Among countless other events, the start of 2021 means that we are all one year closer to SAP’s 2027 S/4 Hana deadline (unless it gets moved again). Back in February 2020, before normality went sideways, SAP announced an extension of the deadline for SAP customers to move to SAP’s cloud platform, S/4 Hana, from 2025 to 2027. No one, least of all SAP, could have predicted what would happen in the months that followed.
Now a year later, a third of SAP users have already deferred the migration in response to the pandemic and economic disruption. It’s an understandable bid to mitigate risk during these uncertain times, but even without the events of 2020, an organization’s decision should be made on its needs, and not on the technology itself. What SAP customers need right now is some flexibility from their vendor. Unfortunately, SAP has gone in the opposite direction.
Is SAP’s organization outdated?
Back in 2019, Bill McDermott stepped down as SAP’s CEO and was replaced by the two-person team of Christian Klein and Jennifer Morgan. At the time, we questioned whether this would return SAP to its more customer-friendly roots. Six months later, Jennifer Morgan stepped down due to SAP needing “clearer leadership“. Once more, we were curious what impact this would have on SAP’s outlook. Jennifer Morgan had been president of SAP’s cloud business, and it was assumed that a cloud-first attitude would follow her. With her gone, would Klein be the one to usher in a golden age for SAP?
Thus far, SAP seems to be just ticking along rather than surging ahead. In late 2020, we got a glimpse of SAP’s status. The vendor’s Q3 results showed that SAP’s market valuation had plunged by more than £26.6 billion (21%). Naturally, it cannot be assumed that Klein’s leadership is the sole reason behind this decline, given the unprecedented challenges faced in 2020. And in fairness to the CEO, in its Q4 results, SAP demonstrated it has finished 2020 more or less where it expected to be, with forecasts of “flat revenue” as we move into 2021. It isn’t good news, it isn’t bad news – but what’s SAP’s take on it?
SAP’s way, or not at all
With “flat revenue”, SAP came out of 2020 fairly unscathed. However, rather than protecting itself by focusing on its loyal and longstanding customer base and listening to their needs and requirements, SAP continues to follow its own set path. For instance, any SAP customers that decide to move to the cloud will have to adapt to SAP’s own standardized processes and drop customizations.
As Oliver Betz, SVP and Head of Product Management for S/4 Hana explains, “I’m a true believer in the cloud as the future state-of-the-art model. However, that requires standardization which needs to happen on the customer side: They have to agree on standardized processes. You cannot have these modifications that you had in the on-premises world; that’s not how the cloud works. You will go in a direction where you have quarterly or at least twice per year releases, which you have to absorb and agree to.”