Simple SAP - the Plattner perspective

Den Howlett Profile picture for user gonzodaddy November 12, 2014
Nailing simple SAP has to be more than a marketing buzzphrase. this is what it means for core product strategy.

Hasso Plattner - 2
Hasso Plattner

I had not planned to write about this until I saw Steve Lucas post called A Roadmap for Simple. Simple SAP? Surely we're talking about a paradox inside an enigma. But maybe not. Lucas talks about a range of topics. I am restricting myself to core applications. There is plenty more to be said about delivery.

Caveat: Hasso Plattner, co-founder SAP and chairman of the supervisory board has no legal status as a decision maker inside SAP. Therefore, while he provides counsel to the company on a range of topics and especially engineering, the company's management can choose to ignore what he says or make their own interpretations.

However, the long running argument about what SAP stands for has reached a point where I wanted to get the Plattner perspective in the context of CEO Bill McDermott's 'Run Simple' messaging. What follows therefore is my analysis of a series of discussions that Plattner and I have had over the last year and which culminated in our meeting this week in Berlin. Of necessity, there are parts of our discussion that must remain under non-disclosure.

SAP's inflection point

SAP's success since 1992 has been built on what was then a revolutionary idea: 3-tier client server architecture. It broke the mainframe processing mold and, combined with the business idea of 'business process re-engineering' ushered in a new era of computing that saw SAP flourish at the expense of previous giants such as D&B, Baan and McCormack & Dodge.

When cloud computing, or rather SaaS came on the scene in the early 2000s, SAP mistakenly thought it would not materially impact their business. It dabbled with the entry level market via ByDesign but was convinced that R/3 aka ECC6 aka the Business Suite would not be impacted. In 2008, SAP embarked upon a renewal project under the HANA banner which, from 2010, dominated SAP's engineering efforts. From 2010 until late 2013, all we heard about was HANA. There was no clear product strategy/roadmap as it related to the core ERP suite and much confusion around what, if anything, would go to SaaS/cloud.

In the meantime, SAP positioned HANA first as a database replacement, then as an adjunct platform for new applications and now as the underpinning for everything SAP does. This has been a massive engineering effort that continues on a roadmap that is now coming into view as a set of alternative value propositions for all customers both existing and prospective.

I am sure SAP will agree that none of this was simple and there have been a lot of executive casualties along the way. But let's be clear about one thing. This is a re-engineered and renovated SAP, built for now and into the future. It is a much simpler SAP. It will be for buyers to decide whether this makes sense but my take is that at last, we can see a picture that has coherence and which makes strategic sense. So - what does this look like from a product perspective as it relates to the core business suite elements?

The SAP ERP portfolio

Prior to our meeting, Plattner and I had a long series of back and forth emails which culminated in my requesting a meeting where he could draw out a diagram that explains what SAP is working towards in simple terms that any buyer can grasp. Up to now this has been virtually impossible. I believe that has changed and what you see below is my interpretation of what was discussed. This diagram only refers to a re-interpretation of the Business Suite. It does not include BusinessOne or ByDesign.

SAP apps portfolio


All solutions run on HANA but as you can see in bottom right, SAP is preserving the ability for customers to run on any database they choose. Typically this will be one of Microsoft SQL Server, IBM DB/2 or Oracle. This will allow customers to preserve customizations that are specific to their database of choice.

Keep calm SAP
On bottom left, SAP is providing its global customers with the assurance that their core processes continue to run undisturbed with the functionality they want or have built up over the years and which will continue to be supported through to 2025. This is important because key customers have made very clear to SAP that they may never forklift some processes to the cloud.

The Simplified portfolio is a reworking of the applications to provide both richer functionality and ease of operations through Fiori interfaces. It is anticipated these will be offered primarily as cloud apps. For the technical purists in the peanut gallery, this represents an engineering effort that recognizes the different requirements for cloud infrastructure that underpins cloud applications and which will largely run in SAP data centers.

SaaS are the applications SAP has acquired i.e. mainly SuccessFactors and Ariba and which remain as pure plays.

