Introducing Brightwork’s Deloitte Coupon for Terrible SAP Advice

Executive Summary

  • The SAP consulting companies charge top rates, but also offer the worst possible advice.
  • With the Brightwork coupon, SAP customers can now get 1/2 on the same horrible advice they have always gotten.

Introduction

At Brightwork, we provide analysis for companies evaluating SAP and Oracle. And in this role, we are exposed to the documentation and information that is provided to our clients by the major consulting firms. And how is the quality of this advice? Horrible! There are so many areas where the SAP consulting firms mislead their “clients” but here is a sample.

How SAP Consulting Firms Mislead Clients

  1. One of the first ways is that they do not declare their financial relationship with SAP. The firms make it seem like they represent their client’s interests when they represent their own and SAP’s interests over the client. SAP consulting firms will not help their clients negotiation against SAP, because that would harm their relationship with SAP.
  2. A second major way is the SAP consulting firm will mindlessly repeat whatever SAP says. No matter how inappropriate the application is for a client, the SAP consulting firms will agree with SAP’s presentation that the client should use the application in question.
  3. A third major way SAP consulting companies conspire against their accounts. The SAP consulting firms share information with SAP about the client, so that it may be leveraged by SAP. And they never tell their clients that they do this.
  4. A fourth major way is they communicate no realistic information about the success of SAP applications at other clients, in each case allowing SAP sales to exaggerate their success ratios. Literally, nothing is questioned,  SAP’s timeline estimates, SAP’s roadmap for products, SAP’s methodologies, SAP’s typical overrun on projects, nothing.

Deloitte and (fill in the blank) consulting companies are good little passive parrots for SAP. They provide heaps of false information to clients and lack any independence. 

Paying Top Rates for the Worst Advice

The advice from the SAP consulting companies creates a curious dynamic where clients pay top rates to get 100% biased information. The only goal of the consulting companies is to bill the maximum number of hours and to strengthen their relationship with SAP. And this is why we created the 50% off Coupon. Yes, with this coupon any SAP customer will get the standard garbage advice that benefits SAP and the consulting company over the client, but with the coupon the get 50%. And that is nothing to sneeze at!

Conclusions

The worst advice that benefits the consulting company versus the client is available in the open market of SAP consulting. There is a tremendous choice in the market. One can be lied to by Deloitte, Infosys, Accenture, IBM, and many other firms. So while the advice is horrible and entirely self-serving, at least SAP customers can choose who will lie to them. And with the Brightwork coupon, they can now get 1/2 off!

It’s a fantastic time to be an SAP customer!

Financial Disclosure

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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References

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See our free project risk estimators that are available per application. The provide a method of risk analysis that is not available from other sources.

Does SAP’s Hasso Plattner Have a Real PhD?

Executive Summary

  • Hasso Plattner is frequently introduced as Dr. Hasso Plattner.
  • Is Hasso Plattner’s degree anything but honorary?

Introduction

In a previous article, I questioned whether Hasso Plattner behaved as a Ph.D. The reason being that he is so often divorced from reality. He also does not communicate in a style that is consistent with other Ph.D.’s I know, and I proposed that people who have Ph.D.’s who don’t care what is true, should be required to give those Ph.D.’s back. Since that time someone reached out to me to explain that he did not think Hasso had a real Ph.D.

Searching for Hasso’s P.h.D.

Since I began working in SAP, it had always been generally accepted that Hasso Plattner was  Ph.D. In reference after reference, Hasso is repeatedly referred to as “Dr. Hasso Plattner.” In fact, I was once told to add “Dr.” to Hasso Plattner’s name because if Hasso Plattner had attained a Ph.D., then it was required that I add that to every possible reference. That is not true, but this demonstrates the degree to which the idea that Hasso must have a Ph.D.

However, when I went go and look for Hasso’s Ph.D. I could find no mention of it outside of this quote from Wikipedia.

“Since his retirement from SAP, Plattner has been particularly active as a benefactor in the field of technological research. Media reports have named him one of Germany’s most important private sponsors of scientific research. Plattner received his honorary doctorate in 2002 and his honorary professorship in 2004 from the University of Potsdam. Plattner had also received an honorary doctorate (1990) and an honorary professorship in Information Systems (1994) from the Saarland University, Saarbrücken. The same university named him an honorary senator in 1998.[12]”

So Hasso appears to have two honorary doctorates. Outside of these two honorary doctorates, Hasso does not appear in any other source to have his Ph.D listed. And it is stated as such on his profile, but unless you speak German, most people will not catch it.

