As SAP and ASUG wrapped up the November 2022 Application Lifecycle Management (ALM) Summit and began considering 2023 event programs, Marc Thier, SAP SVP of Application Lifecycle Management, shared themes from his summit keynote and conversations. In a recent interview, he also discussed SAP ALM strategy, the product portfolio, and his views on 2023 technology shifts.
For more on Thier’s insights, ASUG offers this edited version of the conversation.
Question: From your perspective, Marc, what were the takeaways from the most recent SAP-ASUG ALM event?
Answer: I can talk about the keynote and the fireside chat—the key messages during the event related to direction. SAP Solution Manager is the flagship product for ALM. We have 15,000 delighted customers on it. But based on the business need–the end of mainstream maintenance by 2027–customers should have an attractive alternative for Solution Manager customers to move to, SAP Cloud ALM. It is prime time already for the operations part. So, when you want to manage your operations, you can use that now. And then, for cloud implementations, you move to SAP Cloud ALM.
When declaring your next-generation ALM platform, you must take the customer’s hand and guide them to the next-generation solution. So, we also explained how to transition and how we would support customers’ transitions from SAP Solution Manager to SAP Cloud ALM. That was one highlight.
From both ALM events in Germany and the U.S., we're positively surprised about our strategy's excellent momentum and spirit Customers are on board. They’re excited to follow us. In a funny story from the German event, they said, "I expected that I would retire with SAP Solution Manager, but now I'm so excited about SAP Cloud ALM that I will work even longer."
We are in a transition to a new ALM solution. Customers say it's more a question of when to find the right time. With SAP Cloud ALM, we have a solution customers trust. Even if it doesn't do the job for all of their needs yet, they trust us with the roadmap we shared.
It was also important to explain that this is not SAP Solution Manager in the cloud. It's really a completely new solution, basically disruptive innovation. I explained on one slide the 15 innovations on SAP Cloud ALM that are not available today on SAP Solution Manager.
It is an important part of positioning that we are doing things very, very differently. It's still an ALM solution in nature. The car still brings you from A to B. But we have a new solution that’s improved in many dimensions, not just little continuous improvements to SAP Solution Manager.
Q: Looking back at the last 18 months, have customer awareness and understanding of SAP ALM solutions increased? Has their adoption increased? And what do you project for the next 18 months to two years?
A: SAP Cloud ALM has been out for roughly two years. Within those two years, we gained 1,500 customers through the end of last month. We currently gain four to five customers every day. By the end of this year, we will probably reach 2,000 to 2,500 customers. Then we will be in the range of 4,000 to 5,000 by the end of next year.
I rather expect an acceleration of growth beyond the four to five per day that we add today. Why? Because SAP Cloud ALM will become more mature and more known. Especially with Solution Manager, we have the transition from mainstream maintenance, which increases a little pressure to move to Cloud ALM.
Let’s say the total addressable market for SAP Cloud ALM is roughly 76,000 customers. These customers could click on SAP Cloud ALM today, and 15 minutes later, they would have it. I expect that within the next 10 years, we will reach at least half of the targeted customers. That is a pretty good momentum because there are not so many solutions out there that have this magnitude of customers.
With that, we would pretty much be superstars already. We would double the number of Solution Manager customers, which is fair because the addressable market of SAP Cloud ALM is much larger. There are the first 15,000 additional customers that we can reach with SAP Cloud ALM because the entry-level barrier for SAP Cloud ALM is smaller. You can be productive for implementation, usually after an hour, and for operation, after a day. That's the speed we have.
Then you have 30,000-plus customers, and a good portion of them also will adopt cloud solutions. I expect on-prem-only customers will move to hybrid solutions, which again accelerates SAP Cloud ALM because it supports cloud use cases, not just the on-prem world but also the cloud world.
We also address all the customers that are cloud-only. We should not underestimate that. That is a new addressable market that SAP Solution Manager could never reach. That's what makes me so positive about adopting SAP Cloud ALM because it can address the smaller, on-prem customers and all our cloud-oriented, cloud-centric customers much better than SAP Solution Manager. It's built for that use case, from an ease-of-consumption point of view, from the solutions we support, the content we provide, and the ease of adoption and simple UI.
