"That's a mindset change" - talking about the clean core, AI, and the state of SAP with UKISUG Chair Paul Cooper

Jon Reed Profile picture for user jreed November 28, 2023
Summary:
In Birmingham, UKISUG's annual member conference is underway. Here's my preview discussion with UKISUG Chair Paul Cooper, on customer priorities in the face of AI and S/4HANA deadlines. Cooper also weighs in on the challenge of SAP's "clean core" and BTP model, as SAP's innovation debate comes to a head.

Paul cooper, Chair of UKISUG
(Paul Cooper, Outgoing Chair of UKISUG)

What a change in outlook a year can bring. Last year's conversation with UKISUG Chair Paul Cooper on the state of SAP didn't even touch on AI (Sustainability, S/4HANA adoption and low-code - hitting the hot topics with UKISUG).

We certainly can't get away with that this year - though I'll be curious to know how the questions about SAP's AI strategy play out on the ground.

We'll find out soon, as UKISUG Connect, the annual conference for members of UKISUG, the independent UK & Ireland SAP User Group, is now underway in Birmingham (our own Derek du Preez is in Birmingham for the event).

SAP leaders are juggling a complex mix of competing agendas, while contending with macro-economic pressures on all sides. Pressure on supply chain efficiency and operating margins blends into S/4HANA migration timing - and whether a purely technical migration to beat the 2027 deadline is the right move amidst the need to transform, and emerge with a (more) agile architecture and better data platform (a must-have for AI pursuits). Add skills and talent issues - including S/4HANA and data science skills - and SAP customers have plenty to grapple with.

"The AI piece really has exploded in the public consciousness"

But those priorities are what I heard at ASUG Tech Connect New Orleans. During our video catchup, I asked Cooper - how does this stack up with what you are hearing from UKISUG members? Cooper believes that the cultural phenomenon around ChatGPT has elevated the AI discussion at UKISUG as well:

The AI piece really has exploded in the public consciousness this year. I can remember being at events four or five years ago. In the UK, I was at one where Microsoft was pushing really hard on the ethics and legislation catching up.

And yet, very few forward-thinking AI policies were enacted - something that is posing problems across the globe now, including in the UK. Regardless, the popular embrace of ChatGPT and LLM prompts has forced the enterprise - and enterprise vendors - to react. Cooper:

ChatGPT is probably the thing that ignited people's desire to have a play and see what it could do - and be surprised, or worried about what it's doing. And I think the enterprise [vendors] are moving in. We've seen Microsoft, with CoPilot, and generative AI talk from SAP. So I think there's definite interest starting to bubble up to the surface.

And yet, despite this disruption, Cooper believes S/4HANA remains the central concern for UKISUG members:

But if we did a show of hands, it would still be about getting that S/4HANA journey complete - and completing any transformation projects that they were doing with that. And then taking an intake of breath and thinking, 'What comes next?' [Author's note: I did an actual hand poll on this topic at ASUG Connect earlier this month, and got a similar result, albeit with a twist regarding "clean core" interest].

S/4HANA and beyond - "There's a lot getting thrown at IT departments"

After that S/4HANA exhale, it won't get easier:

I think there's a lot getting thrown at IT departments, let alone the business departments: should you be doing the kind of things that will fall into the Green Ledger eventually? Should it be BTP that you're pushing hard? So there's a lot of competing pressure on an IT team, trying to prioritize where their resources go.

Getting over the hurdles of S/4 will allow these broader discussions to happen in earnest. Those peer discussions will surely spark this week in Birmingham:

I'm hoping that S/4 starts to be part of business as usual - and we can start to talk more about some of those other things. For us as a member organization, like you said, that peer to peer support is absolutely key. Our members want to hear what other members have done in these spaces.

Whether it's non-SAP or SAP technology, UKISUG members need to document their wins, and their adoption challenges. Cooper says this is playing out now with SAP BTP (Business Technology Platform), as well as RISE with SAP:

It's good that we can do that in the BTP area this year. One or two BTP customers have been the ones that have turned up at most events in the UK over the last few years. It's broader than that now, so we will see more on BTP there [in Birmingham].

With RISE, I still think people struggle to understand where it sits and what it is. SAP is still clearly pushing it quite hard. But when you have conversations with people, RISE can be so many different things. It's that classic sort of sweet shop analogy of: it can be different things to different organizations. It's quite hard to explain things like RISE and BTP to people that are either new to the ecosystem, or have been in the old on-premise world of SAP with a very stable system, doing what it's done for the last 10-15 years.

