Opinion: SAP, don’t neglect the customers that paid for your acquisitions!

Opinion: SAP, don’t neglect the customers that paid for your acquisitions!

The European software giant has made a string of acquisitions in recent years, but its customers don’t understand why

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The SAP User Group conference is always a fascinating event for a journalist trying to get to grips with the ins and outs of the enterprise software giant. It is rare to be invited to an event that isn’t hosted by the vendor itself, but still manages to attract top executives and a wide variety of customers that are willing to talk frankly about the problems they are having with their SAP systems.

This can largely be put down to the influence that the SAP User Group has with SAP itself, and the authority it holds with its members. Much of which can probably be attributed to its chairman Alan Bowling (although he would certainly attribute it to the efforts of the whole team), who sadly will be stepping down from the position in March next year, to be replaced by vice chair Philip Adams. Bowling has always been a frank and insightful leader who seems to have a good relationship with SAP, which will no doubt be missed.


However, having interviewed Adams on a couple of occasions in recent weeks, he too seems like a strong candidate. Although it is obvious he doesn’t have the experience of Bowling, he certainly knows his stuff and seems determined not to have SAP pull the wool over his eyes.

In fact, Adams headed up the User Group’s recent piece of research into licensing complexity, which found that some 95 percent of customers still find SAP’s approach too complicated. This was a big theme at the conference this year and it seems users are still not happy with SAP’s attempts to reduce complexity – which, if you were listening to UK MD Tim Noble, have been reduced by some 20 percent in the past two years.

How you exactly measure a 20 percent reduction in licensing complexity still remains to be explained by Noble, and the claim did baffle most of the people I spoke to at the event. That aside, Noble did tell me that licensing was still on the agenda for SAP. However, he followed this by pointing out that SAP is inherently a complex beast, and so this may take some time to fix.

So what can SAP fix now that will be of benefit to its customers? Well, it’s simple really; it can communicate its roadmaps. Whilst at the event I spoke to a wide variety of customers, ranging from corporate giants to local councils, none of which spoke excitedly about the recent string of acquisitions made by SAP.

Bowling also highlighted this during his final keynote speech, where he said that a recent membership poll found that the vast majority of respondents do not understand the benefits to them of the Ariba, SucessFactors and Sybase acquisitions. From the outside it might seem obvious why SAP is investing in mobile, cloud, analytics – all growing trends in the market that organisations are likely going to want to take advantage of going forward.

However, if your core customer base, the ones that paid for these acquisitions through maintenance and licence fees, don’t understand the benefits to them, is SAP really doing its job properly?

Most of the confusion comes from the cloud piece. SAP now claims to be the largest supplier of cloud based enterprise applications in the world (its words, not mine). However, how is that of benefit to an enterprise with a heavily embedded SAP ERP system? Is that enterprise likely to suddenly rip and replace this and put things in the cloud just because SAP has acquired Ariba or SuccessFactors? Probably not.

Companies aren’t likely to consider this migration until their infrastructure is tired and they are looking to upgrade. Even then, if some clear benefits of being in the cloud with SAP haven’t been communicated to customers, are they likely to take the plunge? Maybe not.

SAP needs to remember that a big chunk of its revenues and customers are still traditional, on-premise, process heavy, locked down, ERP customers. Yes, we all know cloud, mobile and analytics are the future and are important, but many SAP customers are still living with traditional systems and need ongoing investment in R&D for many years to come.

Bowling questioned how much of this is happening at SAP at the moment with so much of its focus on recent acquisitions. When Tim Noble took to the stage he said “we aren’t forcing you into the cloud”, which is probably true. But it’s also not the point. I don’t think many SAP customers feel like they are being ‘forced’ into the cloud, but they are starting to feel neglected.

We can only hope that investment, research and development haven’t slowed down at SAP HQ and that it continues to deliver innovative features for traditional ERP systems. However, communication also needs to start now. SAP needs to be talking to its customers about why these trends and acquisitions are important to them, even if it will only be relevant in five years times. If they don’t, SAP might find that when those customers are faced with an upgrade decision, money might just be taken elsewhere.

There were just a few too many customer complaints and rumbles at this year’s SAP User Group conference for SAP to ignore it. It became very obvious at the close of play that Noble and SAP’s management need to ensure that they remember how they got to where they are today – they need to remember their original customer base.

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