SAP Sapphire 2024 Recap: Joule, Cloud, and a Growing Divide
Last week’s SAP Sapphire 2024 event certainly created a lot of buzz. From an onslaught of AI-related announcements to an expansion of capabilities with their new generative AI-based assistant, Joule, there was an awful lot for customers to unpack.
While we’ll have plenty more to say about Joule and BTP in the coming weeks, I wanted to take some time out today to reflect on what I perceive to be a growing divide within SAP’s customer base. So, without further ado, let’s dig in, shall we?
The "Haves" vs. the "Have-Nots"
As I was re-watching the opening keynote (which I’ve embedded a link to below) this weekend, I got to thinking about how all the announcements must be perceived from an end customer perspective. For customers already running modern solutions like SAP S/4 HANA Cloud or SAP SuccessFactors, I’m sure there was a lot of excitement about all the new features. But what about all those customers still running SAP ECC on-premises?
For the most part, the message to those customers was:
Drop everything you’re doing and move to SAP S/4 HANA Cloud.
Adopt a clean core philosophy and begin refactoring all of your custom ABAP code to SAP BTP — see the side-by-side extensibility concept shown in Figure 1 below.
Purchase additional cloud portfolio solutions like SAP Spend Management.
Achieve cloud-based enterprise software nirvana.
Figure 1: SAP Side-by-Side Extensibility Concept
If I’m an SAP customer running SAP ECC 6 and maybe a few other SAP software solutions, this is a huge leap — both in terms of complexity and cost. This, in turn, begs the question: where do we go from here?
Figure 2: SAP S/4 HANA Innovation Path
Clean Core Perspective Among the Masses
As I was reflecting on all this, I happened upon this post from the great John Patterson (@jasper_07 on X):
Naturally, this brought out the snark from many long-time SAP pundits who added a few response options of their own:
D) a way of classifying and managing technical debt in an enterprise landscape
E) SAP motivating competitors to take SAP market share
F) aligning with a move to a SaaS-based revenue and development model and attempting to bring existing market share with it
G) unrealistic
Perhaps Jon Reed (@jonerp) said it best when he suggested it was a little bit of all of the above.
Overall, I don’t think any customer out there would dispute that clean core as a philosophy is a good thing. However, to say that you have to renovate 20–30 years’ worth of custom ABAP code and move to S/4 HANA Cloud before you can start to innovate with generative AI, etc. — that’s a tough pill to swallow. For SAP customers that are still contemplating their S/4 journey, it’s a lot to ponder.
The Great Divide
Between my work with customers at Bowdark, panel discussions at SAPinsider conferences, and conversations with peers, I’ve been getting a stronger and stronger impression that SAP customers are starting to be divided into two camps:
All-In With SAP: These customers are all-in on SAP and continue to strategically align themselves with SAP’s direction/product portfolio. Even if the cost/complexity/proprietary lock-in is higher, these customers like having one throat to choke with SAP.
Mostly Committed to SAP, But Also Playing the Field: These customers aren’t necessarily looking to move off of SAP, but they are playing the field in the sense that they’re more open to a best-of-breeds, composable ERP approach that’s both pragmatic and more affordable. Customers in this camp are also looking for ways to keep the lights on with their legacy SAP Business Suite systems beyond their expiration date(s).
Of course, I’m painting with broad strokes here, but my point is that customers in the second camp probably didn’t hear much that pertained to them in the keynote address, etc. Indeed, the more pragmatic stuff was being discussed in peer-to-peer fashion down the hall at the ASUG sessions. Jon Reed has a similar read on this on his SAP and Enterprise Trends Podcast.
Where Do We Go From Here?
For SAP customers in the “all in” camp, the path forward is simple — just follow along with SAP’s direction. However, if you’re finding yourself in that second camp, there are many unknowns.
Whenever we advise customers in this camp, we always start with the good news: you have plenty of options to choose from. For example, if you need to buy some additional time in terms of the S/4 migration deadline, you can purchase extended support for legacy SAP Business Suite systems from companies like Rimini Street.
In the meantime, you can chart out your own innovation roadmap where you can innovate at your own pace. With that in mind, here are a few strategies we would encourage you to consider.
Building a Composable ERP Strategy
Many of the SAP customers we talk to are only using a couple of modules in SAP ECC (e.g., finance plus something else). If that’s all you truly need, perhaps a composable ERP strategy might make more sense for your business. This is particularly true if you already have overlaps in functionality between SAP and other SaaS solutions in your landscape such as Workday, Coupa, and so forth.
One thing to keep an eye on here is the changing marketplace now that we’re living in the age of copilots. Last week, Microsoft introduced a new solution within their Dynamics 365 portfolio: Dynamics 365 Contact Center. This SaaS solution can be used to create a modern, omnichannel-based contact center experience on top of legacy backend systems like SAP.
If you’re an SAP customer running the legacy SAP Customer Service (CS) module, you can think of Contact Center as a bolt-on that allows you to more flexibly manage work orders, schedule resources, and simplify/enrich the user experience for frontline workers. The integration with SAP is seamless and it’s a much easier to get up and running with something like this compared to integrating a full-blown CRM system like Salesforce.
Solutions like Dynamics 365 Contact Center can go a long way towards bridging the gap for customers that are looking longingly at SAP Joule and thinking that gaining access to modern AI-based assistants is lightyears away. As more and more of these types of solutions enter the market, it’s going to get easier and easier for customers to obtain access to modern features regardless of how old their backend SAP systems are.
Innovating Around the Edges
Even if your legacy systems are still running on-premises, there is a lot of value to be gained from cloud and low-code development platforms. Indeed, these platforms empower you to innovate around the edges of your existing SAP landscape and fill in functional gaps like never before.
Whether you’re an AWS shop, a Microsoft shop, or something else, there’s nothing stopping you from developing side-by-side extensions using the tools your team is the most productive with. Plus, given the openness of SAP BTP, you have the option of developing a multi-cloud strategy that maximizes the capabilities of your entire development team.
Figure 3: Developing Multi-Cloud Solutions with SAP BTP
Here at Bowdark, we’ve seen more than a 60% increase in productivity since we started developing SAP solutions on top of Microsoft Azure and the Power Platform. These solutions follow clean core principles, ensuring that they’re fully compatible with S/4 HANA. So, you can rest assured knowing that these aren’t wasted efforts.
For customers that may be years away from an upgrade, we find that low-code technologies can really accelerate the time it takes to deliver innovation into the hands of the business. You don’t have to wait until S/4 to innovate; you have all the tools you need to get started with digital transformation initiatives today.
Harness the Power of Your Data
By harnessing the power of modern cloud-based data platforms such as Microsoft Fabric, it’s never been easier to bring your SAP and non-SAP data sources together to unlock advanced analytics, data science, AI/ML workloads, and so forth.
While these capabilities are powerful in their own right, the underlying functionality can be woven into your existing SAP apps to modernize user experiences. For example, Figure 4 illustrates how a Power BI report can be embedded inside of a Fiori application. Behind the scenes, we can utilize API integration to infuse SAP applications with data/insights as well.
Figure 4: Embedding Power BI Analytics into a Fiori App
Closing Thoughts
Regardless of where you may fall in the great divide, I hope that this article provided you with some better context to know where you stand. It always makes me sad to talk to SAP customers that leave events like Sapphire feeling like they’re years away from innovation because nothing could be further from the truth.
As always, we welcome your feedback and would love to learn more about your perspective. Feel free to add in your question below or drop me an email to discuss these concepts further.
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