SAP’s Integration Urgency

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Talking about the heady days in the late 90s, one of SAP’s best salespeople had reminisced:

“It was a truly transformational time for the technology industry. We replaced thousands of departmental and mainframe systems. We put MSA, M&D, and many others out of business. We didn’t really have much competition. In deals it would be SAP v. SAP v. SAP — that is, SAP/Accenture v. SAP/KPMG v. SAP/PwC.”

A little over a decade later, a CIO at a large SAP customer lamented to me

“SAP used to publish A0-sized wall posters with the R/3 data model (entity relationship diagrams). How about similar for the existing SAP portfolio? Integrating even among 100 percent SAP assets must increasingly be a nightmare.”

By last year, most analysts and customers were getting really impatient. “Why are the cloud acquisitions – Ariba, SuccessFactors, Fieldglass still so siloed? When will they be on HANA? How many more years for integration across the C4 properties? Even the presentations across the SAP Analytics tools are not consistent.”

Same with customers – “Why are there so many different ways to cut checks in the SAP portfolio?”  and a snarky one “the biggest contribution SAP made to the API economy is to be careful of Indirect Access exposure”

So, it is good to see Christian Klein in his new role as Co-CEO of SAP prioritize integration. He recently wrote

“Although we have made progress on integration across our full suite of offerings, we must do more to be the reliable partner our customers trust. Turning true business integration into reality is a company-wide effort and requires collaboration across board areas and teams. Customers are eager to hear about our way forward and looking for roadmaps detailing the timeline of our integration plan for the cloud.”

He also linked to what he calls a “Strategy Paper” – it is more of a long infograph in a PDF file. It is good to see something customers can put on their walls. I liked the fact that even products like IBP and AIN have been factored and that it thinks on business process lines like Lead to Cash.

It focuses on cloud properties and mostly assumes you have moved to S/4HANA. That is certainly SAP’s future, but the API economy has grown because companies are finding moves of legacy to modern cloud applications frightfully expensive and are using APIs to integrate new extensions to the old.  How many big banks have moved their core banking applications? Or utilities their billing applications? Most are building or buying modern extensions and integrating them to their legacy.

SAP will have to similarly start thinking about extensions and integrations to ECC, various IS Solutions and in an even bigger opportunity to help develop extensions by industry to then allow customers to integrate to their legacy vertical operational applications.

We have moved to a world of drone-initiated casualty claims, multistory and highly robotized warehouses, last-mile and reverse logistics, shop floors with wearables, robots and 3D printing, smart assets which allow for next-gen maintenance and field service. I can think of countless extensions SAP could develop for utilities, insurance, retail, auto and many other industries.

Think of the glory days if a SAP salesperson can tell me (again) in 2025 “We replaced thousands of departmental and legacy systems.” or a SAP customer again proudly shows off the A0 chart for her industry on her wall. Well, given the increased complexity of most industries, it may take 2 or 3 of those charts.

Am glad Christian is giving it priority. Lots for SAP to deliver – and profit from.

Update – I posted this comment on LinkedIn. Should have also included it here

It’s two markets – incumbent products and incumbent customers/prospects and vertical extensions. The first one honestly is technical debt – vendors like to pretend customers have it, but especially after acquisitions if they dont invest enough that’s their technical debt. Oracle, Infor, IBM and others also have them in spades. The vertical extensions are actually way more exciting and could mean huge new growth, which can fund the former.

(Cross-posted @ Deal Architect)