Just a few days ago, SAP announced earnings and a significant change to their CEO leadership. After a good run leading SAP, Bill McDermott is stepping down to make way for Jennifer Morgan and Christian Klein to take co-CEO roles. I have had the opportunity to meet Bill and he has done a good job of leading SAP to this point.
However, SAP finds itself at yet another critical decision point that will dramatically impact its future. While many will debate the pros and cons of moving to a co-CEO model, there are five key areas that are more critical to SAP’s future that directly impact enterprise customers.
There are many directions that SAP could go from an acquisition standpoint. As the world of technology becomes increasingly more complicated, SAP needs to consider how future acquisitions play into their enterprise strategy. While SAP has made some interesting acquisitions with Concur, Ariba and SuccessFactors, it is unclear where they go from here. The next set of issues outlined below could provide a roadmap for them to follow.
Strategy, identification, due diligence and closing the deal is one thing. Integrating the acquisition is a wholly other thing. SAP has acquired a large number of companies over the past several years. To date, many of the critical functions still operate in a siloed fashion. While this presents challenges for the company internally, for customers, the integration challenges are significant. One of SAPs core opportunities could be from the gains it gets by integrating the different solutions, and data, for customers.
IOT AND EDGE
A few years back, SAP appeared to be on the leading edge for IoT and edge strategies with SAP Leonardo. Of late, discussion around Leonardo has gotten much quieter and S/4HANA is more prominent again. Leonardo was confusing at first and early to the market. It is unfortunate as enterprises are just getting started with their IoT and Edge strategies. This could provide a resurgence of opportunity as enterprises are looking for differentiation strategies when it comes to customer value.
ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING
AI and ML are two core opportunities where intelligence of data becomes front and center. While SAP is making advancements in these spaces, it seems to have fallen behind the classic approach of pitching data integration and analytics. SAP is in a prime position to leverage analytics and RPA along with more advanced functions like AI and ML. In the SAP ecosystem, AI and ML could help differentiate how they are advancing their customer’s businesses.
SAP Cloud was all the rage a couple of years back. It was the future for SAP. And it had every right to be. As an SAP customer, I know the challenges to running ERP, CRM and HCM solutions on-premises first-hand. Cloud has the potential to change all of that on many different levels for both customers and SAP alike. It presents a great opportunity to help catapult both customers and SAP moving forward. To be clear, there are challenges to get from here to there. It seems those challenges are getting in the way. However, of late, it is rarely discussed openly.
A CIO PERSPECTIVE
The CIO generally has a love/ hate relationship with their ERP/ CRM/ HCM vendor. I have seen both sides of this many times and how it plays out. I have also had the opportunity to see SAP on the inside too. There are many good, potential directions SAP could take that would really change the perspective many have of them. That starts with understanding the customer and how they can provide value…different from what they do today. The reality is that the CIO is looking to solve core business problems. The challenge is that it is a hard nut to crack. Can SAP potentially be the one to start to crack the nut with the new leadership team?
In order for SAP to succeed, they need a clear vision that addresses the growing enterprise complexity while leveraging data in many different ways. While McDermott took SAP to this point, Morgan and Klein will need to rationalize the pieces, advance their position, and set a solid vision moving forward that demonstrates strong leadership in the industry.