During a live, virtual conversation, ASUG CEO Geoff Scott and SAP CEO Christian Klein spoke candidly about common concerns among North American customers. They touched on everything from strategy and vision to SAP S/4HANA, moving to the cloud, and integration. ASUG shared five key takeaways of that conversation and what it meant for customers planning for the next year.
Klein did not shy away from any topic, and, in fact, agreed to follow up on any unanswered questions, which we tackle in this two-part series. In part one, Klein went in depth about the challenges customers face with SAP S/4HANA and how SAP plans to help, as well as a closer look at product strategy and what is driving it. In this second and final part, Klein discusses cloud strategy, integration, licensing, education and training, and much more.
ASUG: How should customers think about and differentiate SAP’s cloud offerings from others, including the myriad of cloud tools that are out there today. Why go with SAP instead of other established cloud providers?
Klein: Customers in more than 25 industries value our ability to develop the most comprehensive suite with a consistent end-user experience to run their most mission-critical core processes, end-to-end. In the almost 50 years since our founding, we have created the broadest portfolio of front- and back-office applications in the market, leading in ERP, finance, HR, spend management, digital supply chain, and experience management.
That said, to benefit from the chances that digital transformation holds, companies need tightly integrated processes—and let’s face it, running a patchwork of software as a service (SaaS) applications doesn’t necessarily make you an Intelligent Enterprise that is able to operate seamlessly, end-to-end.
A true business transformation does not happen only with an intelligent workflow solution or by selecting many best-of-breed vendors, leading to fragmented IT landscapes or by just moving your IT landscape on a public cloud infrastructure and creating data lakes. A successful transformation starts with tailor-made, standardized, or industry-specific solutions for your challenges, and continues with the holistic transformation, including the redesign of your business processes. Meanwhile, we fully understand that customers have their own pace of transforming their business—and their highly individual approach. SAP will accompany companies on this journey no matter what.
Only SAP can connect the front to the back office, allowing companies to benefit from seamless visibility, insights, and process across their entire company and value chain. Only SAP has the solutions, services, and ecosystem to help customers run as Intelligent Enterprises.
ASUG: The cloud solutions have made a lot of progress on operations, but there are still notable challenges in change management, support, and stability of integrations through the release cycles. Since these are mission-critical applications, how do cloud operations fit in SAP's priorities?
Klein: SAP continues to invest in operations topics and drive improvements to all aspects of the customer experience. This is a top priority for all the cloud solutions, which are now part of the Product Engineering board area under Thomas Saueressig. Here we are working to deliver solutions through the entire operational life cycle and across Intelligent Enterprise scenarios. Teams are especially focusing these integration scenarios to improve testing, monitoring, and operations.
As reported with Q3 results, SAP will invest even more in cloud delivery modernization, which will accelerate SAP’s move to the cloud and enable more reliability, resilience, and scalability.
ASUG: What is SAP doing to integrate the acquired businesses, both from a technology perspective and a leadership perspective?
Klein: From a technology perspective, out-of-the box integration for our SaaS applications remains key for us. Gartner has just ranked us a leader in its Magic Quadrant for Multi-Experience Development Platforms, and we’re making excellent progress to deliver a seamless business process integration, including key elements like harmonization of SAP’s data domain model, user experience, workflow management, and real-time steering. Currently at 57%, we expect to deliver up to 90% of these cloud integration suite qualities to our customers by end of this year.
Our Integration Strategy Paper provides a comprehensive overview of our integration plan in the cloud. It focuses on the significant value customers get from holistic technology and business process integration, SAP to SAP, but also to any third-party application in hybrid customer landscapes. Our Business Technology Platform, including our SAP Cloud Platform Integration Suite, provides all capabilities for process-, data-, user-, and analytics-centric integrations, enabling out-of-the-box integration for SAP-to-SAP scenarios and more than 160 connectors for third-party applications. Harmonized data models and a central master data service will simplify the sharing and distribution of master data across the Intelligent Suite. No other vendor can deliver this deep business process integration across the entire value chain, going far beyond the solely technical integration approaches of our competitors.
From a leadership perspective, we have made many acquisitions and realized that it is very important to give the teams and talents we acquired with these companies some time to continue doing what they did before—as this is one of the reasons we chose these companies: for their people’s expertise and skill sets.
In the next step, it is crucial to combine the expertise of these new companies and their cloud DNA, which is carried by their leaders and employees, with the unique skills of the SAP employees to continue to drive the transformation to a cloud company. In other words: bring the best of two worlds together.
