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The “Customer Services & Delivery” Board Unit

SAP, a leading software company based in Germany, announced on Tuesday its plans to establish a new division within its executive board, specifically aimed at enhancing cloud growth. The focus of this division will be on facilitating customers’ engagement with continuous innovation in cloud-based services, according to the company’s statement.

In conjunction with this development, Muhammad Alam is set to join the executive board. Alam will be taking over from Saueressig and will be responsible for overseeing the product engineering segment of SAP.

SAP’s strategic restructuring, particularly the establishment of the “Customer Services & Delivery” board area, shows SAP’s continued determination towards accelerating cloud transformation, despite concerns around SAP’s pivot to “cloud-first” offerings raised among SAP user groups and customers.

Thomas Saueressig

The new division of the Executive Board, which is set to commence operations from April 1, will be under the leadership of Thomas Saueressig, currently a member of the Executive Board of SAP SE, Product Engineering.

Saueressig’s leadership and vision are aligned to SAP’s strategy, particularly in integrating innovative technologies like cloud computing, AI, and machine learning with SAP’s core offerings.

Saueressig advocates a customer-focused approach, aligning product development closely with customer needs and feedback. This philosophy has played a critical role in the establishment of the “Customer Services & Delivery” board area. His emphasis on innovation is intended to ensure that SAP maintains its competitive edge and continues to offer cutting-edge solutions that meet the demands of a digitally evolving landscape.

Muhammad Alam

Complementing Saueressig’s vision is Muhammad Alam, another key figure who will be joining SAP’s executive board, and taking on Saueressig’s previous role in Product Engineering.

Muhammad Alam began at SAP in January 2022, taking on the roles of president and chief product officer for the company’s Intelligent Spend and Business Network divisions. His responsibilities in the position included leading the engineering and design teams that focus on areas such as procurement, travel and expense management, external workforce management, and the SAP Business Network. Before joining SAP, Alam had a significant 17-year career at Microsoft. His final role there was as the corporate vice president in charge of product and engineering for the Microsoft Dynamics 365 business applications suite.

Alam is expected to continue Saueressig’s work with a focus on improving customer experiences, facilitating smoother cloud adoption, and fostering innovation in cloud services.

Controversy Around Cloud-Only Innovations

SAP’s establishment of the “Customer Services & Delivery” board area and the reshuffling of its executive leadership, including the prominent roles of Thomas Saueressig and Muhammad Alam, are part of a larger strategic shift towards cloud innovation. SAP’s cloud shift has sparked controversy among SAP user groups, reflecting the broader challenges and concerns within the SAP community.

SAP’s decision to offer new capabilities primarily to cloud customers has become a point of contention. User groups, such as DSAG (German-speaking SAP User Group) and the UK & Ireland SAP User Group (UKISUG), have expressed concerns that SAP’s cloud-only innovation policy might not meet the needs of all customers, especially those using the software in non-cloud environments. These groups argue for a more equitable approach to innovation distribution, insisting that customers using on-premises or hosted environments also deserve access to new capabilities.

Challenges with SAP’s Rise Program

SAP has attempted to streamline the move to S/4HANA Cloud through the “Rise with SAP” program, offering various cloud deployment options. However, not all customers find the Rise program to be a perfect fit for their needs. The details of Rise contracts and the actual functionality delivered as part of the S/4HANA shift have been thorny issues, with some customers feeling that SAP might have over-promised in this regard.

Implications for SAP’s Strategy

Despite these challenges, SAP is unlikely to alter its strategy significantly, as the enterprise software market is increasingly moving towards a Software as a Service (SaaS) model, and many new innovations like embedded generative AI are not possible in on-premise deployments due to the required processing power and necessary cloud architecture. However, SAP faces a delicate balance in maintaining its commitment to cloud innovation while addressing the concerns of its on-premises customer base.

Customer Focus and Cloud Adoption

Saueressig’s new role in the “Customer Services & Delivery” area is aimed at supporting customers through the process of cloud transformations and accelerating innovation adoption, presumably as part of a new effort to reinvigorate SAP’s campaign of migrating their customer base to the cloud so that new SAP innovations can be adopted far more widely.

Market Analysis

The SAP services market is increasingly leaning towards cloud-based solutions, driven on the one hand by demands for flexibility, scalability, and rapid innovation, and held back by a reticent and wary customer base.

SAP’s decision to focus on cloud services aligns with dominant IT services market trends: such as AI integration across business workflows, and heavy investment in workforce skills and developing specialized services in generative AI in order to meet demand. This market trend also brings with it the need to focus more on governance in cybersecurity and data operations.

Impact on SAP Consultants

SAP consultants now face the crucial task of understanding cloud-based ecosystems and integration strategies, and guiding their clients through cloud migrations in a limited timeframe, particularly as SAP has designated 2027 as the cutoff date for support for legacy SAP software such as SAP ECC and others (with extended customer support options until 2030).

For SAP consultants, this strategic shift signals the need for rapid adaptation and evolution. As SAP is determined to encourage cloud services and draw a line under some legacy offerings, consultants must become proficient in the latest cloud technologies and SAP’s cloud-based services.

SAP Consultants need to stay updated on further rapid developments in SAP’s cloud strategy, as these will directly impact their service offerings, project implementations, and client advisory roles.

There is an acceleration in demand for SAP consulting services, to help clients navigate concerns about the future of their SAP investments while highlighting the correct pathway toward cloud transformation for each customer, in their own business context, with minimal disruption to operations.

SAP’s Long-Term Cloud Strategy

SAP’s long-term cloud strategy, as reflected in the corporate and board restructuring with the roles of executives like Saueressig and Alam, indicates a renewed commitment to innovation and agility. Consultants must stay abreast of these changes, embracing continuous learning to offer state-of-the-art solutions to their clients.

The introduction of the “Customer Services & Delivery” board area is a significant marker in SAP’s journey towards a cloud-first future. It highlights the blend of challenges and opportunities SAP consultants will be facing over the next three years and beyond.

Embracing change, enhancing cloud and AI expertise, aligning with SAP’s cloud-based approach, and encouraging SAP customers to do so will define the SAP services market over this period.

This shift, characterized by regular incremental but non-reversible changes, is not just a corporate strategy but a reflection of the evolving landscape in the SAP services market, and is defined by wider trends in IT services. They offer a new realm of possibilities for SAP consultants, who thrive on technological evolution. Understanding the impact of changes in SAP strategy is crucial for SAP professionals aiming to stay relevant in a rapidly evolving technological and business environment.

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