What about sidecars? What about extensions? These will be developed and managed in the SAP Platform. Note I am not distinguishing between HANA Cloud Platform (HCP) and HANA Enterprise Platform (HEC.) This is important because the difference, while purposeful internally, served to confuse. Going forward, customers should not need to concern themselves with the distinction except as it relates to their preferred delivery method. Note also that I am omitting the platform piece because it is an enabler, not an application.


There is still plenty for SAP to do on the messaging front but the marketing should be much simpler. Again - my interpretation:

  1. SaaS and cloud purists will likely pull this to shreds. In doing so, they completely miss the point. SAP's customer portfolio is far richer, sophisticated and diverse than allows for simply airbrushing into a cloudscape of any vendor's imagination.
  2. SAP's customer portfolio ranges from the relatively simple to the mind numbingly complex. In that sense it is unique among the enterprise software vendors where it is catering for well established brands like Nestlé, Coca Cola, Apple, Burberry and many others that have distinctive and differentiated requirements. When viewed through that lens, attacking the transition to a 21st century landscape is far from straightforward.
  3. To some extent, SAP customers can adopt a 'pick and mix' approach to their applications portfolio but the real emphasis is on getting all applications optimized for 21st century performance and needs. There is for example no point in having real time customer service if the warehouse and logistics operation can't keep up. Here, SAP is putting in a lot of effort to optimize across the entire portfolio.
  4. I have deliberately avoided specific product naming conventions beyond those that are easiest to understand from an SAP customer standpoint. My belief is that SAP has to do another round of naming discussions internally before this portfolio matrix makes sense. Let's hope they don't fall into the usual trap of applying denglish to the problem.
  5. It is important to understand that SAP's engineering effort on infrastructure in the form of HANA, while representing a distraction in the eyes of many, is something that others have not had to do in the same way. Oracle for example chose to re-engineer from a middleware perspective and then build apps on top alongside its e-Business Suite. SAP is taking its existing processes in which it has considerable intellectual property and re-using those where it makes sense and then simplifying for delivery options that different customer groups require. NetSuite is still building out capabilities which it does not have today but spent years working on infrastructure before building applications. The same is true for Workday. When viewed in those terms, the newer vendors have had a much easier story to tell while arguably building out simpler solution sets than those demanded by SAP customers going back 40 years.
  6. Along the way, SAP is preserving its long line of interfaces, including the much maligned SAP GUI. Although there will be debate around this, there are circumstances where SAP GUI is the right choice but for the many occasional users SAP would like to reach, Fiori is absolutely the way to go.
  7. This is not job done. While we did not discuss timelines, you can expect SAP to roll out capabilities in the Simplified area very quickly by SAP standards, adding functionality as it goes. My expectation is that the timelines will be much shorter than most people imagine because HANA provides a much simpler landscape onto which SAP can drop functionality that's already well understood.
  8. Where things remain a tad murky is in the additional functionality that HANA enables and which deals with exceptions, short run processes, disposable applications and the like. SAP has yet to think this through and will, in most cases, rely upon partners to fill in white spaces. My sense is that SAP will do a much better job communicating to partners where it starts and stops, acquiring along the way. So for example, I would be very interested to see how Trufa fares. This is a fresh way of looking at management information that SAP has yet to explore.
  9. The end game is for SAP to present a portfolio choice that is easy for any customer to consume. How that plays out in the various vertical markets that SAP serves has yet to be determined. I would for example like to see the company invest more heavily in new required functionality around sensor usage in oil and gas, in retail and healthcare. This is the so-called Big Data market. That may well have to be Step 2 although it would not surprise to discover that special projects are ongoing in those areas.
  10. Whatever the competition might think, SAP is not going away anytime soon. It may see pain as some customers move some aspects of their operations to others but in the core, where the money hits the cash desk? Not so much.

Endnote: If there are any fundamental errors, then they are mine.

Disclosure: SAP, Oracle, NetSuite and Workday are premier partners at time of writing. SAP and Workday have been a consulting client within the last year.

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