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The DSAG Board Comments on Rise with SAP

DSAG the German speaking SAP user group have aired their opinions of Rise with SAP and the Sapphire Now 2021 event. Following our coverage of Sapphire Now and how Rise with SAP is being received, IgniteSAP shares the opinions of two DSAG board members, Jens Hungerhausen and Otto Schell, expressed in their interview with Jon Reed of Diginomica.

We will look at Reed’s discussion of their thoughts on Rise with SAP and SAP’s current direction in general as this provides a bird’s eye view of the current SAP strategy, and a summary of the point of view of the 60,000 strong German language SAP user group.

A Counterpoint to the Hype of Sapphire Now

The main theme that came across in this interview was that DSAG leaders felt it was important to provide a counterpoint to the hype of the Sapphire Now 2021 event. This is not really a surprise as they represent the interests of SAP users and as such it is their duty to ask the questions which they felt were not answered by the presentations of Sapphire Now.

At first we might think that DSAG and SAP were in opposition because of the criticism of SAP by DSAG but this is constructive criticism towards a shared goal of SAP and SAP user groups: to ensure that SAP products provide the best answer to customers ERP needs.

While the function of Sapphire Now is to educate and drum up enthusiasm for SAP products, this optimism and corporate hype requires a healthy dose of pragmatism and a reality check in order to ensure SAP remains fundamentally grounded in its aim of serving SAP customers and users. In this way DSAG serves an important function for SAP themselves.

SAP Is Filling Out The Rise With SAP Offering

Reed’s digest of the interview began with a previous statement by Hungerhausen (Chairman of the DSAG board) on Rise with SAP:

“The planned industry-specific packages for the automotive sector, retail, consumer goods, engineering, component manufacturers, and utilities sound interesting. The same goes for the improvements around human resources (Human Experience Management) and the modular cloud-based ERP system. But these are all also intrusions into existing IT landscapes that are only possible if the relevant solutions can be understood in the context of the wider SAP ecosystem and corresponding projects can be implemented using viable business cases.”

This is essentially a call for more information on Rise with SAP that can overcome the professional caution of SAP System Integrators. They need to be confident in the solutions they implement. They also need to make a case for it as an improvement over their customers’ existing systems.

In the interview, Hungerhausen agreed that some of the new parts of Rise with SAP that were announced at Sapphire Now 2021 filled out the offering and that this evolution was a good step forward. He pointed out that we still need to see more statements from customers of SAP who have taken up the Rise with SAP program to share their experiences.

This is an unavoidable issue for SAP as a new product requires a certain critical mass of customers to circulate their success stories before others are convinced to adopt it. As with S/4HANA and the cloud, companies want contradictory things: to be ahead of the competition and to see other companies jump and land on their feet before they do so themselves.

Complex Relationships

Otto Schell said that the wider context of Rise adoption could be understood if we take into account the point of view of the users, the end-customers and also the partners’ opinions. This three-part relationship is further complicated by the involvement of the hyperscalers.

Schell also pointed out that this revealed some of SAP’s motivation for the instigation of the Rise with SAP service: as a means to get more control over this complex set of relationships in the ERP space: “…in our view, one of the objectives of RISE is to try to get control on your software, by putting your customers in a controlled environment.”

It is possible that for some customers and users this will also be to their own benefit as the simplicity of “one hand-shake” will simplify their own operations but it is natural for users and customers to be wary of handing over “control” of their business software in any form.

Hungerhausen pointed out that for end-customers of SAP, they will still have SIs as well as SAP involved so it will continue to be the case that these companies have more than one hand to shake for now.

Customers Are Still Wary of Change

Schell highlighted a more general issue, that the same wariness of change is still affecting the willingness of DSAG members to move SAP to the cloud or transform. The customers still don’t see the need “after ten years” to move to different environments or change their business models.

In the DSAG Investment Report 2021 released earlier this year we saw that 39% of participants in the survey stated that IT investment budgets in their company were increasing and 43% were increasing their budget for SAP investment. This could suggest that although DSAG members “unwilling” to move, presumably due to perceived risks, that they understood the eventual necessity to do so. However this may imply that the messaging about digital transformation still needs more of a push for it to filter through to the end-customers in commerce and industry, otherwise the burden of making a business case will fall on the system integrators.