This is what we did through the new organizational setup we announced in February: We brought the teams closely together with a strong focus on change management. As a result, you see great leaders from acquired companies like Michael Weingartner leading teams with employees from acquisitions and SAP.
ASUG: Most customer landscapes include both SAP and partner solutions. How should customers ensure that partner solutions are up to date and certified for the latest SAP version?
Klein: Certification from SAP ensures high-quality integration of partner solutions. Customers should encourage their third-party application providers to get their add-ons certified by SAP if not already done so, and potentially explore working with certified application providers during their buying decision. During the buying process, they should try and secure commitment of partners in keeping their applications up to date with SAP releases.
In line with ASUG’s recommendation, SAP continuously provides the support partners need to prepare their add-ons for latest releases of primarily SAP S/4HANA and certify them for that release. This includes early access to a free SAP S/4HANA sandbox two months prior to the official release for select partners with certified add-ons and active SAP S/4HANA customers. It also includes an annual subscription service to recertify partner add-ons on an ongoing basis and to be supported by a dedicated integration consultant from SAP.
Customers can verify the certification status of any add-on. It also includes the option to get in touch with the SAP Integration and Certification Center, should their partner add-on be missing from the list, so that SAP can get the respective partners on the latest releases.
ASUG: Can you talk about SAP's future direction on indirect and digital access? Will there be a significant push to make SAP ERP licensing available via a SaaS model?
Klein: SAP Digital Access, announced in 2018, is an optional model for our customers. We believe it offers a simpler, more transparent, and predictable approach for licensing indirect use scenarios by determining licensing based on outcomes achieved with the software (i.e., documents generated) versus the number of named users using the software. We are convinced that SAP Digital Access is a fair and forward-looking pricing model for all our customers who digitally (via third-party software) interact with an SAP ERP system. There have been no further changes to the benefits of the program, after the extension through Dec. 31, 2021, which we announced earlier this year.
While the Digital Access Adoption Program (DAAP) will expire at the end of 2021, our customers will be able to continue to take advantage of the SAP Digital Access licensing model, and we are available to help all ERP customers determine if it makes sense for them. Given that the DAAP is ending and it is unlikely to be extended again, we suggest all customers formally evaluate SAP Digital Access sooner rather than later. SAP offers several tools, as well as the Digital Access Evaluation Service, to help with such an evaluation.
Given today’s market environment, we are cognizant of our customers’ needs to expedite their digital transformations. We are also aware that the move from on-premise to SaaS landscapes and commercial models pose unique challenges and opportunities to each of our customers. We are fully committed to supporting our customers in their journeys to take ERP to the cloud. Going forward, we will offer increasingly flexible and simple license models to partner with our customers in this process.
ASUG: Are there any plans to enhance the SAP University Alliances?
Klein: In April 2020, we established a new leadership team to focus and strengthen SAP’s University Alliances programs. The University Alliances team was integrated with the SAP Academy for Engineering and the SAP Sales Academy under the leadership of Karina Edmonds in the CEO board area. The new focused mission of the SAP University Alliances team is to inspire young people about digital technologies, deliver a great learning experience around SAP technologies to students, promote SAP as the leader in end-to-end enterprise solutions to academic partners, and increase collaborations with universities and research organizations.
To name a few of the current enhancements, University Alliances focuses on accelerating the move to SAP Cloud solutions for teaching curriculum at universities; expanding offerings of SAP University Alliances globally, like SAP Young Thinkers program for high schools, SAP Next-Gen semester student projects, and delivering academic seminars by senior leaders at top universities; partnering with HR and SAP Labs to attract top talent to SAP via the Campus Ambassador Program; leveraging the SAP Academies for curriculum development and training faculty; fostering research cooperation with universities and research institutions; and ensuring a close cooperation with the SAP User Groups to join forces in education and acquisition of the next generation. North America, for example, has Paul Kurchina from ASUG on its new North America Academic Board.
ASUG: What advice do you have for the early talent in the company who are entering the workforce in SAP during this tumultuous time?
Klein: I would first reassure them that they are joining one of the best companies in the world, and we are very happy they chose to start their careers with us and enrich our diverse teams with their unique perspective, background, and skills. At SAP, their development will always be supported regardless of the external challenges presented. In fact, throughout this tumultuous year, we have made several investments to enhance the experience early talent has with us.