H. c mult. translates in English to honorary doctorate, with “mult” standing for multiple honorary doctorates. Therefore Hasso has not only one honorary doctorate but two honorary doctorates. The detail is explained in this section, where it states that he was awarded “honorary doctorates.” But at the end of the profile, it becomes confusing because it states he is a professor at the Hasso Plattner Institute. How can he be a professor if he has no Ph.D. Well, one way is to simply own the school (the HPI is a small branch on the University of Potsdam campus).

Interestingly, I don’t recall anyone observing that Hasso did not have a P.h.D. I was once writing a paper for a company and I wrote “Hasso Plattner” and was told that I needed to change it to “Dr. Hasso Plattner” because “if he earned the degree, then you have to state it.” But how about if the degree is “honorary”

Well then obviously not.

Both Meryl Streep and Oprah Winfrey have four honorary degrees (so twice as many as Hasso), but I don’t recall anyone referring to Meryl Streep as Prof. Dr. h.c. mult Meryl Streep or Prof. Dr. h.c. mult Oprah Winfrey. This should not need to be explained, but you are not supposed add what amounts to fake degrees to your profile in an attempt to trick people.

How Honorary P.h.D’s Work and Who Gets Them

Now lets us discuss the honorary Ph.D for a moment. Honorary P.h.Ds are given out like candy often for providing a commencement speech. The work involved in getting one is nothing, and they are usually given out to high-profile individuals. There is also an ethic involved with honorary Ph.Ds. That is, you are not supposed to pretend it is a real Ph.D. They are basically a joke Ph.D. Again, honorary Ph.Ds are given to entice celebrities to provide a commencement ceremony speech. A real P.h.D can take 4 years to attain and only about 1 out of 140 people (in the US at least) to attain an undergraduate degree ever attain a Ph.D.

Moreover, this story gets better. This is because Hasso did not stop at pretending to have a P.h.D. He also decided to start an institute at the university close to his personal residence, the University of Potsdam.

However, how can a person who has never completed a Ph.D program start up a pseudo-mini-university? Its all a bit ridiculous.

This is explained in the following quotation from Wikipedia.

“Also in 1998, Plattner founded the Hasso Plattner Institute[3] for software systems engineering based at the University of Potsdam, and in Palo Alto, California, its sole source of funding being the non-profit Hasso Plattner Foundation for Software Systems Engineering. Plattner has pledged €50 million of his personal fortune over a period of 20 years. Since its foundation, Plattner’s commitment to the HPI has quadrupled to over €200 million. He not only fully finances the HPI, but is also actively involved as a director and lecturer in Enterprise Platforms and Integration Concepts.[13]”

Again, the University of Potsdam also conferred upon him one of his honorary degrees. Obviously, the University of Potsdam benefits from having the Hasso Plattner Institute on their campus. Was this one of the motivating factors in conferring an honorary Ph.D. to Hasso Plattner?

A Fictitious Backstory from a Fictitious Ph.D?

The Hasso Plattner Institute is the location of yet another made up story by both Hasso and SAP where they created a deliberately false backstory to make it appear that Hasso and his Ph.D. candidates created a “whole new database,” which I previously covered in Did Hasso Plattner and His Ph.D. Students Invent HANA?

With HANA Hasso showed how lacking in studiousness he was, as one of the major problems with HANA has been that it was designed in great part by Hasso Plattner, and he did not know what he was doing. This constant overestimation of knowledge is consistent with a person who fakes academic credentials.

Later Hasso donated money to Stanford and they created the Hasso Plattner Institute of Design. SAP has used this to promote Fiori, repeatedly leveraging the Stanford name. Yet after the institute being created, and all the discussion around Design Thinking (which I covered in the article Does Design Thinking Improve SAP’s Implementation Speed?), the output of Fiori is underwhelming. Once again, having a lot of cash does not translate into knowledge or ability.

Falsified Academic Authority

Hasso, and SAP used his honorary degrees to communicate false authority for over a decade and a half. As a result, almost no one knows Hasso is not a Ph.D.

When My Suspicious About Hasso Were First Triggered

  • I have been reading and analyzing Hasso Plattner’s writing and quotations for years, and find that he constantly lies and constantly pivots between topics which demonstrates an unstructured mind.
  • This is the last person who would make a good Ph.D candidate. This is the writing of a sales promoter, not a scientist.
  • My analysis of Hasso Plattner’s writings is that he works backward from what he wants to be true, and makes up a story to fit the conclusion. That is sales, not academic thinking.
  • I know whenever I read his material or watch his presentations that I can’t trust that any of it is true. Hasso’s books are absolutely punishing to get through because they are filled with so many inaccuracies and they are less “books” then lengthy sales pitches.

Ding Ding Ding

We award Hasso Plattner the Golden Pinocchio Award for claiming to have a real Ph.D when in fact he only holds honorary Ph.D.s. 

