Understanding how your plans align with those of your critical tech providers has never been more important. Now is the right time to ask hard questions about your legacy applications and what the path to cloud-based systems looks like.
“Rigid systems were fine when the world was much more steady and constant. That’s just not the world we’re in now,” says Brian Sommer, industry analyst and founder of TechVentive. “I think this pandemic has been a blow to on-premises systems. A lot of companies are realizing that they don’t want to have their IT headcount tied up in patching and maintaining those systems.”
Investing strategically in technology during an economic downturn paid off for many companies during the last recession, according to McKinsey & Co. research. The firm examined 1,500 public companies from 2007 to 2011 to understand which businesses outperformed competitors. The companies in the top 25% in total return to shareholders owed much of their success to investing aggressively in productivity improvements following the economic crisis, the research found, and those companies sustained 30% more organic revenue growth and were able to reduce their debt to equity ratio between 2007 and 2009.
“If you weren’t thinking about reimagining how work gets done in the company, how processes flow, and how you can increase automation, you’ll need to look at that now, because you need every advantage you can get,” Sommer says.
Today, companies need their IT departments focused on innovation so that they can adjust, even shift their business models, he says. Key to that innovation is process automation, as well as real-time analytics that taps artificial intelligence and draws on IoT data.
“Companies don’t want a driveway full of tools and car parts.” Brian Sommer, industry analyst and founder of TechVentive
“Companies don’t want a driveway full of tools and car parts,” Sommer says, they just want to get in a car and drive. “They want solutions—and if they hear a bunch of futuristic plans and ideas and see a few prototypes of things a vendor might someday make available, they don’t want that. They want to hear that there is something they can take advantage of and take home and implement today.”
Given these business demands, if you’re attending SAP’s annual SAPPHIRE conference this week, here are a few questions we at Oracle think that you might ask:
1. When will all of SAP’s acquired products—from the likes of Ariba, Fieldglass, SuccessFactors, Hybris, and CalidusCloud—have a single code line, a single product architecture, and a single data model?
These SAP applications run on separate technology stacks and require the SAP Cloud Platform to integrate with each other and on-premises SAP systems, all of which end up requiring systems integration—something that SAP CEO Christian Klein recently acknowledged has affected customer satisfaction scores.
Furthermore, if each of these standalone cloud products is on different update schedules, that leaves customers’ IT departments in constant update mode. And systems with separate data models make it harder for business users to build their own reports and analytics and get a unified view of how their company is performing.
2. How fast can I move off old SAP on-premises systems? What’s the risk?
Leaders at companies still using rigid on-premises systems are worried, Sommer says, and they need to ask: “How fast can you do an implementation and get this boat anchor off of me?”
While speed is an important consideration, they also need to understand risks such as loss of functionality.
“It’s important to understand how the company is monitoring its ecosystem of partners to make sure that they’re going to deliver exactly what you need in the right amount of time,” Sommer says. “No one wants death by a thousand cuts with a slow migration. There’s just no appetite for that. It’s risky, and the longer the implementation goes on the longer you deal with that risk.”
And although the deadline for moving to the SAP S/4HANA system has been pushed back a few times, it’s complicated and expensive to implement, and still largely includes only financials. Companies that want to use SAP’s acquired cloud applications for the rest of their crucial functions will also need to license and configure the SAP Cloud Platform and integrate all of those systems.
3. How will SAP’s recent change in leadership affect its customers?
On top of the company’s ever-moving deadline for customers to migrate to S/4HANA, SAP has in the last year lost its CEO and recently a co-CEO. The company’s chief product officer left in May, and the company’s cloud division CFO will exit the company later this month.
“Executive shakeups like these can suggest a complete strategic pivot, trouble in paradise, or other strategic issues that buyers may want to know more about,” says Eric Kimberling, CEO and founder of Third Stage Consulting Group.
4. How does SAP enable companies to incorporate the latest technologies?
For example, Leonardo, SAP’s offering for AI, machine learning, IoT, and blockchain, is a standalone product. Rather than incorporating these technologies into applications, making it easier for users to quickly take advantage, Leonardo is a toolkit that leaves the heavy lifting to IT departments and consultants.
Businesses need to be able to analyze data from across the company at scale, tapping machine learning to spot patterns much more readily, cluster that information, and then use that insight to make predictions, create scenarios, generate forecasts, and enable business users to take swift, corrective action.
“Companies need solutions. They want something they can take advantage of quickly,” Sommer says. With the need to integrate the various SAP cloud applications as well as this separate toolkit, he says, “you need an incredibly competent implementer, and you want the implementer to stand behind those integrations over time, even as changes and updates are made to different parts of the value chain. If any of these integrations break, you want someone to be accountable.”
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