The majority of enterprises today are currently striving with concerted effort to move their organizations into the digital future. The overarching objective is to to drive revenue growth, avoid disruption, and access all-new business opportunities. Next-generation C-Suite leaders are increasingly focused on ensuring they have the right innovation and delivery capabilities in place at a strategic level to achieve this. To accomplish these goals, which will take place mostly in fasting-growing new digital markets, many leaders are currently evaluating the right mix of foundational digital platforms to build upon. With effective choices, they can swiftly and confidently lead the transformation of their businesses as well as the creation of their own digital platforms and ecosystems.
This then was the backdrop for SAP’s TechEd event in Las Vegas earlier this month, a prime showcase for its growing digital platforms and ecosystem. For its part, German enterprise IT giant SAP has long positioned itself as an organization without peer that deeply understands the complex and sophisticated needs of the traditional large enterprise. The challenge: Many today still regard SAP as more of a legacy software vendor of organizations as their needs were defined five or ten years ago. In other words, more focused on ERP than on customer experience, the latter which is today’s topical darling for revenue growth and customer acquisition/retention.
The argument for SAP’s relevancy in an age of Amazon’s, Microsoft’s and Google’s ascendancy – and many would say supremacy – into the cloud is that we now live in a new digital business operating environment that needs fresh market-facing strengths and capabilities. One’s that are less concerned with raw compute power or storage and more focused on the vital functional needs of the enterprise. The good news: The enterprise software giant is far from content to concede this point.
The pace of innovation is evident in the steady drumbeat of SAP’s cloud platform evolution both in breadth, depth, as well as scope of vision. SAP board member and head of products and innovation, Bernd Leukert, steadily but passionately laid this out on stage. In fact, the SAP Cloud Platform is now the crown jewel that the German tech company intends to use to seize the high ground in the industry to deliver an expanding product portfolio that will realize end-to-end digital experience and value creation in an overarching way, and to use its own business application, as well as its developer ecosystem, to offer a more compelling business vision for the cloud.
To say there’s an epic horse race is under way today in enterprise cloud computing would be an understatement: The business world as a whole is steadily and inexorably moving its IT infrastructure and digital operations out to the public cloud for many good reasons. As a reult, the cloud vendor industry is collectively spending tens of billions in CapEx annually to seize this sea change market opportunity. For its part, SAP has exerted itself mightily the last several years to make clear its continued relevance in a world where the public cloud foundation in most organizations is now owned either by upstarts in enterprise computing (Amazon’s AWS and Google Cloud) or entrenched enterprise leaders that managed to make good on cloud (Microsoft Azure, IBM Cloud.)
Key Strategy: Your Preferred Clouds + SAP’s Multicloud Enterprise Capabilities
Understanding how SAP can differentiate and rise above the cloud giants is key here: A strong technical foundational base is far from the only cloud capability that enterprises need today. SAP has bet that it again much better understands the true strategic needs of the enterprise when it comes to shifting operations to the cloud while fully executing on digital transformation of their business.
I’ve termed this top-level new strategic requirement a digital transformation target platform, which I currently track on my shortlist of the same name. Put succintly, a digital transformation target platform sets itself apart from a pure-play enterprise public cloud platform or a managed service provider by providing a fuller and richer set of digital business transformation capabilities. These include embodying the latest digital best practices (devops, serverless, machine learning), industry templates/accelerators, digital business reference models/blueprints, citizen development/low code, business models-in-a-box, migration tools/services, and other means of enabling the digital transformation process from a combined technology and business perspective. Such target platforms must have global presence with regulatory compliance support across the majority of the developed world. These platforms must also have the ability to support the scale and combined transformational/operational needs of enterprise organizations of the largest size and complexity. Finally, they must also regularly incorporate the latest emerging technologies likely to fuel business growth over the next 5-10 years. These include technologies such as next-gen mobility, advanced analytics, Internet of Things (both IoT and IIoT), machine learning, AI, blockchain, APIs/microservices, and natural language interfaces, to name some of the more important ones.
If this seems like a tall order for any digital platform, C-Suite leaders must realize that modern digital capabilities indeed have a great deal of moving parts today in order to succeed in today’s highly sophisticated digital landscape. This then is the key opportunity for SAP: The SAP Cloud Platform, especially when combined with SAP Leonardo, forms just such a higher order capability and is demonstrating its ability to evolve and mature at a sufficient pace to maintain a leadership position. It can also run on top of many of the leading public cloud platforms. This lets SAP deliver on several vital elements, including a) offering choice at a cloud hosting level as a fully mulicloud-ready superplatform, b) avoid a punishing and needless race to the bottom in commoditized cloud computing services like compute and storage, while c) emphasizing the unique, high leverage, high impact enterprise capabilities that SAP has in the back office (supply chain, procurement, and human resources) as well as increasingly the front office in CRM and customer experience.
SAP’s argument is evidently — and I would agree — that organizations will need all this as a working set to transform faster, deliver on innovation quicker and more successfully, and seize that holy grail of business execution today: Shorter and less expensive time to customer value.
