The SAP Innovation Disaster

Fear and talk instead of action

A finales del año pasado, quedó claro que muchos miembros del consejo de supervisión, directivos y ejecutivos temían un sucesor de Plattner que fuera muy activista. El ex CEO designado, Punit Renjen, seguramente no habría intervenido en la gestión operativa de SAP, de lo intervino el Profesor Hasso Plattner en los últimos veinte años. Sin embargo, habría ejercido una supervisión meticulosa y habría dado consejos claros. Punit Renjen habría sido muy concienzudo y comprometido en su papel de presidente del consejo de supervisión.

Renjen's task was clearly defined: all of Hasso Plattner's friends needed to be removed to make way for competence. If SAP wanted to have a chance in the future, Punit Renjen had to become an activist chairman of the supervisory board and act according to the letter of the law: exercising strict supervision and giving solid advice.

The German magazine Manager Magazin summarized the situation for another supervisory board chairman last year. Jim Hagemann Snabe, former SAP CEO and current Chairman of the Supervisory Board at Siemens, mainly removed friends of Gerhard Cromme, the former Chief Auditor. Snabe is now chairman of the supervisory board, and Manager Magazin quotes him as saying that he was looking for people with skills, not for people with well-known names. Punit Renjen would have had a similar task ahead of him if he wanted to move SAP forward and make it successful beyond Hana and S/4.

There has already been a good deal of discussion about Punit Renjen and his possible activist role at SAP. SAP's Supervisory Board has at short notice nominated Ala-Pietilä for election on May 15, for a two-year term, and if elected, he will also assume the role of future Supervisory Board Chairman. SAP and Punit Renjen have mutually agreed to part ways. This was due to a difference of opinion regarding the role of the future supervisory board chairman, which Punit Renjen had been nominated to assume. Punit Renjen has therefore decided to resign from the Supervisory Board at the end of the SAP Annual General Meeting of Shareholders in May.

AI was also a hot topic at the DSAG Technology Days conference in Hamburg. The DSAG is the German-speaking SAP user group. While DSAG Chief Technology Officer Sebastian Westphal and SAP Chief Technology Officer Jürgen Müller philosophized animatedly about possible solutions and missing roadmaps, the audience waited in vain for concrete answers.

SAP wants AI, but cann't manage it

Thanks to the quick and easy availability of ChatGPT, the topic of artificial intelligence (AI) has gained a good deal of momentum since November 2022. However, from the DSAG's perspective, it is often unclear what AI means in terms of specific applications. Long before the hype around generative AI and large language models (LLMs), AI was already being used to automate SAP processes, for example, or to better identify cyber threats using machine and deep learning models.

Juergen Mueller could have surprised the 3,000 DSAG members and made quite a statement, if he had chosen to come on stage together with Aleph Alpha CEO Jonas Andrulis and Signavio co-founder Gero Decker. The German magazine Handelsblatt held an event at the end of last year, where Jonas Andrulis raved about the potential of his Large Language Model and Signavio's Process Mining. This combination would be a game changer and go far beyond ChatGPT in the B2B and ERP world.

AI Core and Launchpad at the BTP

But all is not lost! SAP's Chief Technology Officer, Juergen Mueller, wants to make a lasting impact. Mueller's announcement of the Generative AI Hub at the recent SAP TechEd in Bangalore, India, is positive in this context. The Generative AI Hub will be added to the existing SAP AI Core and SAP AI Launchpad on the SAP Business Technology Platform (BTP) to manage the connection to external LLMs, initially Open AI. Billing via a separate pricing model (AI units) is also planned.

Unfortunately, Jürgen Müller's technical concept is only half the truth. This should set off alarm bells for experienced SAP customers. What happens in cases with indirect usage, such as when SAP-generated data from Open AI is passed on to third-party systems? And what about compliance and the GDPR (general data protection regulation), etc.?

Reparations through financial incentives

At the beginning of the year, SAP unveiled a set of resources, services, and financial incentives to help customers migrate to the cloud and keep up with the pace of innovation. The Rise Migration and Modernization program is designed to help. The end of maintenance for some key SAP solutions is clearly defined as 2027 and therefore foreseeable. Many questions remain about how future services and solutions will actually be implemented—and companies need working solutions before they can migrate.

To protect the investments of SAP customers and offset the costs of migration and transformation, SAP has announced a limited time offer to reduce migration costs by up to 50 percent. Through the end of 2024, S/4 and ECC customers who migrate to RISE or GROW will receive special credits that can be applied to maintenance costs, cloud services, or cloud subscriptions.

Consistency across all BTP services

According to the DSAG user association, SAP customers still lack a cross-service-strategy and consistency across all BTP services and their interactions, to better integrate BTP as a platform in enterprise-wide, multi-tier architectures with the associated services. If you are in the DACH region, click here to attend a BTP event in your area!

For example, SAP has not yet standardized monitoring and logging individual BTP services and, according to the DSAG, SAP has also not yet developed a consistent cloud identity management strategy. In addition, features that would facilitate the operational use of BTP would be a unified access strategy from SAP to support to the lines of business (LoB) services, a unified overview of BTP services including their availability in SAP price lists, and the rapid integration of solutions such as Signavio as a true, fully integrated BTP service. In summary, SAP desperately needs to develop, implement, and communicate a unified strategy for the interaction of LoB and BTP services. The DSAG sees this as an important approach that must be expanded.