SAP Issue Selection and Strategy

The stock market dominates SAP's visions for the future

SAP stock is doing well. SAP CEO Christian Klein and CFO Dominik Asam have good news for financial analysts, which always boosts the share price. Both SAP employees are good at using the right buzzwords and know exactly what financial analysts want to hear: cloud and AI.

However, things weren’t always like this. In a moment of great honesty and transparency, Christian Klein also warned of upcoming and costly challenges—and then SAP's share price plummeted to as low as 80 EUR. SAP quickly learned their lessons about making clear statements. Executive Board members now avoid talking about anything other than cloud computing and artificial intelligence.

Environmental, Social, and Governance

AI was the dominant theme at Sapphire in Orlando. On the European mainland, in Barcelona, SAP was more realistic: in addition to AI, other important topics included sustainability, green IT, and ESG (environmental, social, and governance).

Due to the current legal situation in the EU, ESG is a major challenge for companies and thus also for all SAP customers. SAP is approaching the topic with caution, but not with the same commitment as AI—which many users believe is a mistake.

ESG is an important and sustainable need, but obviously not an issue for a strong share price. This divergence between necessity and vision can often be found in the SAP universe. SAP CEO Christian Klein has not yet found an answer to this contradiction, so cloud computing and AI continue to dominate.

How Relevant Is SAP?

A remarkable survey by the German-speaking SAP User Group (DSAG) shows that a growing number of SAP customers rate SAP's relevance as only average. The reason for this may lie in the choice of topics. Cloud and AI are the absolute leading topics for the stock market, while SAP's long-standing customers have completely different problems.

An international study by SAP partners NTT Data Business Solutions and Natuvion shows that companies underestimate the lead time and complexity of digital transformation projects. The study revealed three key points: first, companies are embarking on IT transformations in order to reposition themselves organizationally; second, one in three companies complain about a lack of transformation expertise within their own workforce; and third, customers see early collaboration with external consultants as critical to their transformation success.

SAP would be relevant if the global ERP leader focused more on the business and organizational challenges of its existing customers. A robust organizational and operational structure is still the best response to crises and market challenges.