not customizable. That may be some time off but it will have to happen if SAP is to retain its relevance as a world-class enterprise software provider. In turn, SAP will need to expose many more pieces of its landscape by way of APIs. While SAP touts 2,200 APIs, that's piffling in comparison to what's needed going forward. 

Having said that I want to draw attention to some of the comments I saw and which were largely ignored in the general executive discussion around RISE. Tobias Hofman, who has been vocal on the topic of developers gaining access to an unencumbered, free version of the Business Technology Platform said this on Twitter:

The SAP RISE event could also have been an internal event for sales: new service offer to go to clients to talk about transformation and how to implement it. Tbh, making the integration to other SAP solutions work is the minimum expectation clients have.

He's not wrong and while executives talked about products like Ariba, there was precious little said in relation to progress on integration. SAP knows that long term, it has to solve those long-standing problems and if it forgets, then the user groups will be quick to remind them. Perhaps that will be the next big topic for which SAP puts on a RISE equivalent?

My take

By now readers should know that despite all the humming and hawing about rebranding and repackaging of existing services and the apparent intention of encroaching on SI domains, I see the potential for genuine customer value in RISE.

If customers understand that then SAP has an opportunity to not only solve many long-standing problems but also get control of its code as the precursor to formalizing standards. There will be many technical arguments along the way and customers who have become jaded by the lack of innovation for industries will have plenty to say.

But then I remember the eruption of dismay among Adobe customers who were used to paying a single or bundled license fee and who were suddenly faced with a subscription model. It worked out OK for Adobe and its users. 

And to answer the question posed in the title of this story; it's a bit of both.