Offices are not yet open in many countries and face-to-face activities have been limited, but early talent should ensure they stay connected with their teams and mentors, so the current restraints do not impact their experience and deliverables negatively. Looking back at my own career, it was always very important for me to have a strong mentor on my side. A key role of managers is to take care of people development and develop everyone’s strengths to help guide people to their next career level.
Early talent should continue to bring their energy and ideas to the table, giving everyone a chance to learn from them. SAP has a world of learning opportunities they should explore, which will help them become top professionals, even in the toughest of times.
What I would also like to tell them is to move out of their comfort zone regularly. Oftentimes when something works very well, you really don’t have the feeling that you should move on. But after a certain time, it’s very important to experience new things to go for the next opportunity to keep up your learning curve. With that, you also broaden your experience, which is essential to build a successful career within SAP.
ASUG: Where are you most optimistic about, with respect to how we emerge as a global society from this pandemic?
Klein: This pandemic is a catastrophe. There is no doubt about that. But despite all the hardship it brings, it also brought out the best in many of us. Friends, colleagues, even strangers started to look after each other—help elderly with their grocery shopping, offer online gym classes for kids, and stay connected to keep the spirits up. I hope this kindness continues.
Business worldwide became incredibly creative in dealing with the crisis, forcefully demonstrating the ability to adapt to even the worst circumstances. This was based on technology, but also based on the extreme commitment of their leaders and employees. The positive environmental side effects of the pandemic demonstrated how fast we can drive environmental transformation.
CO2 output declined to a level we haven’t seen since 2006. China’s CO2 output alone has decreased by 200 million tons, which equals 10% of the total global emissions. This doesn’t make the pandemic and its consequences on people and the economy any less horrible or devastating. But it demonstrates that together we can drive massive change in a short period of time.
ASUG: What keeps you up at night and how does it drive what your next day looks like?
Klein: Besides my little baby girl, there are some things that keep me up at night. Particularly in challenging times like this, I think a lot about what’s right for our employees and customers—now, but also in the future. The good news is that I’m not alone. Besides the SAP team, I have many close relationships with amazing leaders and their teams on the side of our customers and partners.
On the next day, thoughts like this get me to focus even more on reaching out and listening even more closely—to our employees and leaders at SAP, to our customers and partners. There are many ideas out there that we sometimes just need to bring together to find innovative solutions we didn’t know existed.
ASUG: As you look forward to next year and the following years, give us a sense of how customers should think about SAP.
Klein: Since 1972, we have been running the world’s most critical business processes. Combined with our deep knowledge of 25-plus industries, we know better than anyone else about how to transform businesses and create real business impact. There are four things I would like you to think about when you think of SAP.
First, we are your long-term partner for business transformation and for helping you become intelligent enterprises. To stay relevant, companies need to be able to adapt to changes and new trends constantly and with agility. For almost 50 years now, we have been enabling our customers to do exactly this. We appreciate that many of you have your own pace of moving to the cloud and taking the journey to reinventing how your business is run. On this journey, we are by your side. This is where you find us today, next year, and the years after.
Second, when it comes to our portfolio, we stand for integration and innovation. It’s not about either-or. We need to focus on integration to deliver the Intelligent Enterprise. And we constantly need to innovate to continue to deliver best-in-class solutions to our customers. This is where our Business Technology Platform plays a crucial role as the foundation—not only for integration and extension, but also for the agility I just mentioned. Moving forward, we will even accelerate our efforts in helping you to analyze and redesign your business processes and make them more intelligent.
Third, we stand for customer empathy. While we challenge the status quo, for us, this doesn’t stop at the point of sales. For us, it is about ensuring value across the whole life cycle.
And finally, SAP is a company that cares—not only for our customers or colleagues, but for society as a whole. For example, sustainability presents a unique opportunity for us to create a lasting, positive impact for future generations. We are expanding our solutions to allow customers to measure and reduce carbon emissions along their value chain. We will embed sustainability as a new dimension of success into analytical and transactional applications, adding a green line to the top and bottom line for measuring a company’s performance, ultimately allowing them to transition to the circular economy.
ASUG: Thank you Christian, for your candid responses. We look forward to 2021 and what it will bring.
ASUG members can watch the full conversation between the two CEOs on demand. You can also register for ASUG Express and ASUG Think Tanks and Interest Groups throughout the year to further learn about and discuss everything from SAP S/4HANA to cloud strategy and integration.