The 2019 UK and Ireland SAP User Group Connect had trust as its top of mind issue with a hard-hitting opening keynote from Paul Cooper, chair UK&ISUG ensuring that SAP understood what's at stake for both members and SAP. Speaking to the recent co-CEO arrangement under Christian Klein and Jennifer Morgan, Cooper said:
The relationship with us, SAP’s customers, will need to be top of mind for the two new co-CEOs. Customer trust and confidence is a very fragile thing. Topics like indirect licensing, the end of life of ECC6 and lack of clarity around the roadmap for S/4 HANA have not helped the customer relationship. This is underlined in this year’s member survey that showed only 8 percent of you, our members, see SAP as a trusted advisor. However, 53 percent of us do see SAP as a reliable technology partner. The worrying number, however, is that 10 percent of you said SAP is becoming less important to you. That’s a big number.
Trust is a habit
In a later conversation I suggested that SAP as a 'trusted advisor' would always be ambitious given the propensity for customers to view their consultancy or SI partner in those terms. But then as Cooper pointed out, 16% see their relationship with SAP as 'transactional' while a further 13% see SAP as 'one of many technology providers.'
There are a variety of reasons why this is the case, some of which are not unique to SAP but which impact them nonetheless. For example, the business landscape coupled with an explosion in technology choice means that customers have more to think about. Where once SAP was 'the' dominant part of a firm's technology estate, many product components within the SAP portdolio have become scattered in what are already fragmented markets while their core ERP is largely commoditized. Customers expect those core elements to be delivered at commodity prices but that's hardly the case.
The focus within SAP is still very much centered around getting its customers across the S/4 line with the company touting 60% either live or interested in that solution. That is despite the fact SAP hs been on the X-O crusade since acquiring Qualtrics. Speaking of which, a shocking 44% of this survey group are unaware of Qualtrics while a further 43% need convincing about the value Qualtrics delivers before making a buy decision.
The S/4 saga
Returning to the S/4 story, UK&ISUG reports that 70% of respondents are either live or on the S/4 road. This is pretty much unchanged from 2018 and s broadly n line with other checks we have undertaken among other User Groups. But when you start to dig into actual go-lives, the picture is different again. Informal estimates put the total world-wide go-lives at around 3,500 of the 10,500 sales SAP reports. For its part, UK&ISUG estimates that:
The split is 10% implemented and 60% planning to. There was a little bit of a statistical anomaly in that the split in 2018 was 12% implemented and 58% planning to – we suspect this is because it’s not the exactly the same people answering the survey year on year.
Moreover, the reasons for not implementing S/4 remain stubbornly unchanged with cost and fears around expensive change management being top of mind. Our view is that SAP could do a great deal to help by setting out what the broad use cases look like for greenfield, brownfield and bluefield scenarios. This is important because as we have discovered customers are confused and unclear about the best approach to take. On the one hand, the Big 4 SIs are primarily interested in greenfield and eschew brownfield projects. The tier 2 SIs, on the other hand, have experience of bringing in successful brownfield projects as the precursor for future innovation. Earlier in the year, I heard from the Open University about a successful, limited scope brownfield project. On the journey to the event, I had a long conversation with an internationally recognized fashion brand that has completed a fixed price/scope brownfield implementation that came in as written into the contract. There will be more such cases but they need purposeful collection, categorizing and marketing.
For its part, SAP advised me that there are two programs designed to arm the CIO with a business plan to make an S/4 case to firms' boards. These fall into two types running 45 or 90-days. Uwe Grigoleit, head of S/4HANA global GTM at SAP said:
The large enterprises will do what they're doing and many of those are on the road to S/4. But the general business does need help and these programs, which consist of tools, roadmaps and classroom types engagements are proving successful. We know we have to make those transitions as painless as possible and are investing in automation as a way of driving out cost.
That's all very welcome but as I considered what I'm hearing, the disconnect between what users and user groups want and what SAP is delivering are not one and the same thing. I asked several SAP executives about SAP support for customer journeys beyond these types of engagement. There really isn't anything there to help so that even if a CIO has what she thinks is a good business case, SAP is not going to make SI recommendations, for example.
That leads on to the vexed question of skills. Cooper raised the concern that even if a third to 50% of those 'interested' customers decide to take the S/4 plunge in the next three years there will be a shortage of trained consultants able to pick up the demand.
Members are rightly concerened that demand becomes such that rates skyrocket.
Overarching all of the angst around the S/4 transition is the issue of transparency. Here Cooper laid it out for all to hear:
Above all, as customers, we need clear communication from SAP. Take the thorny topic of indirect licensing or digital access as SAP calls it. Behind closed doors, SAP gave us lots of detail on the Digital Access Adoption Programme. However, the announcement it made and subsequent documents were light on detail.
We, with other user groups around the globe, were really pleased with the work we’ve done on digital access. Through the program, SAP is giving customers a way to measure the financial impact of adopting the digital access licensing model and seems to be providing a level of financial predictability. However, there is still uncertainty. Why? Because communication was not clear and transparent.
SAP decided not to publicly communicate key details of the program – I’m sure there is a raft of accountants and lawyers with reasons why. We say to SAP – ignore them, give customers the detail, be clear and transparent. Explain the financial options in the program in a much clearer way, with realistic and concrete examples of how it's going work and how it is working. Tell us the maximum financial exposure any customer might have.
Progress on important topics for SAP customers is proving to be glacially slow. I could have written the UK&ISUG talking points for the 2019 keynote last year with very few amendments. I got the sense there is an air of frustration that while SAP is making cooing noises around the topic of 'customer first,' the actions its customers think need taking are not in plain sight.
This is not a regional problem but one that is broadly reflected across all regions. As we have said before, we too welcome the co-CEO arrangement. But as before, SAP has its work cut out. That message came across loud and clear.