Getting desperate
Looks like they've got so much promo stuff left over that they're trying to raise a few €
SAP has launched a lift-and-shift-to-the-cloud service for customers' on-premises ERP systems, taking accountability for performance and promising lower costs. The service is meant as a stepping stone for businesses onto more standardised processes, and, naturally, upgrading to SAP's S/4HANA ERP system. The move follows …
Looks like they've got so much promo stuff left over that they're trying to raise a few €
An attractive model would be one where the customer's customizations, which they have already spent millions on, would work in The Cloud (TM).
I hardly see anything attractive in moving to The Cloud (TM) just to shore up your revenue line when it will totally disrupt everything your customers have built their business on.
Tell me, is this plan from the CEOs nephew who just got his MBA ?
How can you be stupid enough to create a cloud platform that totally ignores your customers' needs, and then be surprised that it is not widely adopted ?
"How can you be stupid enough to create a cloud platform that totally ignores your customers' needs, and then be surprised that it is not widely adopted ?"
You forgot it's SAP we're talking about here.
"CFO Luka Mucic said at the time that the cloud model would increase customer lifetime revenue. "We are effectively expanding our share of the wallet," he told investors."
....
Saueressig (Product Engineering) meanwhile "committed to the total cost of ownership being lower in the cloud than comparable current payments."
CFO claims this will make SAP more money, Engineering, what wait a minute..
game over.
So, they say: " the cloud model would increase customer lifetime revenue. We are effectively expanding our share of the wallet" and then "the total cost of ownership being lower in the cloud than comparable current payments.". Which is it as is cannot be both?
They also say "We want to give [customers] a helping hand now to move them to the cloud.." Sure they do.
This all sounds like they have been reading from the Oracle book on how to make more money from your users. They are trying to get it's users to use standard products in their cloud and with no customisation. Some users have years of investment in making SAP work the way they want (or best possible) and will be very reluctant to use SAP's standard template offerings. If they believe that "the total cost of ownership being lower in the cloud than comparable current payments." then it sounds like a bait and switch operation.
1- ERP market is close to saturation, hence SAP cannot grow profits by selling more licenses, and the annual license manteinance fees, while substantial, will remain essentially flat in the future.
2- The capex cost of running SAP on premises is starting to look ridiculous in comparison with the cloud costs. Not to mention the lack of flexibilty, staff costs, etc. So much that more and more business are starting to devaluate the "single source of truth" idea as one that is either unattainable, extremely costly or just not valuable enough. Business agility requires processes to be resilient and adaptable, and a single monolithic solution is not. So SAP is not being considered for new deployments.
3- Customers will not touch a single bit in their existing SAP installation if that means even the slightest change on their business processes or SAP customization, which are the result of years of costly, painstaking and complex compromises between the so called "SAP best practices" and the real world. In practice, nobody wants to hear anything about SAP version upgrades or migrations.
With all the above considerations, the "lift and shift" to the cloud is their only option if SAP wants to keep growing profits. Make them move "as is" to the cloud and then force them to move to a higher SAP version (sorry, your "lift and shift" app will not be supported on....) and/or increase revenue by raising cloud fees (now that you've moved to the cloud, where will you run your SAP instances if not on our cloud?)