UKISUG Connect 2021 - SAP RISE needs use cases, clarity and a refined purpose

 

RISE was announced by SAP earlier this year and is being touted as the ERP vendor's biggest and best opportunity to get customers off of their on-premise installs and upgrade them to S/4HANA in the cloud. But, what exactly is SAP RISE? This is the question I heard on the lips of a few people at UKISUG Connect - the UK & Ireland SAP User Group conference this week in Birmingham - and it's a problem that SAP needs to solve. 

As my colleague Jon Reed pointed out, we aren't here to sensationalize or to suggest that there isn't plenty of opportunity in SAP's RISE offering, but after speaking with a number of SAP execs, customers and UKISUG itself, it's pretty clear to me that SAP needs to better understand what the appeal *could* be for buyers. 

RISE with SAP was launched to much hype back in January and was pitched as ‘business transformation as a service'. This turn of phrase may be a problem for SAP in itself, but more on that later. 

Essentially RISE offers customers an opportunity to upgrade to S/4HANA in the cloud and have SAP manage the entire stack, via a hyperscaler of choice. The simplified contract also includes SAP Business Technology Platform cloud credits, as well as an emphasis on process design and remediation, via Signavio. 

There was initial controversy over SAP's initial use of the term ‘one handshake' when launching RISE, but it was soon made clear that SIs would still play a role and help with the migration and some management aspects of most S/4HANA upgrades.

Confused? Well, let's dig in. This, on the surface, doesn't appear to be a simple off the shelf cloud purchase offering. SAP wants to manage your S/4HANA stack, via a hyperscaler like Azure or GCP, whilst also transforming your business processes, but also making use of an SI as part of this process. It does feel a bit complicated. 

And there are questions about how this fits in a market where customers are pursuing a multi-cloud strategy that they tend to manage internally, via an integration strategy, and are building up capability/skills to do so. Handing over a chunk of your systems, when you're possibly already managing AWS/GCP/Azure in house, feels…jarring. 

But this is important to SAP and perhaps ERP deserves some special treatment. In fact, SAP was quite clear at UKISUG Connect that the aim here is to get customers into the cloud as quickly as possible, as that recurring revenue is X times more valuable to shareholders. But just because it's important to SAP, doesn't mean that it's important to customers, and that's what we sought to dissect. 

And to be totally fair to SAP, executives at the event did clarify that if you have a deal with a hyperscaler, then handing over some of that capacity to SAP to manage your S/4HANA system won't leave you penalized. In other words, you won't get a better/worse deal with GCP or Azure if you choose to take away your S/4HANA workloads from your existing hyperscaler cloud deal. 

Speaking with Paul Cooper, Chairman of the UK & Ireland SAP User Group, he said that his view is that RISE is not going to be relevant to some of SAP's existing customers - those that have already upgraded to S/4HANA. But for those looking to move, this programme could work well as an ‘accelerator. 

Cooper's main concern is that SAP sustains its momentum on RISE and that this offering doesn't become the next ‘Leonardo'. He said: 

It's only in the last six or seven weeks that SAP has put names against customers that have done anything. We've got one speaking here, but they're on their journey, as opposed to finishing their journey. 

The thing that we've heard people talk about, are those businesses that need to do a transformation. The ones that are not quite sure where to go and how to get there, but are getting that transformation aspect from SAP. 

But in terms of fully understanding what people are doing, why they're doing it, how they're doing it, there's just not enough out in the marketplace at this stage to talk about. 

But what we don't want is for this to be the Leonardo of 2021. They have to sustain the marketing effort behind it, as well as the technical effort of the extra business-centric bits that they're doing. They can't lose interest next year, they've got that responsibility.

The customer view

Whilst Cooper isn't convinced that those that have already upgraded to S/4HANA would be interested in RISE, one S4 customer did say to me that they may explore it further to get them to the cloud (not all S/4HANA customers are cloud-based). 

But one point that came up with more than one customer, is that regardless of where you are in your S/4HANA journey, RISE may be tempting in order to streamline the relationship with SAP (in terms of licensing and maintenance). 

For instance, Julian Bond, Head of ICT at Hillarys (a UK blinds retailer and vocal SAP customer), said:

The opportunity to reset your licensing framework and your maintenance framework with SAP, I think that's appealing. We've got licenses bought over the last 21 years, SAP has got more licensing types than you can shake a stick at. Neither side can actually find all the paperwork. A chance to reset that in the modern world, I think that's probably the bigger opportunity. 

However, Bond also had a healthy dose of scepticism towards the announcement, and said: 

If you've been around the SAP space for a while, it just feels like the next wave of hype. You think: I remember that with Leonardo. Where's that now? Just because it's the latest thing that they're peddling, doesn't make me think ‘oh that makes sense'. The fact that SAP thinks it's good for them, doesn't necessarily mean it's good for me. 

