Otherwise SAP is out of the window

At the end of January, the traditional SAP annual press conference took place and there it became clear: SAP not only has problems, but the group is acting erratically. SAP CEO Christian Klein announced the layoff of 3,000 employees from the CRM area, among others, while at the same time employing about 1,000 temporary workers from an Indian IT service provider for development and maintenance, including support for the discontinued Business ByDesign.

At the end of last year, I was with Peter Hartmann at a CIO conference in Switzerland. I spoke with numerous IT bosses and heard a lot of praise for the current SAP CRM, which is now supposed to be much more powerful and better than Salesforce. It was with great surprise that I then heard the words of Christian Klein at the SAP financial press conference: Personnel is to be cut in the CRM area and the CRM add-on product Qualtrics is to be sold. It sounds like a capitulation to Salesforce at the very moment when existing customers are showing interest again.

SAP is not acting stringently under Christian Klein because the young Executive Board team with Jürgen Müller and Thomas Saueressig lacks long-term experience and perspective. ERP is different! Many years ago, the then CFO of the world's largest chemical company, BASF, stated that the introduction of SAP R/3 took over a decade. ERP decisions once made reach very far into the future. Mistakes can only be corrected over many years.

Many of Christian Klein's orders seem erratic. But the SAP CEO is in good company, as a report by Spiegel online from the end of January concerning the German automotive industry shows: "According to this report, Mercedes, Audi and Volkswagen urgently need to push ahead with their technical innovations in order not to lose their global market shares in the electric age. [...] For example, a new E/E architecture is still largely lacking. The term stands for something like stable nerve tracts that do not buckle under the complexity of electronically controlled functions in the car. [...] But by then it may be too late. Just how dramatic the situation is for German carmakers was reiterated a few weeks ago by Hildegard Wortmann, Audi's Board Member for Sales: According to Wortmann, there is a 50 percent chance that Audi will still exist in ten years. The challenges for the auto industry are so great that even faster changes are necessary: 'Otherwise we'll be out of the window.'"

I drive an Audi A3 that is well over ten years old. I bought the car with the most expensive sound, radio and navigation system at the time, including an Apple iPod interface. A few years later, I discovered that this system could not be updated. While at that time every Miele washing machine, every Samsung TV and every smartphone could already record new firmware via USB or other interfaces, Audi told me that my car radio would continue to show the iPod music tracks only as an internal numerical code on the display.

My life partner's Mercedes SLK could speak plain language. I now maintain that Audi has always had an erratic relationship with electronics and that the origin of the current problems goes back more than ten years. Likewise, it will take ten years for improvements to appear - but then it's only a 50 percent chance whether Audi still exists.

The current situation is similar with SAP. The Healthcare industry solution is not being expanded and rolled out worldwide in a steadily growing healthcare market, but is being discontinued. At the Hasso Plattner Institute in Potsdam, there is a university cluster called Digital Health because the digitization of healthcare is a topic of the future. The innovation product Business ByDesign is not being reborn as open source in keeping with the spirit of the times, but discontinued and outsourced. SAP CRM and Qualtrics will not be harmonized and synchronized, but reduced and sold. 

The only thing left to do is to adapt the Spiegel quote: According to this, SAP urgently needs to drive forward technical innovations in order not to lose global market share in the open source and transformation age.For example, SAP still largely lacks a new ERP architecture. The term ERP stands for something like stable neural pathways that do not buckle under the complexity of Industry 4.0, IoT, supply chain and customer experience. But it may be too late.