SAP, in common with many other tech firms, held its Field Kick Off Meetings (FKOM) this week in both the US and Spain.
Buyers may not be aware but January is the month when many technology firms hold FKOM. It is the time when sales teams are gathered to hear the messaging the vendor wants to put into the field in support of its sales and marketing efforts and acts as a rallying cry for those that know big pay checks and bonuses await those that meet or exceed their sales quotas. It is also that time of year when tech vendors laud their partners, essential to any large tech vendor.
Don't be disillusioned, FKOM messages are not about buyers, they're about getting sales teams incented to sell as much as possible and this year, the theme is 'Forward Together.'
As one of the largest tech vendors with large markets in the US and Europe, SAP divides its efforts between the two continents but the essential messaging remains the same - sell more stuff. (Update - apparently there was an FKOM in Singapore for the APJ crowd - missed that as there was social radio silence from that part of the world.) This year is of particular interest because as we noted towards the end of 2019, all stakeholders are interested to know what direction the company takes following on the change in leadership. FKOM provides a good sense of that direction and, if what my sources tell me is remotely accurate then you can sum it up in one expression - 'we're going back to our roots.' Is this a good thing or not so good?
Before assessing what this means, it's worth explaining the messaging. I don't have much insight into the European event but the US one yielded some interesting Tweets and back channel conversations. Co-CEO Jennifer Morgan hits the boards in Europe while board member and Global Customer Operations leader Adaire Fox-Martin lead the charge in the US.
Bringing on Riverdance as the warm up act is certainly a blast from the past. Earning fame and fortune in the 1990s, much as SAP did, Riverdance is still a fixture on the theatrical scene, but as Wikipedia points out:
Riverdance continues to be performed all over the world, in a diminished format and in smaller venues. Current productions are geared towards smaller theatres, whereas past productions have been performed in large theatres and arenas.
The SAP FKOM crowd enjoyed the show but for me, it doesn't spell a forward thinking message with which to kick off such an important event.
What she didn't say is that SAP is a cloud ERP company. That's telling, almost as much as the fact that both Google and AWS pulled out of sponsoring SAP's FKOM this year, preferring instead to hold their own events across town.
Why? You don't need to be a rocket scientist to infer that the mega deal SAP struck with Microsoft last year put both Google and AWS's noses out of joint. According to one person who was on the ground in Las Vegas, the night before the event started, the SAP venue was a 'ghost town' with many preferring to see what else was on offer. Evan so, as one wag put it: "Microsoft is as smug as shit." I bet they are. Not great optics though.
On the other hand, the SAP cloud message is not completely obscured. During the event, Lemongrass, which specializes in SAP deployments on AWS raised $10 million i a Series C round, with an investor declaring that:
Lemongrass is an exceptional company. The magnitude of their vision and the quality of their solutions positions them well to dominate the SAP on AWS growth market.
But then should we be surprised at all? It is now clear that SAP has settled on a hybrid cloud message but that still leaves plenty of scope since, as analyst Josh Greenbaum points out, the largest supplier of ERP as measured in surveys is regularly stated as 'other.' That gives leading vendors like SAP plenty of runway to make inroads into truly legacy environments.
Back to the cloud and, more generally, the messaging coming from customers.
Regular readers will recall that late last year, co-CEO Christian Klein took a beating at a DSAG event with German customers making it abundantly clear that SAP must continue to support on-premises customers. DSAG, along with other user groups are urging SAP to continue innovation in the tried and trusted systems that have a legacy going back 45+ years. Who can blame them? That was echoed in the UK at an event I attended where I noted that:
Jazz Pharmaceuticals, a stand out showcase for an S4/HANA greenfield implementation (more later) cannot find a compelling X-O scenario within their business model. Instead, and in common with other customers, Jazz insist that SAP focus on keeping their businesses going at an operational level, at scale, and across international borders - skills for which SAP remains unmatched and uniquely equipped.
In short, you can conclude that SAP has listened and that FKOM is the early expression of that level of listening. One of the key takeaways for attendees was:
- Focus on the business issue
- Listen. Ask questions
- Tell stories. Don't use SAP speak.
At the European event, Jennifer Morgan was at pains to emphasis 'listening to customers.' In reality, the firm has no choice. The days of telling customers what they'll do and when they'll do it are well and truly over. If you want evidence of that then check this interesting Tweet:
I'll leave that hanging there without comment and leave others to do the math when compared to the reported S/4 HANA sales momentum.
What happened to the X-O messaging? It's gone, or, at least, is in the process of being reinvented. I could find no evidence of X-O expressed in the way it has been since the Qualtrics acquisition. That's not to say that the Qualtrics charge has lost momentum. It's just lost relevance.
Die hard SAP'pers who look back to more halcyonesque days will be happy.
Channel partners will also be happy as will those tier 2 and 3 vendors who have complementary S/4 HANA migration solutions on offer. FKOM was stuffed full of their potential customers.
User groups anxious to get clarity from SAP on S/4 HANA will be moderately satisfied but will need more support on topics such as cloud partner choice and cementing the S/4 business case. But (isn't there always?) my concern is that SAP reverts to solving yesterday's problems. SAP may position S/4 HANA as the platform for the future but too many customers view S/4 as a reinvention of R/3-ECC.
SAP bulls will argue that the focus on ERP is right and proper given the scale of the market, the urgent need to modernize and the challenges that faces SAP customers. OK - I get that. But what that messaging doesn't do is tell forward thinking companies how to solve today and tomorrow's problems. It is conceivable that SAP will repurpose some of its 'experience' messaging as part of the longer term strategy of extracting value from the numerous non-ERP SKUs it has in its portfolio. But for 2020, the messaging is all about helping SAP steady the ship and re-establish itself as relevant via the tried and true ERP route. Remember that quote from Adaire Fox-Martin: 'We're an ERP company and proud of it.' Is that the buyer message you want to hear?
One question remains unanswered. Has the much vaunted 2025 cut off date for ECC been addressed? Maybe. But we're not hearing that on this outing.