In fact, Bond was particularly scathing about the ‘business transformation as a service pitch', and said: 

When you first unpack it, it seems that it's taking all the stuff we manage and giving it to SAP to manage. My first reaction was: over my dead body. How on earth could that be good for me? The level of distrust between SAP and its customer base is significant. But they are trying to do something about that. 

And when I look at business transformation as a service, on the surface that sounds great. But then I look at SAP and I think: I don't think you're the expert? 

Bond's comments were the harshest of the bunch, from the customer viewpoint. Most I spoke to were inquisitive and simply wanted to know more. But the appeal wasn't necessarily about the bundling of services or the ‘business transformation as a service' pitch being pushed by SAP - it was the opportunity to offload operations management skills to the vendor and the chance to reset the licensing relationship. From a messaging perspective, SAP should take note of those points. 

The SAP view

I also got the chance to grill SAP executives on RISE - and they were refreshingly honest about the fact that it isn't quite perfect in terms of articulating to the market its necessity. They were also productive in terms of taking on board what needs work. 

Michiel Verhoeven, MD of SAP UK&I, said that RISE already has 1,000 customers signed up (in under a year) and the UK is one of the market's highest value regions for the offering. 

Verhoeven was keen to highlight two points about RISE that he sees as significant. The first was that it brings SAP closer to the customer. He said: 

Your software provider is stepping up in terms of responsibility, you can hold us accountable, including in a contract. Blame for downtime will sit with SAP. That's a great opportunity to reskill and upskill - instead of your people doing maintenance type requirements, let them go towards design, architecture, business functional requirements and create a competency center around that. Non strategic skills, let them be with SAP. 

This point is worth amplifying, from my perspective. We often hear about a dearth of skills when it comes to SAP operations and buyers are struggling with increased complexity. Handing that over to SAP has appeal. 

Secondly, Verhoeven said that the SI community needs to get with the RISE programme. He added: 

People need to see it work and that it's not just a marketing gimmick, then we will get more momentum. But the other thing that needs to happen is that our SIs need to not just talk about it, but do it, and that's not kicked in enough yet. We need more momentum in the channel…but it's still early. 

I also got the chance to speak with Simon Carpenter, RISE with SAP, GTM and Strategy of SAP EMEA North, and he agreed that the notion that SAP will ‘show up every day' will bring some‘peace of mind' to customers. He said: 

We're changing the relationship between SAP and the customer, we're there for the long haul. We're getting closer than we have been before.

And that the skill piece is important. Carpenter said: 

They're quite happy that they lose these deep database admins and techies. They're quite happy to lose those folks off the team, because they want more digitally savvy folks who can interact with the business. And work with the business to exploit these new capabilities. 

However, he recognized that there is still a great deal of confusion around where responsibilities lie. When you've got SAP and a buyer managing two different hyperscaler environments, SAP managing the S/4HANA environment, and an SI managing some process/design/migration elements - the relationship and responsibilities need clarifying. Carpenter said: 

We need to do a better job of making it easier to understand where each party's responsibilities begin and end and how they flow into each other. We have a massive and very detailed roles and responsibilities document that we go through with the customer, but it's probably too detailed. It's too much to absorb, so we are working to make that easier to comprehend so that everybody is very clear. 

But our responsibility is to provide that entire stack that sits underneath the applications and the applications themselves. And then the customer themselves, or with an SI, or a combination of the two, will do the migration off the old systems into the new environment; help them with business process design; organization redesign; and then the ongoing application management services. 

In some instances there may be some technical managed services that the customer would tend to want to do themselves for some reason, so then we may look at the Rise contract and carve those out.  

My take

I think the challenge for SAP is that many of its RISE deals will be very tailored and customized to the specific needs of each buyer. And that creates an element of confusion, with a number of parties involved. It's equally difficult when many buyers have already begun thinking about their S/4HANA migration - and now they have to understand whether RISE is better for them or not. 

If I were SAP I would stick to the key selling points:

1. A closer relationship with SAP

2. Resetting licensing, maintenance and a streamlined contract

3. Offloading skills that don't necessarily add value and are hard to find 

4. Bundling of services 

5. Reduced costs

6. EASE!!

I personally think selling RISE as ‘business transformation as a service' is a step too far. You can't sell that as a vendor. The customers that have gone through business transformation know that - it's an in-house capability that typically takes years to refine. But what SAP can do is provide a streamlined ERP in the cloud, with advanced analytics and manage that for customers in a simplified way. And then offer advice on how S/4HANA can add to existing use cases elsewhere in the business. I personally think there's plenty of opportunity with RISE, it just needs a little refinement for buyers to have that lightbulb moment.