Call to disobedience

It is a simple conclusion: Even SAP will not find nearly as many new customers in the coming years to achieve the projected growth. SAP CFO Luka Mucic has committed to new, high revenue targets, but has not revealed the details of where the money will come from - only this much SAP CEO Christian Klein and Luka Mucic want to reveal: The cloud is supposed to fix it!

And on the occasion of the virtual in-house exhibition Sapphire, the chairman of the supervisory board, Professor Hasso Plattner, assisted the two board members: "The whole idea of cloud systems means a gigantic improvement."Plattner has been the admonisher, innovator and constructive critic - but he has never been the bearer and promulgator of an SAP marketing message.

This year, the SAP in-house exhibition was not only a perfectly staged online event, but, under the leadership of the new Executive Board member Julia White, also a great promotional event - completely without contradictions and perfectly choreographed. This harmony and radiance should make SAP's existing customers skeptical.

The fact is that SAP has erased all real values and achievements of the past years and is now trying a marketing-driven new start: Rise or Fall with SAP! For example, former Chief Technology Officer Vishal Sikka once announced "real Realtime" at Sapphire, promoting the Realtime Enterprise in the spirit of Hasso Plattner and his Hana database.

The vision of the real-time enterprise thus had a strong foundation, the Hana database platform. Christian Klein and his board members were committed to the Intelligent Enterprise - foundation for this vision? Missing!

Now that SAP has de facto cancelled the Leonardo program and the partnership with Nvidia is currently fizzling out, there is no basis for the Intelligent Enterprise at SAP. In the areas of artificial intelligence, machine learning, blockchain and IIoT, SAP is dependent on cooperations and acquisitions - there is no core competence of its own.

What is Christian Klein doing fundamentally wrong? He has his foot in the door everywhere, but no fields of competence of his own. He has carelessly abandoned the outstanding unique selling point of "real-time enterprise. Even when it comes to recognized topics of the future such as quantum computing, SAP is only a silent follower. SAP is a founding member of the Quantum Technology and Application Consortium. This is intended to lay the foundation for the successful industrialization of quantum computing in Germany and Europe.

At the time of its founding, the consortium included BASF, BMW Group, Boehringer Ingelheim, Bosch, Infineon, Merck, Munich Re, SAP, Siemens and Volkswagen. While most of the founding members went public with euphoric press releases, SAP left unanswered an inquiry from E-3 Magazine about what they were now planning within the framework of this consortium.

Despite the lack of a core competence and a unique selling proposition, SAP wants to achieve revenue growth in the coming years that, according to consensus analysis, cannot be achieved with new customers - leaving existing customers as the second source of funds.

Accordingly, "Rise with SAP" is to become the gigantic money printing machine. Experts from the SAP community have calculated that in the case of a technical release upgrade from SAP Business Suite 7 to S/4 Hana with Cloud Subscription and Full User Equivalent (FUE) - i.e., a one-to-one transfer - the respective existing SAP customer will then bear between 20 and 50 percent higher license costs.

This calculation behind Luka Mucic's planned SAP growth fits on a beer mat: The FUE transformation to the SAP cloud platform should significantly increase revenue. This also explains why SAP has cancelled the Embrace agreement primarily with Microsoft. A transformation with the company's own on-prem licenses to the MS Azure cloud has no positive effect on SAP revenue itself. 

FUE is the key to SAP's future success. But existing customers can fight back and don't have to accept a one-to-one transfer. Those who consolidate and harmonize their on-prem licenses can save up to 20 percent of their license base using FUE.

Sounds simple, but it is complicated: More intensive study of the FUE transformation rules is the prerequisite. This disobedience to SAP will not kill the group, but Luka Mucic will have to adapt his sales targets.

In mid-June, the major Swiss bank UBS left its rating for SAP at "neutral" with a price target of 121 euros after the multi-day Sapphire. In a study, UBS analyst Michael Briest looks ahead to an upcoming analyst event, in which the most important statements to customers should be summarized again and the financial targets set for 2025 should be explained in more detail: Rise or Fall with SAP!