We had the opportunity to attend the yearly SAP Cloud analyst meeting, held from March 6th till 7th in Salt Lake City. It was co-located with Qualtrics X4 Summit user conference, a good move to get the analysts up to speed on the newest 'sister' (as I call the SAP cloud businesses). Much of the summit was under NDA and we had to go through a reverse factual review – sharing with SAP before we published… then more work happened, and I am belated with this post… but better late … than never.
Here is the 1 slide condensation (if the slide doesn't show up, check here):
Want to read on? Here you go:
The big SAP cloud business re-platform is under way. With this I refer to the effort of moving the 'sisters' to the SAP technology stack, meaning SAP HANA, SAP Cloud Platform, SAP Analytics and Leonardo. That effort is under way and seems to be going well. Fieldglass – the smallest sister – is already on HANA. Work at SuccessFactors and hybris is under way. Not sure where the Ariba efforts stand. As I learnt a week later at Concur's Fusion – the Concur efforts are excused from the effort, going "all in" with Amazon's AWS Cloud. Customers want to know where the effort stands – so SAP is well advised at giving some updates and timelines at some point in the near future.
Concur and Qualtrics - clarity and questions. The Concur decision makes a lot of sense, as likely HANA is punitively high for products like Tripit. And to be fair – HANA was never designed to be a travel expense / travel management database with millions of users. The big question is now what SAP will do with Qualtrics. Let the new experience management acquisition "daughter" run by itself for a while, move it to the SAP stack or maybe also to AWS (where it largely is already)? It was too early to get firm answers of this. But the question is pertinent to make the SAP desire of a new software category with "Experience Management" going – as customers and prospects will want to know what this new software will run on. Personally, I am sceptic HANA can be the database for capturing and continuously querying digital exhaust to predict and create superior experiences. That's more of a Hadoop job. Future will tell.
Reduced functional progress is the price. As with any re-platform – this must be an all hands effort at all the daughters. They almost all picked Oracle and have heavily optimized on that platform. When you do that on Oracle, you write a lot of stored procedures, and those cannot be migrated to another database – also if its HANA. This means that a decade + of code that has been built e.g. at SuccessFactors and Ariba will have to be re-written and tested. If SAP shares the effort publicly it will likely make customers a little nervous and open the install base up for FUD from the competitors. So likely SAP will have to undertake the effort behind closed doors. The consequence is less functional progress for the 'daughter' as developer across the product are busy re-coding and testing functionality. I am not covering Ariba in depth, but SuccessFactors and we can see that slow down on the SuccessFactors side. Pretty much since Spring of 2018 the major piece of innovation coming from SuccessFactors is … a mobile version. Building mobile versions while re-platforming the core offering is a proven strategy for vendors in that phase – mobile is separate technology (especially when you move to HANA) and there are well defined interfaces to the rest of the product. So, it was not a surprise the demo of SuccessFactor's Amy Wilson in Salt Lake City was about – mobile, with SAP Cockpit and the future what Qualtrics can be doing in combination with SuccessFactors for the employee experience. We will see what SAP will share soon.
A new role for SAP technology. SAP has long invested into HANA, SAP Cloud Platform and more. Executives have adamantly insisted that both are strong products, that stand alone and compete with e.g. the Oracle database. That seems to be history now, though SAP has not officially stated it is changing the role of its technology products to focus less on independent, best of breed competition, but making its technology support its application products and ambitions. Certainly, a valid approach, but a lot of investment that will not capitalize. The litmus test question: What is SAP had banked on Oracle only its database – how much SaaS product could have been built? Certainly, more than SAP has been able to build so far. It would have been the reverse takeover of the sisters' decision to standardize on that database. In the past SAP always mentioned the license payments that had to go to Oracle – but SAP does not have a principal issue with it – as we see with its multi-cloud strategy: Here SAP uses the IaaS partners the same way as it uses / used to use its database partners.
But What Ifs are nice scenario plays – it is what it is – and SAP seems to have made that decision. Data points into that direction. It would be good for SAP to make it public.
MyPOV
Let's focus on the good news first: The SAP Intelligent Suite messaging, unveiled at the very first meeting of this group one year ago – is still the true north for S/4HANA, C/4HANA and the sisters. It takes time to build product and keeping the vision and strategy the same is vital for delivering successful enterprise products. I may have missed the plans on the integration side. SAP is creating a distributed system landscape and this time owns the integration between these automation islands. At Sapphire 2018 executives were aware of owning this and committed to it. By now its time to see more specifics on how SAP wants to enable that integration for its customers.
On the concern side, every re-platform is risky business. It must work, must happen likely behind the scenes (as it happens in the cloud world - to not make customers nervous) and means a functional pause for the products undertaking the effort… But the train has left the station, certainly for SuccessFactors, maybe for Ariba, maybe for hybris. The big question now is what the plan for Qualtrics will be. Given SAP's complex development organization (see here) – customers need to plead for transparency by SAP in the form of roadmaps.
But overall kudos for SAP to give insights on its overall state of the cloud products. It was good to see three board members (Enslin, Klein and Mueller) as well as their key lieutenants (e.g. Faerber, Saueressig, Wilson) coming to Salt Lake City to speak with the analysts present there. Now all eyes are on Sapphire.
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