Conclusion

This honorary Ph.D issue is another case of both Hasso and SAP using deception to trick customers into thinking that there is some great mind behind SAP. It shows how little Hasso and SAP care about what is true. And the trick worked. It worked on me. I never thought to actually look up Hasso Plattner’s educational credentials.

Financial Disclosure

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.

Search Our Other SAP Content

SAP Contact Form

  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

References

https://www.businessinsider.com/celebrities-who-have-honorary-degrees-2015-8#meryl-streep-has-three-ivy-league-honorary-doctorates-1

https://en.wikipedia.org/wiki/Hasso_Plattner#Education_and_research

How to Understand The Art of the SAP Support Flip Flop

Executive Summary

  • SAP has a specific strategy for flip-flopping on support.
  • This strategy is to move customers down the desired pathway.

Introduction

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.

  1. The first part is the deadline, and..
  2. 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.

  1. First, they set some unattainable timeline…
  2. 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. 

Conclusion

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 Disclosure

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.

Search Our Other SAP Content

SAP Contact Form

  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

References

https://diginomica.com/2018/01/09/sap-extends-hcm-premise-support-2030-smart-move-massive-error/

How Accurate Was Bluefin Solutions on C/4HANA?

Executive Summary

  • Bluefin Solutions published a bizarre article on C/4HANA that focused more on methodology than on what C/4HANA actually is.
  • The proposal by Bluefin Solutions is that C/4HANA will speed implementations.

Introduction

Bluefin Solutions has been the source of an enormous amount of information around HANA and S/4HANA. But visiting Bluefin Solutions website, one can find false information on any SAP topic. The reason is that none of the information is designed to be accurate, it is designed to drive revenue and to be consistent with whatever SAP says. In this article, we cover the false and compliant information provided on C/4HANA.

Global Head of SAP C/4HANA?

Bluefin Solutions has a history of giving exalted titles to individuals. This was the case when John Appleby was the “Global Head of HANA” before being promoted out of that role. This has occurred again as the author of this article, Theirry Crifasi being called the “Global Head of C/4HANA,” and having this title featured prominently at the top of the article. This is misleading because SAP has very little business from C/4HANA, and it is unlikely that Theirry Crifasi has many projects he is managing. C/4HANA was just announced at SAPPHIRE at the beginning of June….is there really enough work to justify a “Global Head” for each consulting company? In a previous Bluefin Solutions article we analyzed we found that they also have a “Global Head of Leonardo.” A solution that almost no one uses but apparently is what allows frozen ice cream to be delivered (as covered in the article Is it SAP Leonardo that Ensures Frozen Ice Cream Delivery?).

Hence my new title at Brightwork Research & Analysis will now be “Global Head of Unicorns.” I have put myself in charge of all the unicorns, and….

It is very rare to give out a Golden Pinocchio Award before even getting into the analysis of the article, but Bluefin Solutions did it. They win the award for a deceptive title of the author. 

This is already shaping up to be an envigorating accuracy analysis. Now let us get to the article.

SAP is Communicating that C/4HANA is in the Public Cloud?

Theirry Crifasi begins the article by asserting that I was unaware was a major thrust of C/4HANA.

“The 4 main pillars of the portfolio (sales, service, commerce and marketing) have been renamed and closely follow its main competitors, namely Salesforce and Oracle: for example, SAP Sales Cloud vs Salesforce/Oracle Sales Cloud. This should make it easier for customers to understand what capability they cover as well as to reinforce the fact the whole suite is in the Public Cloud.”

How does this action follow its main competitors? First, the main competitor of CRM is Salesforce, not Oracle. Oracle has very little CRM business, and most of it is due to Oracle customers for other items buying what Oracle has to offer. Secondly, Hybris, the main component in C/4HANA is focused more on e-commerce while Salesforce’s primary focus is CRM. So this first contention makes no sense, and the second contention, which is based on the first contention is also illogical in that naming a suite, which has no correspondence to any name used by SAP or Oracle, also makes no sense. This entire paragraph reads like a James Joyce novel. But this either could be merely a highly illogical paragraph or a smokescreen, that is deliberately obscuring in nature.

SAP/Bluefin Solutions Combine to Misinform Customers about C/4HANA’s Integration?

Like a good parrot, C/4HANA is careful to, just as SAP, never explain how the component, acquisitions, etc…that are to make up C/4HANA are not integrated to one another. It normally takes years for SAP to work out the integration for their acquired applications, but you won’t find that information from the C/4HANA article.

This is a slide from SAP. Something unmentioned by either SAP or Bluefin Solutions is that none of these applications are integrated at this time, and won’t be for years most likely. 

SAP’s Success and Credibility in CRM?

“Customer experience and customer relationship management (CRM) technologies are a growth market and SAP is looking for a growth engine for its Cloud business. In fact, CRM software by license revenue is already this year’s largest category in the enterprise application market. 

