- SAP has created press releases and related media coverage of customer SAP usage numbers.
- How customers, prospects, media outlets and Wall Street tend to interpret SAP usage numbers.
- How faulty SAP usage numbers contradict reality
- Many announcements on the part of SAP include the release of the number of customers that a particular SAP application has acquired in the most recent quarter.
- If you use these numbers from SAP, you will come to inaccurate conclusions about what is happening with SAP.
- This is an important topic to address because many people then quote SAP usage numbers under the assumption that these numbers are accurate.
Press Releases and Related Media Coverage of Customer SAP Usage Numbers
SAP likes to make splashes with big press releases. They go something like this..
- Frequently the claim will use a statistic regarding the successfulness of an application. SAP will often have the word number of customers that it has. SAP has done this with HANA and S/4. They announced around 500 new “customers” every quarter for S/4. They often follow the statement about the customer numbers with something rather non-sensical about how the software is completely transforming the way their customers are doing XYZ.
- SAP then swiftly move to propose that this is evidence that the marketplace is very enthusiastic about whatever they are offering.
- Provide statements that are unsubstantiated as to what the usage numbers mean.
The SAP Customer Numbers for S/4HANA
There are many examples of SAP doing this.
But I will bring up an excellent recent example of this was when SAP placed S/4HANA (the ERP system not the database) on a promotion and placed it into contracts when it sold other applications one quarter. This lead to a significant uptick in SAP customers that now had S/4. But almost none of those customers had any foreseeable plans to implement S/4HANA. What few people who read the S/4HANA press release knew was that S/4 was not and is still not a completed product. It is a partially completed set of modules that only parts of which can be used.
This makes it impossible for anything close to the number of customers listed by SAP to have implemented and be using S/4HANA.
n this article, we will cover just one example in a PR release titled SAP’s HANA Bet Seems to be Paying Off.
Larry Ellison’s Fallacious Swipes at HANA?
There’s a reason that Larry Ellison keeps taking swipes at SAP when he talks about databases in public.
In fact there’s more than one reason — there are 1300. That’s how many enterprises have adopted SAP HANA S/4, the super-fast, in-memory database, since it was made generally available only five years ago.
These are companies who, if not for HANA, might be using Oracle today. And given the rapid pace of innovation on HANA — it’s grown beyond a database and into a platform, beyond an on prem solution to one that has its own cloud, beyond its analytics roots to one that blends Analytics insights into ERP … we could keep going —the list of benefits it offers to companies digitizing for the new economy keeps growing.
Larry Ellison takes swipes at anything that is not pro-Oracle. However, the number of companies that have adopted HANA, say 1300 in this case, does not necessarily mean that HANA is a good choice. SAP, because of its market power has the ability to push HANA into accounts.
When an Uptick Equals Enormous Growth
Nevertheless, Hasso Plattner then stated that the uptick in S/4HANA customers demonstrated enormous growth in the acceptance of S/4HANA. I was hired to estimate the actual number of S/4HANA implementations by a company, and using a variety of sources I came up with a very low number of S/4HANA implementations.
You can see this estimate at this link.
The estimate is far off of the number of customers determined by SAP. And really, no one what SAP knows the actual number of clients that are live with some part of S/4HANA. And SAP won’t provide an honest accounting of this because they would see their stock price decline. SAP’s S/4HANA has been very lightly implemented. This is illuminated in the following quotation from the book SAP Nation 2.0.
“Rob Enslin…would later confirm “Yes, all of the [more than 900 S/4] deals are all on-premise. Our cloud piece for S/4, we’re talking it step-by-step for now“”
“Many of the early adopters like Shell are trying out multiple projects — so the “137 running projects” Enslin mentions are at a small fraction of the 900 plus customers who are supposed to have bought S/4.”
The translation of the first part of the was that they did not have any S/4HANA cloud customers. The second part of the quote shows how SAP exaggerates the number of projects by counting multiple projects, again to exaggerate the number.
