How Relevant Is SAP?

An exit strategy for the SAP Business Technology Platform

If SAP has its way, the BTP (Business Technology Platform) will be the leading system in the SAP universe in the future. All SAP cloud solutions will be orchestrated on this platform; access to Hana will be regulated, modifications including steampunk will be created, and much more. S/4 is the frozen core and ultimately just another BTP service like Datasphere, Singnavio, Concure, LeanIX and all the other works in progress from the extensive SAP offering.

SAP BTP is a counter-concept to the composable enterprise, which consists of SAP Simple Finance (S/4), Saleseforce (CRM) and Workday (HCM) at the SAP customer Mercedes in Stuttgart, Germany. Of course, SAP would prefer to see only its own solutions, such as SuccessFactors or C/4 Hana, being used in its own composable enterprise. BTP is meant to ensure this monoculture. But ERP users have other plans: French IT analyst PAC, which has an office in Munich and excellent connections to SAP, surveyed the community and found that only 24 percent of SAP customers in Europe use the Business Technology Platform. 76 did not even know about the BTP!

BTP versus hyperscalers

SAP came too late to the market with the platform idea, and then wasted a potential success by hesitating. SAP is still convinced of its own success, but the hyperscales and Professor August-Wilhelm Scheer’s argument are more convincing. Original quote: "SAP BTP will become the central platform for digital transformation in companies and the foundation for innovation," said an SAP Chief Revenue Officer in an interview with PAC.

Scheer CTO Wolfram Jost emphasized in a keynote speech at the Steampunk and BTP Summit 2024 in Heidelberg that BTP is not a platform, but a collection of IT services. Internal SAP documents seem to confirm Jost's view that SAP salespeople do not earn bonus points when an SAP customer uses BTP as a whole; they earn a commission for each individual service and software module sold.

As a result, SAP is currently gaining many process mining customers with Signavio, while its competitor Celonis from Munich is falling short. But the platform idea that Signavio should be an orchestrated service on BTP in combination with Cloud ALM, LeanIX, and Joule is completely lost. As an IT tool for a composable enterprise, BTP is not yet convincing.

Composability and the composable enterprise

From SAP's point of view, BTP is supposed to be a game changer for business software. However, at the SAP community’s BTP Summit in Heidelberg at the end of February this year, it quickly became clear that BTP is nothing more than an interesting, heterogeneous collection of IT services. BTP completely lacks the essential feature of "orchestrating" an IT platform.

In December 2021, the E3 editorial team wrote the cover story "Composability" in cooperation with an executive from Oracle. SAP did not respond and ignored the topic until late 2023, when Professor Scheer came along with his book “The Composable Enterprise— Agile, Flexible, Innovative—A Game Changer for Organization, Digitalization, and Enterprise Software”. Many SAP customers are now wondering if SAP has allowed another trend to pass them by. How relevant is SAP?

Relevance in the composable ERP market

With S/4 Hana, SAP has a logical successor to Business Suite 7 (ECC 6.0), but no concrete answer to the challenges of digitalization with generative AI and heterogeneous cloud systems. SAP's solution is S/4 Public Cloud and BTP, which is more of an ambivalent state than a strategic platform.

With S/4 Simple Finance, SAP will remain relevant in accounting and finance until 2040 and beyond with an S/4 successor, but Salesforce is already setting the tone in the CRM market and Workday in the HCM market. SAP has lost the relevance of a holistic ERP approach like R/3 and later Business Suite 7. BTP as a collection of IT services without orchestration will not bring back the lost relevance.

S/4 and BTP architecture

Any move toward the composability megatrend can only be a sham for SAP because the S/4 and BTP architecture was never designed to work together. SAP will also have to embrace the idea of the composable enterprise, although it will remain an unattainable mirage in the SAP universe for SAP customers. Extremely loyal SAP users will continue to evolve and think outside the box. This is not the end of SAP, of course, but the global ERP leader will continue to become less and less relevant.

Whether SAP is and will remain relevant in the market, which is what Professor August-Wilhelm Scheer addresses in his book "Composable Enterprise”, would have been considered blasphemous and an insult to even ask, as recently as a few years ago. The question now is: after the Internet (at the turn of the millennium), after AI (see the phenomenal failure of SAP's Leonardo program a few years ago), will SAP now miss the composable enterprise megatrend?