Sapphire Now 2021 in review - DSAG leaders air out their views on RISE with SAP, integration progress, and the transformation imperative
- Sapphire Now 2021 may have been virtual, but the show raised critical issues for customers (and partners). In this diginomica exclusive, we get the frank reactions of two DSAG board members to what they heard - and how their views changed, or not. Grab a beverage, and let's do this.
With our Sapphire Now (and ASUGForward) coverage in the books, a handful of burning questions linger. One of the big ones: what did DSAG think?
DSAG, the German speaking SAP user group, is never lacking in vocal opinions. Given that RISE with SAP was a top Sapphire Now talking point, it's no surprise DSAG already covered that topic, via a spicy message from Jens Hungershausen, Chairman, Board of Directors, DSAG: We are ready for a reality check.
RISE with SAP - did Sapphire Now change DSAG's views?
DSAG's statement begins with an ROI gut check: to transcend marketing lingo, RISE with SAP needs customer proof points (I think SAP leadership would agree with that one, actually). Hungershausen's statement continues:
The planned industry-specific packages for the automotive sector, retail, consumer goods, engineering, component manufacturers, and utilities sound interesting. The same goes for the improvements around human resources (Human Experience Management) and the modular cloud-based ERP system.
I'd argue that "modular ERP" isn't close to that yet, a debate for another time. However, this comes with DSAG's warning:
But these are all also intrusions into existing IT landscapes that are only possible if the relevant solutions can be understood in the context of the wider SAP ecosystem and corresponding projects can be implemented using viable business cases.
That's plenty to talk about, so I joined Hungershausen and Otto Schell, long-time Member, Board of Directors, DSAG for a video call. How does DSAG view RISE with SAP statement in light of Sapphire Now? As Hungershausen told me:
Regarding RISE, from the initial starting point from RISE, they evolved it. SAP announced some additional parts of RISE at Sapphire. I think that's a good step; that's a good evolution of the program. But I personally am not sure if that will be enough, so we offered the statement... We are really looking for customers who have gone through the RISE program, who can tell a little bit about their experience.
Schell began our talk with a caution: we shouldn't drill too far into RISE without understanding the bigger context.
I would like to take this from three different so-called personas. I think it's important to discuss: what is our opinion on what is coming. What may be the customer's opinion, and then also what may be the partner's opinion?
This has implications for the hyperscalers' role, versus SAP itself. Schell says this explains SAP's motivation with RISE: getting back control of the customer relationship from the hyperscaler, or, alternately, retaining control when the move from on-premise is made.
So if you are asked to get into an hyperscaler position, and you compare yourself with the hyperscaler, what is the main difference? It's very simple. We don't have a direct connection to your customer... We need to get them somehow out of the on-premise into the joint environment. So in our view, one of the objectives of RISE is to try to get control on your software, by putting your customers in a controlled environment.
"As an SAP customer, are you willing to change your processes"?
Schell hit on a key point from our interview: he doesn't believe, at least for DSAG members, that they necessarily want to move SAP to the cloud, or quickly transform.
Jon, you remember, when we talked about Enterprise Support all the time, but are we still talking about that now? Yes, we are. That means that at the moment, it seems that the customers as such, don't see the need, even after ten years, to move into different environments.
Schell sees the same dynamic amidst SAP's business network push: customers don't necessarily want to change their business models.
Going into the customer point of view, you also know how long, for example, Ariba is on the street... And when you see also the adoption, you may ask, "Why is this so slow?" Very simple - it's two different business models. When you are in this corner, and you do a procurement process, you have a typical requisition to a purchaser, who makes a negotiation.
Ariba is completely different. Ariba is a supplier network. Negotiations, you don't have to do anymore; you just put something [into Ariba]. It means business adoption, changing your business model. When you look into the environment, also in the US, there are still purchasing organizations. That means that the business models - and we always talk from a technology point - they are not integrated.
Schell thinks it comes down to this:
As a customer, are you willing to change your processes?
The other piece of the RISE puzzle? The SAP partner. Schell:
The third persona is of course the partner who may be a little bit struggling, 'What does this really mean? I'm still on the edge with SAP. Do I need an architect from their side to make a contract?' Partners at the moment, from what we see, are asking questions; they do it a little bit shy.
Schell says until partners understand the RISE with SAP play, they'll keep selling what they always have:
As long as the customer is confused by 'What should I do by myself; what is SAP doing?' I offer my package which I know that the customer will buy. As long as I can do quick money, I do quick money. So I think it's important that we try to do a 360 degree on this entire situation.
Hungershausen hit on the one contract/one handshake confusion I made a prior stink about:
The other thing is the one contract issue. If you have an SI on your project, you won't have one contract; you will have additional contracts. So we also have to see how that will evolve.
