What This Article Covers
- Outlining the Strategy For Moving Customers Along the Desired Pathway
- SAP HCM Support Flip Flop
- Illumination of A Major Technique Used to SAP to Control Customers
- How SAP is Able to Frame its Flip Flops as Being “Customer Centric”
In this article, we will expose one of the primary ways that SAP pushes its customers to move to new products.
Outlining the Strategy For Moving Customers Along the Desired Pathway
It has two parts.
- The first part is the deadline, and..
- the second is the flip-flop on that deadline.
Notice the following case study on the flip flop on support for the SAP HCM application
SAP HCM Support Flip Flop
“First the announcement under the unassuming title of: Product Note: SAP HCM On-Premise Option for SAP S/4HANA. Basically, this boils down to a choice for customers. Remain on premises for HCM provided they switch over to S/4HANA and, in doing so, get extended support through 2030 or go the SuccessFactors cloud route. Support for other HCM ERP versions ends in 2025.” – Diginomica
SAP made the following statement.
“SAP also continues to support our customers using SAP ERP HCM, our on-premise HCM solution. While an increasing number of them are migrating to SAP SuccessFactors solutions to accelerate their digital HR journeys, we also recognize that every customer journey is unique and must be undertaken at each customer’s own pace. For some SAP customers this includes a desire to deploy their HCM solution in an on-premise environment for the foreseeable future.”
The reason for all of this?
“The bottom line is SAP has really struggled to convince their ~12,500 SAP HCM customers to move to #SuccessFactors as the last provided info had ~600 out of the 2,000 SuccessFactors Employee Central customers coming from SAP HCM. Many of these customers understandably want some assurances that SAP will continue to support SAP HCM further out than 2025 which could have easily been provided by getting agreement to move the entire Business Suite out to 2030. Instead, SAP has decided to introduce a new licensed offering called SAP HCM On-Premise for SAP S/4 HANA that will be built by 2023 and will be based on SAP HCM so they are counting on customers trusting SAP will deliver something five years from now, being willing to do an upgrade (always painful in SAP), signing up for a new license and all of this to get virtually the exact same functionality they have today and an extension of support until 2030.”
Therefore, very practically speaking, SAP HCM customers are not migrating to SuccessFactors. Let us do the math. So 600/12,500 is roughly 5%. Five percent of SAP HCM moved to Employee Central. This is nearly six years after the acquisition (SuccessFactors was acquired in Feb of 2012).
Therefore, the migration of HCM customers to SuccessFactors can rightly be called a failure. This brings up another question which is was the outcome of the SuccessFactors primarily PR related and to make an impression on Wall Street by having Bill McDermott repeatedly say “SuccessFactors” for six years.
But getting back to the support implication. SAP had to extend support for SAP HCM as nowhere near enough customers were moving.
This is a pattern of SAP.
Illumination of A Major Technique Used to SAP to Control Customers
This is a staple of SAP at this point. In the comments to the press, everything is about SuccessFactors and how everyone will migrate to SuccessFactors. But then, the reality of projects is that many customers will not migrate to SuccessFactors from SAP HCM. How many customers have been migrated to SuccessFactors versus SuccessFactors just keeping the customers it already had before the acquisition? The same question could be asked of the Ariba acquisition.
At some point, reality intervenes. And changes are made more in the background, with SAP hoping that no one notices.
This is why it does not make sense to listen to what SAP says. SAP views its customer base as rats to be pushed down a maze. Many if not most of SAP’s statements are to facilitate this progress through that maze. Instead, it makes more sense to evaluate likely outcomes without worrying about what SAP says. If SAP has a large number of customers on HCM, then yes support will be extended.
SAP is brilliant at this.
- First, they set some unattainable timeline…
- Then they change direction 180 degrees, but they frame it as if they “listened to customers.”
They somehow turn a flip-flop on a policy that was just a “rat through maze” statement as being customer focused.
SAP’s marketing department is the New England Patriots of enterprise software. Other vendors run around scratching their head wondering how they got away with it.
SAP’s statements about when support should be taken with a grain of salt. Ultimately it is how many customers have moved away from the previously supported item that will determine when support expires. SAP has a 90%+ margin in its support business. SAP has plenty of resources to support applications for many years, but it chooses to limit support as a mechanism, (or in many cases pretending to limit support) to coerce customers into moving to new products.
- The best way to understand SAP is that they will never be happy with their customers just staying where they are. They must motivate them to continually spend more money on SAP upgrades, consulting through partners, etc..
- One way of keeping away from these types of threats and manipulation by SAP is to move to third-party support.
Financial Bias Disclosure
This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.
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