Schell summed up the issue: “As a customer, are you willing to change your business?”. Then he drew attention to the SAP partners who are wondering what Rise means for them. They need clarity regarding whether they need an architect on the SAP side to make contracts and they have other questions. Schell believes that until partners have answers to their questions they will continue to sell what they always have, rather than push for Rise with SAP which they do not understand yet.

Integration for SMEs

Hungerhausen mentioned the concern among small and medium-sized SIs in Germany about whether Rise with SAP was intended for them as well as the big consulting companies. We might suggest that SMEs make up 80% of SAP’s customer base and so they would not want to make Rise with SAP available exclusively to the larger consulting companies at the expense of this section of the market.

Along a similar theme Hungerhausen said that although SAP had stated in a press conference that they were “75% there” on product integration, the customers have yet to see the benefits of the integration that SAP has already delivered. Schell said that the degree of integration was dependant on the type or size of SAP customer:

“I don’t think that the normal customer sees [the benefits] of these efforts. Each customer has a different hybrid setup. Even if they are on an SAP landscape, they’re not on one; they have different setups. Most of us have legacy engagement. Customers have to do this sometimes by themselves, with their own developers and outsourced developers, then you need to go to your partner to understand what’s going on. So we need to differentiate.”

Transformation Stories

Jon Reed asked them if they felt that DSAG’s challenge was to “make sure that SAP is serving all the customers, and has good answers for how to help them, even if they’re not ready to move to S/4 yet”.

Schell responded that the overall guidance to the cloud makes sense if separated from the Rise messaging.

“What we’re also looking for is, of course, is SAP could be the trusted advisor… If you don’t support customers by giving them something, and they have to take the same money and implement something, they will look for alternatives.”

The support required at this point is simply more information about the changes which are being made.

He went on to insist that many DSAG members have not experienced an “acceleration of transformation” during the Covid-19 period. This would still be consistent with the observations of the DSAG study earlier in the year which implied a steady increase in IT budgets.

Jon Reed observed that the picture is different in America where a variety of cloud software companies have attributed strong earnings over the period to pandemic-driven digital accelerations “such as supply chain weaknesses being exposed, or a customer urgency to upgrade legacy planning processes (and software)”.

The narrative which Schell describes departs from the SAP driven narrative of digital transformation across all business and industry, but he does believe that SAP customers need a “wake-up call” and would benefit from SAP upgrades if it is in a way that supports their needs and does not price them out.

DSAG Keeps SAP In Touch With Users

Reed concluded that the Rise with SAP campaign is a pitch for the “trusted advisor” role. He emphasised that differences that came to light in recent combined surveys between the user groups of ASUG and DSAG, and that the next survey would help shed light on the dynamics of transformation.

DSAG see it as their duty to hold SAP to account on the promises they make. This contributes to SAP’s connection with their users and customers in the wider SAP community. It reminds us of the system of checks and balances that hold governments accountable for the promises they make and helps to make the whole system more stable to the benefit of all stakeholders.

Shared Goals

It is SAP’s goal to digitally transform the world of commerce and industry and this means their strategy is future orientated. In order to achieve their aims they need to ensure that they remain rooted in the realities of today while speculating how to prepare for the future. DSAG and the other user groups fulfil the function of giving crucial industry feedback which ensures that SAP does not take off on its own and forget to take its customers with it. User groups are part of a communication network which helps calibrate SAP strategy.

What we see is that when a new product is launched then corporations have a continuing burden of educating their customers that extends far beyond a few months, and perhaps for the lifetime of that product. As SAP has attempted to reframe the argument for digital transformation it has come up against the same counter-argument continually: “It works, it makes money, don’t rock the boat”. But to carry the metaphor further: SAP is not rocking the boat, waves of change are doing that and SAP is ensuring the boat continues to carry companies into the future. DSAG and other user groups are part of the ballast that helps keep the boat stable.