There's another thing that makes me very optimistic. SAP Solution Manager was very much seen in the IT context; it was usually owned by IT. SAP Cloud ALM goes in both directions. It can be consumed by IT; there are use cases that are probably managed more by IT, but it also has use cases that business users can consume. So, we have seen public cloud customers that are doing their implementation largely on their own. SAP Cloud ALM is great for the consumer because you don't need a big IT investment to get it up and running.
Q: Is there any unfinished business regarding SAP Cloud ALM or SAP Solution Manager as the year comes to a close?
A: Never is everything finished. Even my house is not yet finished. Let's say being finished is against the rules. Vis-a-vis SAP Solution Manager, I think the improvement areas are solution documentation, change management, and testing. These are areas that need more investment and additional capabilities. They are clearly laid out. We did influencing sessions at the [ALM] summits about what we need in these areas. The good news is that all of what’s needed is already on our roadmap for the next one to two years.
On the side of adoption, meaning integrating the products into the SAP Cloud LOBs, SAP SuccessFactors, SAP Ariba, and so on, we must make progressions to get better content and better support. Take change management, for example. On the one side, we support more advanced landscapes, like dual landscapes, which is more of a practical side of change management. But then we have the integration into cloud deployment providers that do the physical transports. Here we have a technical solution, like the cloud transport management system, but it still needs to be integrated into SAP SuccessFactors or SAP Ariba. So, there are also contributions that SAP Cloud ALM needs from the cloud products of SAP to integrate better.
Q: Were there any surprises for you regarding the ALM sector in 2022?
A: A good surprise, honestly, is the partners’ interest in SAP Cloud ALM. We try to be very partner friendly. We have all these open APIs. We provide you with wide spaces to extend SAP Cloud ALM. We offer partners the ability to innovate on top of SAP Cloud ALM. We are even inviting system integrators to build their content on top of our content for their industry verticals so that they can, on the one side, be compliant to SAP, but on the other side, add their differentiating pieces, both in methodology support and in process content support for the industry verticals.
The interest and momentum of partners that I've never seen in SAP Solution Manager are now suddenly coming to us. This evening I talked to Cisco about the integration of SAP Cloud ALM. They're just coming to us and want to integrate into Cloud ALM. That's really good traction.
Q: Do you think that's a function of cloud transition and migration?
A: Cloud means more openness, the next level of openness compared to what you would expect for on-prem, which is, by nature, a little more proprietary. SAP Cloud ALM is built to be committed to open standards, openness via documented APIs, and in the business API hub of SAP. It's visible to everyone. We are building a baseline and inviting partners to innovate, to do the special solutions. And that works well.
We base ourselves on the SAP Business Technology Platform, but then we are in SAP Services and Support, an ALM platform on top of the Business Technology Platform. Some partners like to innovate on top of that. So, we are not just at the end, not just an SAP solution for the customer to manage ALM, but also a platform for system integrators, AMS providers, and ISVs to innovate, on top of SAP Cloud ALM.
Q: The ASUG mission is to help our members and customers get the most value from their investment in SAP technology. How does the ALM strategy, and the ALM solution set, help our members and customers get more value from their investment in SAP?
A: We have two goals, two value propositions, that are absolutely in sync with the value proposition ASUG provides to its customers because they are our joint customers. Number one: accelerate innovation, reduce time to market, and make for the faster adoption of SAP solutions. That’s exactly the game we are in with the implementation part of SAP Cloud ALM. It’s all about understanding the best practices of SAP, having a guided experience for the implementation, accelerating testing, and accelerating deployment. With SAP Cloud ALM, you implement faster. Instead of starting with a blank piece of paper, we begin with a complete set of guidance, via our tools and content.
Number two: now that I'm live, I need to keep the system up and running, and I want to have a low total cost of ownership (TCO) for the operation. You can say with on-prem, that's clear. But what about the cloud? Cloud is not just taken care of by SAP. Ultimately there are rather business-facing things, like managing integration and business processes, which, even in the cloud space, are not operated by SAP or the cloud provider but are still the responsibility of the customer.
So, there are operational duties that we address with monitoring templates, with out-of-the-box thresholds for monitoring integrations, business processes, and users. These lower TCO because we automate the detection of problems that might exist in the customer environment and even try to auto-resolve them.
This brings up to the vision of a self-healing system where problems are detected and mitigated from within the system. That’s the value proposition of low TCO and automation in operation. These are the two things we are doing: lowering the cost of implementation and accelerating implementation time on the one side, and, on the other side, lowering TCO for our customers and automating their operation toward a self-healing system.