How SAP Customers Interpret SAP Usage Numbers
If we look at SAP customers, they receive some exposure to what other companies are doing as they may talk to people they know in other SAP clients and attend SAP events like ASUG. But it does not give them the comprehensive view to know how far SAP’s number is off.
The audience for the fake customer number quoted by SAP is usually not in a position to check the claim.
How Wall Street Interprets SAP Usage Numbers
If we think of Wall Street analysts, they don’t work in software implementation, and they don’t visit SAP customers.
How Media Outlets Interpret SAP Usage Numbers
If we consider media sources, they most often only repeat whatever SAP says. Most the media sources take some money from SAP in the form of advertising or other funding and therefore don’t have any incentive to check SAP’s numbers. Plus repeating what SAP’s press release states are accessible. On the other hand, researching what the right numbers are would take a little work, and publishing anything to the contrary will lead to a confrontation with ad sales. Bad for your career. As long as the journalist has a credible source, and SAP is a reliable source, then the writer is considered to have done his job. And if we think of the journalist’s work week, he or she may be able to be considered to be working for the entire week by just adding 500 words to a story where SAP provided almost all of the content. Combine that with no static with the ad sales team, and that is a pretty good week of work.
How Faulty SAP Usage Numbers Undermine Reality
They form the basis of faulty arguments. I recently had a commenter on one of my LinkedIn articles states that the acceptance of an SAP application was good, and he then quotes SAP’s numbers from their press release. I responded with my detailed research into the values and proposed that there is no way the numbers could be correct. In fact, they are, after a lot of research, just a small fraction of the officially stated SAP numbers.
In response, he changed the subject.
However, what if you don’t research SAP for a living? Many SAP supporters have some false arguments. They will present any number of them that will work on the majority of listeners. If they find someone who knows what they say is untrue, they simply move on to talk to someone who they can trick. They are looking for people with buying power to use these false constructs against, much like a computer hacker looking for websites with weak security to penetrate.
This is how SAP’s numbers are continuously recycled — from Hasso Plattner and Bill McDermott, all the way down to discussions on websites and repeated by SAP account managers. It is a cascading series of false claims.
What is “a Customer”?
Whenever SAP quotes some customers that are using its applications, those numbers are nearly always exaggerated. This cannot be considered wholly false. This is because the definition of a customer is
This cannot be considered entirely false. This is because the definition of a customer is so poorly defined. A customer only means that a license is owned by a company.
A customer only means that a license is owned by a company. In this way, software companies can, if they choose, exaggerate this number in the way that a company that produces a physical product cannot. Companies have always employed techniques to seem more successful than they are. End of quarter pushes, which provide promotions and incentives are quite common. However, for companies that make physical products, these companies incur a cost. If General Motors were to attempt to inflate its customer numbers this way, it would have to ship more cars to customers for free — incurring a large loss for every car is “sold” this way.
- Everyone at SAP who is part of these announcements knows the numbers customers that come exclusively from sales with no input from consulting or implementation are false the moment they utter them.
- They do this to create the impression that the market acceptance of whatever SAP is pushing is working.
- These numbers are used to do everything from influence other companies to “get on board” and perhaps purchase the software themselves, to influence Wall Street into more highly valuing the stock of SAP.
- If you are at the top of SAP, you only have to maintain your position for a few years, creating the rosiest impression possible, and given your options, you and your entire family will never have to work again after that. It is quite an enticement to say whatever you need to say. This is just one in a long list of ways that the stock market system promotes people to provide false information to the market.
The Necessity of Fact Checking
We ask a question that anyone working in enterprise software should ask.
Should decisions be made based on sales information from 100% financially biased parties like consulting firms, IT analysts, and vendors to companies that do not specialize in fact-checking?
If the answer is “No,” then perhaps there should be a change to the present approach to IT decision making.
In a market where inaccurate information is commonplace, our conclusion from our research is that software project problems and failures correlate to a lack of fact checking of the claims made by vendors and consulting firms. If you are worried that you don’t have the real story from your current sources, we offer the solution.
Financial Bias Disclosure
Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.
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The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.
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Chapter 1: Introduction
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Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model