SAP Signals Return Back to the Core Business of ERP

Customers looking for a sign of things to come from the new leadership at SAP are being kept waiting.

In the three months since Jennifer Morgan and Christian Klein took over the Co-CEO roles at SAP there haven’t been any noticeable changes; at least not from the customers' perspective. Morgan and Klein have kept a relatively low profile since assuming the top positions at SAP, unlike their predecessor McDermott, who often flirted with the media. The new CEO's appear to have focussed their efforts internally since taking over the reigns last October.

However, at recent FKOM meetings there seems to be a subtle but significant shift in the messaging coming from SAP, and it could be a sign of things to come. FKOM is the annual SAP Field Kickoff Meeting for internal salespeople and partners.

The message coming from FKOM was: We are an ERP company, and we're not walking away from our traditional customer base. This message was welcomed by many partners as, over the years and through multiple acquisitions, SAP seemed to have diluted its core value proposition with messaging that alienated some customers. Customers we've spoken to talk about a divergence between what they felt they needed from SAP, and the vision being touted by McDermott. Shiny objects and catchy tech buzzwords such as X Data and O Data seemed to dominate the future business strategy for SAP, rather than providing solid, reliable, functional ERP solutions that are easier to implement, support and maintain.

SAP has become far more than the company with the really big and complex ERP system. There's no going back to the days when SAP was essentially a one-product company, however the focus will likely shift to concentrating in the areas where SAP has always been strong – using technology to improve business processes.

S/4HANA has revitalized the core of SAP. Although still not widely adopted by the customers who implemented ECC of R/3, it's gaining momentum and with the 2025 end-of-support deadline approaching, this pace will accelerate.

However, faced with a choice between a significant investment of time and money to convert to the new platform or being stuck on an unsupported system, some customers (including some of ours) are evaluating options and considering non-SAP solutions.

SAP needs to regain focus on the things that most customers really care about – core ERP. The primary mission and strategy should be to invest in further improvements to the S/4HANA so that there is a solid business case for the migration, and significant benefits to be realized.

As competitors such as Workday and Salesforce continue to grow and encroach on what has historically been SAP's turf, Morgan and Klein need to re-energize the customer base so that they feel aligned to the SAP vision, and want to continue to run their businesses using SAP technology.

The new CEO's seem to grasp this better than their predecessor, but we will probably have to wait until May when the annual SAPPHIRE conference kicks off to find out more about their vision and future plans for the company.