Rise: The Point of No Return

Mistakes are allowed to be made. But running into the same dead end twice is irresponsible and stupid. Many years ago, SAP tried to set up an outsourcing and hosting business with its subsidiary SAP SI in Dresden. The attempt failed and a buyer was found in the German Telekom for the company that had gone to the wall. At that time, SAP not only lost sales, but also highly qualified employees. Business and hosting know-how went to Telekom. SAP had to concentrate on software again.

Many years later, however, SAP is trying again: This time, the infrastructure project is running under the name of "Cloud Computing" and is no less ambitious. SAP wants to prove in the circle of global IT groups such as IBM, Microsoft, Oracle, Salesforce and Workday that it is just as good at the infrastructure and services business.

The effects are catastrophic and SAP has long since passed the point of no return. Now the foray into cloud computing can no longer be aborted. SAP must take off into the cloud or the ERP world market leader will collapse.

SAP itself has committed itself to the purpose of "cloud computing" without any need or compulsion, even though many business and organizational fields lie fallow in the context of the digital transformation.

Technology fascinates: Computer farms with graphics processors that mine for Bitcoins; drones that fly over plantations and prevent crop failures with automated image analysis; thousands of sensors in CNC machines.

The digital transformation has produced many innovations in recent years, such as blockchain, machine learning, Industry 4.0 and predictive maintenance. The final success is yet to come because many business and organizational frameworks are still unresolved. Rise with SAP could have become the business management framework for digital transformation. Rise could have become the crystallization point of a new digital business administration and organization theory. Just as Hans-Georg Plaut once inspired selected parts of business administration with marginal costing and whose ideas were incorporated into the development of SAP's ERP, Rise could have contributed to a similar renewal of a successful science. Instead, the purpose of Rise became a tool for cloud computing.

If transformation, sustainability and purpose are to be more than just buzzwords and fig leaves for marketing, companies need a real system change. SAP thinks it has found this system change in cloud computing. Investor confidence in the shares and stock market activity paint a different picture.

There are illuminating figures on the SAP website: Over the past three years, Microsoft's stock price rose by about 88 percent and Oracle's by about 44 percent, Salesforce's remained almost the same, and IBM's fell by about five percent, Workday's by about ten percent, and SAP's by 21 percent (source: sap.com, September 4, 2022).

Thus, SAP CEO Christian Klein has destroyed a lot of market capital with his Purpose and Rise. The selection of the companies mentioned was based on SAP's self-defined peers. By way of comparison, while the SAP share price fell by the aforementioned 21 percent during this period from September 30, 2019 to September 4, 2022, the Dax rose by almost ten percent.

Gut feeling and common sense would probably call for a serious course correction in view of these figures. But SAP has passed the point of no return. The technical cloud transformation with Rise must now succeed. For too long, the core business and organizational competencies have been neglected, but there is still tremendous potential in the ERP group that many SAP executives apparently fail to see for the clouds. This issue of E-3 Magazine is dedicated to the Cover Story BRIM, Billing and Revenue Innovation Management, proof of SAP's unique selling proposition beyond cloud computing.

Some time ago, an SAP partner started to implement (customize) Billing and Revenue Innovation Management at Swiss Post. Among other things, Swiss Post is not just any postal company, but also a clearing house for about 175 other postal companies worldwide. In a few years, the SAP product BRIM will also be used for this business unit of Swiss Post. BRIM is currently still an on-prem product. There are numerous success stories about this, but hardly any official recognition by SAP, because SAP's purpose is cloud computing.

With its core business expertise, SAP could outpace most IT groups such as Apple, Google, AWS, Oracle, and Microsoft. SAP CEO Christian Klein would have to find the courage to focus on his own strengths and look less at the technical offerings of supposed competitors. Rise, purpose and "cobbler, stick to your last" do not have to be a contradiction in terms.