As usual, our visit to the annual SAPPHIRE NOW event in Orlando, Fla., left us with some interesting take-home fare from SAP’s ever-changing technology menu. Starting with the keynote from SAP CEO Bill McDermott, the emphasis was on digital transformation through the cloud, as well as a new vision for customer relationship management (CRM), with the S/4HANA upgrade promotion seeing less emphasis than at last year’s event. Here we’ll discuss these and other developments at the premier SAP conference.
Let’s Get Digital
SAP Cloud Platform sits as the focal point of all of SAP’s innovations and future roadmaps. The company currently has 10,000 customers using it in some capacity within 40 cloud environments. S/4HANA Cloud serves as the digital core, while SAP Cloud Platform is the application extension mechanism.
It’s evident that SAP wants to lead the charge to create a digital enterprise where everything is connected, starting with Leonardo, the equivalent of the Siri for enterprise intelligence. The company now offers pre-built Cloud Platform Open Connectors for more than 150 SAP and non-SAP cloud or on-premise applications, with the aim of accelerating third-party integration and simplifying connectivity to third-party applications.
SAP also wants the enterprise to become more intelligent by making “smart recommendations” to users in various parts of the business. Thus, machine learning has become a focus. In a similar vein, there was mention of how the company is trying to reduce manual effort using technology, with the claim that it has reduced such effort by 94 percent.
SAP + CRM = ??
The biggest announcement at this year’s event wasn’t really a new product, but a new philosophy. SAP C/4HANA is the company’s vision of connecting front-office CRM data with back-office transactional data. This is the culmination of several years of CRM-centric acquisitions to support the front end, along with the maturation of HANA to support the back end. CRM software is objectively a larger market now than ERP software (SAP has already won the back-end battle). The company’s sights are now squarely set on beating Salesforce, probably on the basis of the full technology stack it can offer as the differentiator.
Is it illogical that SAP could compete with Salesforce in the CRM market? The key issue is who could implement the envisioned SAP CRM system. Expertise usually exists within one end or the other, so it would be a massive undertaking.
The Winding Path to S/4HANA
At this year’s SAPPHIRE NOW, SAP seemed much less focused on pitching S/4HANA conversions and implementations. Rather than advocate for customers to convert to S/4HANA, it seems to be treating this as a certainty and has moved on to the next paradigm of the intelligent enterprise and machine learning.
If SAP thinks its work is done within the S/4HANA realm and has moved on, the attitude may be premature. About 2.5 years after the first release of S/4HANA 1511, the company still struggles to articulate the business case to customers. SAP presented perhaps an overly-rosy number of 23 percent of customers converting from ERP to S/4HANA, but in order for this number to be factually true, it has to be including customers who have merely purchased the license, which is misleading.
At our booth, S/4HANA was still a point of discussion. However, there seemed to be a shift in focus where more companies have an S/4 implementation on their roadmap, but not in the immediate future.
On the Finance and Reporting Front
SAP claims that it’s still trying to integrate systems to enable real-time integration and reporting, but when discussing FICO reporting with the IT team visitors at our booth, we heard that there is still a heavy dependence on building customized reports for finance users. Most of these booth visitors admitted that they would like to minimize the custom development and find a tool in which users can build their own reports. Even companies targeting implementation of S/4HANA for 2021 and beyond continue to look for more self-service solutions.
From these conversations, it’s obvious that a need still exists for real-time reporting, and this is not specific to FICO reporting alone. There were definitely more discussions this year around reporting on inventory movements, purchasing and requisition requirements.
In a previous blog from our visit to another SAP event, we mentioned that SAP users felt they were “force fed” SAP Analysis for Microsoft Office for reporting, which was been promoted as a business intelligence (BI) tool that makes it easy to filter and manipulate data in Excel. A greater number of our booth visitors seemed to be (grudgingly) using it now than in the past for reporting, but the chief complaint remains the inflexibility of the solution, such as a rigid output format and staged data.
Perhaps the most conceptually interesting thing we saw in the finance realm was a presentation around “predictive accounting.” While still more conceptual than practical, SAP has been engineering the building blocks for this in recent S/4HANA releases. Essentially, the argument goes that fast-close initiatives will be a thing of the past, as well as continuous close initiatives. The future will involve accountants being more than just backward looking, but instead able to report and analyze future financial positions based on intelligent algorithms.
Each year we visit the SAPPHIRE NOW event, there is a new set of technology offerings, with this year looking at some adventurous fare with cloud and CRM. It will be interesting to see if S/4HANA conversion efforts become the “special” course again next year, as more customers order the new platform.