The following guest perspective was authored by Joshua Greenbaum, Principal at Enterprise Applications Consulting. The views and opinions expressed in this perspective are those of the author.
SAP delivered a solid message from this year’s SAP Sapphire & ASUG Annual Conference keynote stage that strove to lay the groundwork for increasing customer interest in upgrading older SAP systems while beating the drum for artificial intelligence (AI), SAP Business Technology Platform (BTP), SAP Business Network, and other key initiatives.
As usual, not all the announcements and updates were met with universal approval, with customers voicing their reactions in hallway conversations as well as during an at times heated ASUG Executive Exchange session with my friend and colleague Jon Reed, co-founder of Diginomica, moderated by David Wascom, ASUG Senior Vice President of Executive Programs.
Some of SAP’s messages landed well, such as the changing role SAP presented for SAP S/4HANA Cloud Public Edition. To the relief of many, SAP used the conference to begin jettisoning the doctrinaire view that SAP S/4HANA Cloud Public Edition is only for midsize and net-new customers. Instead, the new SAP S/4HANA market position at SAP Sapphire encouraged the installed base of SAP customers to reject the notion that their complex SAP workloads can only run on SAP S/4HANA Cloud Private Edition, and instead look to SAP S/4HANA Cloud Public Edition, for at least some of these workloads.
This focus on public cloud ERP makes sense, considering the ongoing problem of getting thousands of customers running SAP ECC and earlier versions of SAP S/4HANA (or S/3HANA, as I like to call it) to upgrade to the latest version of SAP S/4HANA and avoid falling off a support cliff, which for many of those customers still sitting on the fence starts in 2025.
While it will take some time and effort to provide the proof points needed to reassure customers that they won’t be sacrificing the competitive advantage and industry-specific functionality they expect from running SAP ERP software, the general tenor of the customers at the event was reflected by their willingness to consider moving more workloads to SAP S/4HANA Cloud Public Edition.
But the divide between the keynote stage and the hallway was still front and center in the issue of RISE’s role in moving customers from SAP ECC and those earlier versions of SAP S/4HANA to the promised land of business transformation. To SAP’s credit, Sapphire’s keynotes focused more on how RISE can deliver business value than in previous years, with perhaps a little too much about future AI business value and not enough about how SAP S/4HANA and AI deliver value today. Nonetheless, it’s clear that customers are still seeing SAP continue to conflate RISE—a contracting and licensing regime—with the business and technological imperatives of transformation, without providing sufficient connection between RISE’s growing complexity and customers’ need for solid business justifications for their SAP S/4HANA upgrades. This sentiment was part of the discussions during our heated ASUG Executive Exchange session.
It’s ironic that the simplicity offered by a much-needed public-cloud focus for SAP’s installed base has become clouded, pun intended, by the need for SAP to further complicate contracting and licensing with RISE. It’s also unfortunate that SAP’s field sales staff is still leaning a little too hard on reluctant customers to accept a RISE contract – or else forego the very innovation in AI, SAP Business Network, analytics, and other domains that these customers need in order to justify the upgrades SAP so clearly wants them to undertake. SAP has stated in follow-up discussions with me that they are working on better educating the field on how to work with customers. It’s clear SAP still has work to do reconciling these messages.
Executive Board member Thomas Saueressig highlighted his role as the head of the recently created Customer Services & Delivery board area by using his keynote to outline plans to deploy a growing array of tools, including an increasingly integrated Business Transformation Suite (consisting of SAP Signavio, LeanIX, and SAP Cloud ALM) and a new set of clean core and process transformation dashboards and metrics in the service of delivering better business value from SAP S/4HANA upgrades.
Saueressig’s call for the elevation of the role of enterprise architect (EA) was another highpoint in the effort to align the high-level strategy around RISE and customers’ practical requirements for executing successful business transformation and SAP S/4HANA upgrades. This is admittedly a work in progress: not only does enterprise architect mean different things to different stakeholders, but SAP’s ability to promise an EA for every transformation project will require SAP and its partners to seriously increase the total number of EAs in the market in order to meet this new demand. SAP’s efforts to recruit more EAs will, for the time being, only shift these resources from partners and customers to SAP. How the company plans to increase the net number of EAs across the ecosystem remains to be seen.
The growth of SAP’s AI capabilities, touted in essentially every keynote, were among the important highlights worth noting from SAP Sapphire. The increasing ability of SAP’s existing AI products to measurably impact top and bottom line growth was a welcome change from earlier pie in the sky pronouncements, and the demos of the use of AI in SAP’s customer experience (CX) and planning products showcased this focus on productivity that customers can deploy today. The promises made for Joule, SAP’s generative AI copilot, were a mix of present and future capability, with SAP promising that 80% of the most common tasks in its software would be managed or enhanced by Joule. How soon this promise will become a reality remains to be seen.
Another highlight was the growing emphasis on CX, with SAP for the second year in a row touting CX from the keynote stage and across multiple sessions. A strong SAP CX capability is a strategic necessity for a SAP’s customers, most of whom have embraced SAP’s CX competitors and are now seeing limits in the abilities of their best-of-breed vendors to integrate the data and processes required by modern customer experiences.
Also featured at the conference was the growing strength of the SAP Business Network offering. The ability to use planning, collaboration, intelligent sourcing, global track and trace, and other key features of Business Network to support business transformation helps lend credence to the business value that SAP S/4HANA and the rest of the SAP suite can offer. This is another key justification needed by customers in the march to upgrade their older SAP ECC and SAP S/4HANA systems, and SAP’s messaging around the value of Business Networks continued to make sense in this regard.
Products and technology strategies notwithstanding, the most important takeaway from SAP Sapphire & ASUG Annual Conference this year was the obvious appetite shown by the SAP community to come together and enjoy the benefits of physical proximity that were denied us all during quarantine. This sense of belonging was palpable: as the problems and opportunities besetting customers continue to grow in depth and velocity, the recognition that SAP runs best within the context of its community was in evidence throughout all four days. In that regard, SAP Sapphire & ASUG Annual Conference was a resounding success for all in 2024.
Joshua Greenbaum is Principal at Enterprise Applications Consulting.