He also brought up my other bone of contention with RISE, the role of smaller SIs:
You mentioned the the smaller SIs. We have the same situation. In Germany. We listened to the RISE announcements, and we saw all the huge consulting companies on the slide. We never did see the small and medium-sized SIs. And so we started the discussion with the partners. We heard a lot of concerns, as you've mentioned already.
Progress on SAP integration - status check needed?
At Sapphire Now, I heard SAP leadership make very confident statements regarding their progress on product integration. I felt the statements were a bit over-the-top, lacking the roadmap specifics I was looking for. Example: are S/4HANA and SuccessFactors now fully integrated from an FI/HR perspective? I understand there is progress, but those are the specifics by which integration can be judged. Historically, DSAG has embraced integration as a core talking point with SAP. Where do they stand on that now? Hungershausen responded:
Well, last year at our event, we had the integration topic on the press conference with Christian Klein, and I think he talked about how they were around 75% there. The thing we see is that they might have developed all the APIs and all the integration issues, but all these things have to trickle down into the customer projects. And I don't think that all the customers see the benefit of the integration SAP has delivered already.
Schell believes the caliber of integration still comes down to the customer's relationship with SAP:
If you're talking to high customers, which are pretty much supported, these are the front-runners, which will get every support they need and may also have internal budgets with teams. I don't think that the normal customer sees [the benefits] of these efforts.
Each customer has a different hybrid setup. Even if they are on an SAP landscape, they're not on one; they have different setups. Most of us have legacy engagement. Customers have to do this sometimes by themselves, with their own developers and outsourced developers, then you need to go to your partner to understand what's going on. So we need to differentiate.
My take - is transformation an imperative?
Hungershausen says to better understand SAP's progress with integration, they'll be including this topic in an upcoming survey, so that's an item to return to. Which leads me to the core question in the interview. I asked DSAG:
It seems like SAP has reasonably good answers for customers that have embraced the S/4 journey. But to your point Otto, every customer needs to respond to changing economic circumstances, whether they're on S/4 or not, right? So isn't part of DSAG's challenge to make sure that SAP is serving all the customers, and has good answers for how to help them, even if they're not ready to move to S/4 yet?
Schell responded: if you separate out the RISE messaging, the overall guidance to the cloud makes sense - as long as SAP doesn't lose its "trusted advisor" role, in aggressive pursuit of revenue growth.
If you isolate a little bit the announcement RISE from the company SAP, if you just say 'People, you need to move to cloud applications; you need to ensure that you have a permanent process management; you need to ensure that you are working in business networks' - these are all the right things to do to wake up customers now. I think this is the right message.
What we're also looking for is, of course, is SAP could be the trusted advisor... If you don't support customers by giving them something, and they have to take the same money and implement something, they will look for alternatives.
Tell a story that resonates:
When we talk to SAP about storytelling, we try to ask them to tell the story in a way that is not the standard thinking... You need to look into the eyes and to understand the current setup of the customers before you talk to them, and that is a little bit missing.
Schell was insistent: many DSAG members have not experienced an acceleration of transformation due to the pandemic. He doesn't necessarily see a huge difference between the motivational impact of COVID-19 on business model change - any more so than past financial crises or recessions. He pointed to many projects put on hold, or budgets frozen. That's not how you transform. In the US, I see a different dynamic. Yes, some large scale projects went on ice, but we have a variety of cloud software companies attributing strong earnings to pandemic-driven "digital accelerations," such as supply chain weaknesses being exposed, or a customer urgency to upgrade legacy planning processes (and software).
If Schell is right, that puts SAP in a very tricky spot, working with customers that haven't necessarily embraced any kind of transformation, S/4HANA or otherwise. I have a hard time envisioning that type of customer even looking at a RISE with SAP slide deck, much less considering such a transformation program. And yet, Schell does agree that customers can use an effective wake-up call - if it is framed in a way that supports their needs, and doesn't price them out. That's where Schell's "storytelling" comment becomes important. This strikes me as an important foundation for dialogue. I believe that "trusted advisor" role is exactly what SAP is really going for with RISE, but will it work? Not without the kind of understanding Schell is referring to here.
The last couple of years, DSAG and ASUG have been collaborating on user surveys. These surveys have surfaced regional differences in how SAP projects are approached. The two user groups have another combined survey coming out soon; perhaps that will shed light on these transformation dynamics.
I have another set of concerns about RISE we haven't explored here, which is the idea of RISE as an overreach. In other words, I think RISE potentially works for a smaller subset of SAP customers, but not necessarily as a universal message to all customers. My colleague Phil Wainewright has an interesting twist on this, regarding how RISE might solve one problem. But, Wainewright contends, customers are facing a range of critical issues beyond RISE's scope.
At any rate, SAP can expect to hear it from DSAG until RISE with SAP proof points are well established. As Hungershausen promised:
We'll continue to serve as SAP's sparring partner when it comes to reality checks.
Sounds like fun. I know many vendors shy away from such reality checks. But in my view, those types of unflinching conversations are precisely where the chance for genuine customer success resides.