ERP dilemma

SAP's latest quarterly figures show that cloud computing is in demand and growing. There is no doubt about the success of cloud computing. SAP is building data centers and investing in cloud applications such as Concur, Ariba, SuccessFactors and Fieldglas. Whether this will ever earn money has not yet been proven - because the operating margin has already fallen again!

All successful SAP cloud applications relate to the ERP environment. At the heart of SAP's core ERP competence, existing customers rely on on-premise solutions in their own data centers or use the cloud offerings from AWS, Azure or Google. In this context, look out for the upcoming E-3 cover story in December with the working title: Hybrid Clouds and the Google Cloud Platform.

The majority of core processes remain in on-premise ERP/ECC 6.0, with only ten percent of those surveyed by the DSAG user association moving them to the cloud. DSAG Chairman Marco Lenck therefore warns that fewer cloud-only developments are needed.

He expects functional enhancements from SAP as part of maintenance and not a new cloud subscription. Functions within core applications must remain integrated, as this is the only way to efficiently map business processes.

At SAP itself, Chief Technology Officer Bernd Leukert has not yet succeeded in implementing this dual approach - on-premise and cloud - or in consolidating Hana Enterprise Cloud (HEC), Hana Cloud Platform (HCP) and SAP Cloud Platform (SCP) - quite the opposite:

While Leukert only presents the SAP Cloud Platform offering as the company's core competency, existing SAP customers have to pay "indirect usage" when using Hana Cloud Platform in addition to all other license payments and the maintenance fee!

Anyone using an HCP is liable to pay three times: licenses for the ERP core, annual maintenance fee and "indirect use" of up to 50 cents per document generated in the ERP core by an application from the Hana Cloud Platform.

"Cloud Only" and "Cloud First" are the preferred statements of SAP CEO Bill McDermott, but the dilemma is the responsibility of Chief Technology Officer Bernd Leukert:

In general, there are no answers from Leukert on a consolidated cloud scenario, and in the case of his DSAG annual congress keynote, there was also no answer on hybrid scenarios after 2025. The "ERP dilemma" so prominently featured on the cover by the DSAG user association is ultimately a blind flight.

Naturally, every existing SAP customer could give up their autonomy: One could transfer all on-premise licenses to SAP and move completely to SAP's cloud (SAP Cloud Platform, not Hana Cloud Platform, see above).

For everyone else, it's a dilemma because Bernd Leukert has been refusing for years to explain at the DSAG annual congress what will happen after 2025: Will there then be a consolidated SAP/Hana Cloud Platform? Will the database contracts with IBM, Oracle and Microsoft be extended for the remaining existing on-premise customers? Will it still be possible to purchase on-premise licenses after 2025? Is there a roadmap for the software warranty and maintenance of on-premise installations after 2025?

"Cloud only" is a dilemma because numerous questions remain unanswered both within SAP's cloud and on the ground: HEC, HCP, SCP are expensive and similarly devoid of services and consulting as clouds from AWS, Microsoft and Google - but the latter are dimensions cheaper!

At the DSAG Annual Congress, some SAP partners reported on the first moves away: Existing customers are leaving the SAP cloud and moving to AWS, Azure or Google with the help of competent partners (see again the December E-3 cover story with Q-Partners and the move to the Google cloud platform).

Flying blind, disaster and dilemma are the attributes for the roadmaps presented by Chief Technology Officer Bernd Leukert and for SAP CEO Bill McDermott's "Cloud Only" strategy. It is a paradigm shift at SAP: in-memory computing database "only", HCM on-demand "only", C/4 "only" - and no Salesforce etc., please.

SAP's monopoly-like approach will hopefully prompt the Federal Cartel Office in Bonn to act, but that's another SAP story, which we will be happy to tell you in person on February 14, 2019 in Bonn.