Continued Platform Maturity and Strategic Data Consortiums
This was certainly the messaging I saw at TechEd, where we witnessed a raft of important announcements, that while often technical in nature, assured that SAP is thinking of the evolution of their cloud platform as a truly top-of-the-food-chain cloud capability that they clearly hope that enterprises will end up demanding to add on top of their existing cloud stack(s) to a) save time, b) access key enterprise capabilities/products/solutions, c) eliminate silos/data redundancy, d) reduce unnecessary investment, and e) buy down risk.
SAP also announced an important foray into industry consortiums for trusted data in the supply chain and other key functions using blockchain as well. In my analysis, this is a vital strategic move to take the cloud conversation away from low-level computing and towards a more strategic trusted enterprise and industry data conversation. I attended a meeting of some of the key consortia members right before TechEd as a guest of Bernd Leukert. There was a great deal of excitment evident in members how easy SAP has made it for those already using their solutions to be able to add easily add vital business data to the blockchain.
My take: Blockchain holds great promise to help manage product authenticity, ensure compliance with trade regulations, manage product recalls, track items in the supply chain, and improve business performance management. But blockchain works best when there’s one version of the truth in its immutable chain, as opposed to being spread out in many so-called “side chains.” Consequently, a consortium can ensure trusted, shared data between enterprises in a single, common view. With many heavyweights in industry already part of its blockchain consortia, SAP has likely seized the advantage by playing to its strengths when it comes to numerous strong relationships its developed while running the key business systems of many large enterprises. Member of the C-Suite should be aware that increasingly, cloud platforms will seek to “own” the data for a given industry by using blockchain as a way to make it trusted, open, transparent, and controlled. SAP now appears on its way to adding this key data strategy to its platform.
Takeaway on SAP Cloud Platform for the New C-Suite
The upshot of all this for C-Suite leaders, including the CEO, CIO, CDO, CMO, COO, CCO, and CFO, who are currently evaluating SAP as a long-term partner in their digital growth journey is the following in my analysis:
- SAP is succeeding in building a higher order multicloud capability and digital transformation target platform. One that most enterprises will want to consider adding to their foundational cloud capabilities for the many reasons cited above. However, the challenge from Microsoft, Amazon, and Azure in the next few years will be sharp, and there is a good chance they will close the gap on their more strategic enterprise capabilities to achieve parity with SAP in the future. Existing SAP customers will get the most bang for the buck. Interestingly, in my conversations, did not emphasize their own data centers, and essentially assume the customers will also be using their cloud competitors to run the platform. Be prepared for detailed business cases to the CFO to clearly justify why the SAP CLoud Platform has to be added on top of existing cloud investments, though in my analysis, the value-add will often be evident.
- SAP Cloud Platform is a strong multicloud solution with increasingly cutting-edge features, but also needs SAP Leonardo to be the ‘full package.’ There are many advantages to using SAP Cloud Platform, from a single way to represent enterprise data across many commercial clouds, a robust ecosystem of solutions and partners, and a realized commitment to openness via open APIs, as well as deep analytics and machine learning. But to get the full advantages of its strategic benefits it can offer, it pays to consider them both in conjunction.
- The Intelligent Enterprise vision promoted by SAP is as much vision as it is reality. This vision that most senior SAP executives I speak with are consistent about and offers the overarching promise of enabling organzations to “effectively use their data assets to achieve their desired outcomes faster – and with less risk.” However, SAP has foundational work to do to achieve a common data model among its many business applications as well as make its automation, workflow, machine learning, and other supporting capabilities mature to the point that this will become a sustainable competitive advantage for buyers. Yet is a vision that is very likely to become ever more concrete if SAP can maintain its current pace of platform evolution and development. C-Suite executives should keep in mind that they be adding SAP Cloud Platform capabilties as much for this vision as for what it can deliver today, and should carry out their vendor evaluations and digital transformation planning with this in mind.
- SAP is still widening their product lines to provide and end-to-end enteprise solution, most recently adding customer experience as a full-on capability. One of SAP’s great strengths is its long legacy with ERP. But this has created a perception of a back-office company that doesn’t deliver on where the main focus of business lines: Customer experience. This is arguably in the process of being definitively remedied with the new SAP C4/HANA offering. Members of the C-Suite should realize that their capabilities in this new area are nascent and less mature or sophisticated that their competitors, especially Adobe Experience Cloud. However, SAP’s arguement is that vendors like Adobe don’t have the ability to fullful the business reality of customer experience from beginning-to-end, from order to cash. This is going to be a major differentiator for the SAP cloud platform.
Summary: No longer your father’s enterprise IT company, SAP is succeeding in executing on its vision of a front-end to back-end platform for innovation and customer experience for any size enterprise to use as their primary business environment, not just for legacy ERP and key operations. From Internet of Things to blockchain, as well as artificial intelligence and advanced cloud capabilities, sufficient evidence of platform evolution was on prominent display at TechEd 2018 Las Vegas to ensure that SAP Cloud Platform is a viable strategic enterprise cloud platform of the highest order. My advice is that members of the C-Suite should consider SAP’s offering in their overall strategic plans and enterprise vendor shortlists.
Article by channel:
Everything you need to know about Digital Transformation
The best articles, news and events direct to your inbox
Read more articles tagged: Digital Transformation