Making sense of the SAP clean core - "that's a mindset change"

My biggest surprise at ASUG TechConnect? After the obvious priority of S/4HANA, there was strong interest in AI, significant interest in BTP, but very high interest in SAP's "clean core" concepts. Stepping back, this makes sense: S/4HANA migrations provide a big opportunity to pare down overly-complex SAP landscapes. What does Cooper make of this?

I think a clean core l is an interesting topic. Because from a technology perspective, absolutely, you can SAP pushing that way. And IT departments wanting to simplify what they're looking at there, and do away with some of that.

But as Cooper points out, this "clean core" discipline is not a one-time S/4HANA cleanup - it's an entirely different way of working that impacts business users directly:

I guess the challenge is that your business users - and your end users - have been used to that flexibility of twisting the arm of an IT director and saying, 'It's only a small change, and it will make this department run so much better,' and so on. Therefore, trying to take your business users on the clean core journey, when they've been used to that level of flexibility...

So I think people in my position might say, clean core is great. However, it's a journey that you have to go on with the business to get them to understand that they're going to have to standardize some of their business processes or change their business processes to actually enable that to happen. That's not a single meeting in the calendar type session. That's a mindset change; it's a ways of working change. And all of that is very hard and tough.

My take

Cooper makes crucial points for the success of SAP's clean core strategy. It's obviously sensible to grapple with the amount of custom code in your system - particularly before a major upgrade like S/4HANA - but Cooper's views on the mindset change ahead right true. Obviously, extending systems with BTP - and finding partners with that type of capability and business model - is a big piece of the puzzle also.

As I told Cooper, SAP tech leaders will need to go beyond that, and make the business case for that clean core. Now, the argument goes, we can not only manage our landscape more efficiently (e.g. potential cost savings), but we can absorb new functionality (and new innovations) easier.

This brings us to the SAP innovation roadmap controversies. While I like SAP's overall "responsible AI" messaging, I've been critical about SAP's market talk on premium AI pricing, prior to establishing more of a gen AI co-innovation rhythm with customers, particularly since customer data is a core aspect to how SAP plans to deliver on AI. As SAP's AI pricing gets clearer, SAP has made some strides on transparency about how generative AI can be consumed, but I see more room for improvement.

I have a bigger question about whether SAP's strong talk about requiring RISE (or GROW) to consume future AI and ESG innovations is the winning strategy. Cooper alluded to ongoing customer confusion about RISE. Why put something customers have open questions about in the way of consuming your AI solutions? Isn't that an open invite for AI competitors who will happily sell AI services directly?

To be fair to SAP, I observed some softening of this must-have-RISE talk over the fall season, but this discussion isn't over yet. There is still plenty of talk about why customers must be on private/public SAP clouds to consume AI in particular. There may be an argument for that - I'll get into that in a future piece - but DSAG would like a word with SAP on that one (another story I'll be writing about)

I asked Cooper for his take on this hot button topic, but in this case, he deferred. That's because UKISUG decided to survey its member base before weighing in on SAP's go-forward innovation strategy. That data is on deck to be shared at this week's UKISUG Connect. So we'll see what Derek makes of that news, and the customer sentiment in Birmingham. But as Cooper looks back on prior debates, he observes:

It's that piece we've pushed in the past around trust and transparency. When it's a little bit opaque, and people do kind of infer, well, is it a licensing issue, as opposed to a technology issue, and it's not clear, you start to get people worrying, as we went through the whole indirect access piece as to what would happen, when and how.

For UKISUG, change is afoot as well. There is a new SAP UK Managing Director to work with; Cooper hopes the new SAP leader will be as open to dialogue as others were. Meanwhile, Cooper himself is stepping down as UKISUG Chair after a longer-than-expected stint, which saw UKISUG through pandemic times, and into whatever we have now.

UKISUG's mission continues to expand, via an ongoing push to engage more business users. That will be on display at UKISUG Connect this week, with the supply chain excellence session track added alongside the pre-existing finance excellence stream.

No matter what SAP or tech innovations are to follow, from AI to digital twins or whatever is next, that joint collaboration between tech and business leaders will be key to getting it right. Let's see how this shakes out in Birmingham.

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