A half dozen suggestions to SAP


Vishal has left SAP – and despite the abrupt nature of his exit , he has given the company a lot to work on . In a few weeks from now, Bill will be sole CEO and he gets a great set of leaders in the board and in the top ranks of the company . I think this is a perfect moment for the company to disrupt itself and gain some significant momentum .

In no particular order , here are my suggestions .

1. Split the company into two – apps and platforms – and assign them to two divisional heads with P&L responsibility

If SAP is to become a great platform company (it’s already a great apps company) – it needs specific focus . Platform is a nebulous term – but for true greatness, SAP needs to play in more layers of the IT stack . Similarly – apps that were created decades ago need to evolve without being constrained by pace of platform evolution . For the “cloud company powered by Hana” to be a reality – both apps and platform business need cloud as a vital component .

2. Go make some bold acquisitions

Look at BI and middleware from SAP for example . They have large install bases – but they are a bit tired . Surely some of the innovation can be done organically – like how Lumira started . But SAP doesn’t have time to just build all the way . They need to make bold acquisitions quickly on both platform and apps side .

3. Sunset products with limited upside

SAP has built and bought a lot of stuff over the years . There are many products (not naming them because people who run them are friends that I don’t want to offend ) that have low adoption or no clear forward path . Those products need to be sunset (or migrated to something new ) and investment redirected to new areas. And this will help field sales and customers quite a bit too in eliminating confusion .

4. Double down on business suite and BI integration

It’s really SAP’s sweet spot . Yet – there is very little actual integration between Business suite and BI platform . CRM has some embedded BI as I remember , but the whole “insight to action” thing never totally materialized . I hope that Leukert and Reh can fix this with the right partnership between the apps team and BI team . This game is SAP’s to lose .

5. Renew the focus of product management

SAP has always had great engineering abilities . Product management needs attention in my opinion – and probably could use some external hiring to compliment the in-house talent . I would also go one step more and say that PM should be closer to the Customer organization than to engineering . All innovation is customer driven – if PM gets more customer exposure , it can only accelerate innovation .

6. On platform side, become more channel and open source friendly

As much as SAP has great technology at its disposal , reality is that there is hardly a customer that can survive with as SAP technology alone . So it is a must that SAP actively increases the openness of its platform and connect to other technologies . I am not naive to think that Hana itself will now be open sourced – but it is worth considering for medium to long term .

Similarly – SAP could make more use of channel partners . With Rodolpho being put in charge – I have a good feeling that channel will get to be an important part of SAP business . There are plenty of products in SAP portfolio that could be sold through channel alone I would think

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7 thoughts on “A half dozen suggestions to SAP

  1. I’d like to add some remarks to some of your suggestions:

    Sugestion 1: this is something SAP must do, or it will be forced to do by the outside world (and some internal pressure). However the resulting Platform company will have a challenge, see your suggestion 6 for a example. This split will happen as a requiriment of a future buy out, alas, it will be too late by then…

    Suggestion 2: yes, SAP has the cash to do some big acquisitions. A bold one will be MongoDB, or similar. But alas, past history show what remains after the phagocytosis took place, another line of orphan products and little nutrition.

    Suggestion 3: this is what I call the suite of “orphan products” at SAP. SAP needs a Steve Jobs that has the will of cleansing the portfolio, that now with several thousands of SKUs, is absolutely unmanageable, as you say, even for SAP sales people. But SAP will fail again as they will force the few customers of orphan products to pay again for a dubious replacement.

    Suggestion 5: absolutely spot on. SAP must have a way of getting and adopting customer feedback in product development. SAP talks a lot about “customer intimacy”, but really, the teams are so isolated from customer contact that customer feedback only comes in from support and escalation. And then the solution adopted is ad-hoc and not applies to product mainstream (exceptions notwithstanding, like Fiori and others).

    But you forget to mention the biggest show stopper to all change in SAP, and this is SAP’s internal corruption, created after years of self complacency and represented by the huge force of overpaid management lurking at all levels in the company and working hard to keep friction in all areas, in order to assure their position and salary increase for years to come.

    Thanks a lot for your insight, Vijay.

  2. Well done laying this out so succinctly. I agree SAP needs to make some radical changes rather than tinkering at the margins.

    Taking a leaf out of Adam Hartung’s growth stalls (http://adamhartung.com/deadly-stalls), it’s time to *attack* the status quo with a combination of your options 1, 3, and 5. Like in a banking crisis, maybe it’s time to hive off into a “bad” SAP all those legacy products and customers (i.e. those without a strategic buy-in but who use SAP products as little more than glorified bookkeeping software, or are unwilling to jump onto the HANA bandwagon – there’s probably a lot of overlap…). The “good” SAP is left with the new platforms and strategic, targeted products which are differentiated and have a clear roadmap.

    Certainly painful, especially for shareholders in the short term. However without a radical change, chances are that the new is held back by the ball & chain of all those maintenance-paying customers who want ‘innovation without disruption’ to their R/3 4.6c systems…

  3. SAP has seen such rough weather a lot of times before and has emerged successful from it. But what SAP is seeing this time is quite different. The cloud push especially in the HCM area is flailing. Workday is eating their cloud push and their established coveted on prem HCM installations for breakfast, lunch and dinner. A shrinking on prem and a flailing cloud push is a double whammy for SAP.

    While the massive failure of the ByD suite started the spark, shortsighted acquisitions of half-baked companies like SuccessFactors poured the necessary gas. To top these woes, incompetent management in the likes of Leukert and his core team including Khandelwal and co have absolutely no clue where they are headed. Come on, SAP is a product company and these guys have no product background, never responsible for even a small piece of software within SAP and look at where they are today. These guys run teams like their personal fiefdoms. Complete lack of transparency, top grade sycophancy and gross inability to innovate is bleeding SAP.

  4. Hola! I’ve been reading your blog for a long time now and finally got the bravery to go ahead and give you a shout out from Atascocita Texas!
    Just wanted to say keep up the great job!

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