Last time SAP ran a major CRM campaign was 3 or 4 years ago with the ‘Beyond CRM’ campaign. Combined with the C/4HANA rebranding this campaign will generate renewed focus and attract attention from customers looking at digital transformation programmes.”

SAP has been looking for growth in CRM for some time, but they have been unsuccessful because their CRM offering has been so poor. But does Bluefin Solutions point this out to the reader? No. It is critical, SAP would not like is, so Bluefin Solutions chooses to deceive rather than enlighten the reader. And it is worse than even that. SAP made very aggressive statements and falsified its CRM customer numbers in their CRM business in the past.

CRM is a very large market, but that does not follow that SAP will be able to capture very much of it, especially since all of the applications that make up C/4HANA aren’t actually core CRM.

It is true that SAP has not run a significant CRM campaign in years, but the question that should be asked is why. The answer is that SAP has not had anything to talk about in the space since the failure of SAP CRM.

This entire section is the author communicating that they are going to mislead the reader as to SAP’s history with CRM. If this is what Bluefin Solutions publishes on a topic, imagine what they say to prospects and clients one-on-one?

S/4HANA and HANA are Growth Engines for SAP?

“The HANA platform and S/4HANA have been growth engines for SAP over the last few years but improving customer experience is now firmly on the top of the boardroom agenda.”

S/4HANA has not been a growth engine as it has had few implementations. What are 8900 purchases have resulted in only 1500 attempted implementations.

HANA has been a better story, but HANA is no longer growing, and companies that have HANA, unless they only use HANA to support BW, are generally not having good experiences with HANA. Furthermore many HANA purchases have been based upon either exaggerated claims, or have been purchased to satisfy indirect access claims. This is the nature of the part of the Teradata lawsuit against SAP.

Hmm……could there be a reason that Bluefin Solutions is not bringing up these topics? Let us see, I wonder if it is a good idea to get information about SAP from consulting companies that are trying to sell SAP consulting services to implement SAP?

C/4HANA is Integrated to S/4HANA?

“The ease of integration of C/4HANA products with S/4HANA will enable these organisations to provide their customers with a holistic customer experience from front-end to backend not just limited to a nice website or a clever chatbot.”

This is standard practice on the part of SAP and their consulting partners. As soon as the acquisition or announcement is made, the proposal is that the application is already integrated. First, C/4HANA is not integrated to S/4HANA. Secondly, the C/4HANA suite is not integrated to the components that make up C/4HANA!

Once again, Bluefin Solutions is leaving out important details regarding C/4HANA.

C/4HANA Positioning

“Over the last 2 years, SAP has been assembling a portfolio of solutions either through acquisitions or its own development: Abakus, Gigya, CallidusCloud, Recast.ai, Coresystems and Hybris Revenue. The rebranding and repackaging as described above must be restructured to align to the C/4HANA vision.

The most recent trend around “trusted data” which enables the ability to offer personalised offers is a strong angle SAP is pushing through its Gigya acquisition now called Customer Data Cloud. Recent consumer backlashes like the Facebook Cambridge Analytica data scandal have shown organisations cannot be “creepy” anymore with their customers and collect any data they want without customer consent. Customer relationships should be based on trust and shared with customers instead of being managed via an inside-out approach.”

  • The assumption is that this portfolio of solutions makes sense. It is difficult to see how that is, and it is difficult to find the CRM solution from the acquisition.
  • The article presumes that all of these applications will be integrated, but is this author familiar with the history of SAP acquisitions?

For example, when Business Objects was acquired, it was proposed that Business Objects would be highly integrated, and that never came true. Ariba took many years to be integrated. Secondly, unlike the statement above not only has integration never been a strength of SAP it has been a well-known weakness as making the most demanding applications in which to integrate.

Integration Has Always Been an SAP Strength?

“Integration has always been SAP’s strength. C/4HANA will obviously continue to offer ease of integration to customers with SAP backends like ECC or S/4HANA. The integration of the recently acquired CallidusCloud and Coresystems products into C/4HANA will also strengthen the horizontal integration within the sales and service offerings as well as enlarge the functional coverage for these scenarios, thus allowing SAP to better compete with the likes of Salesforce.”

It is true that SAP ECC was integrated between its modules, but outside of ECC the integration story quickly degrades. Even internally developed applications like SAP APO have had a problematic integration history connecting to ECC with the CIF. For the acquired products the integration history is far worse. Its integration XI/PI/PO integration product is one of the weaker offerings as was covered in How Non-Programming Integration Solutions from SAP Damage Projects.

The statement that C/4HANA will…

“obviously continue to offer ease of integration to customers with backends like ECC or S/4HANA”

..implies that C/4HANA is integrated currently.

Hybris has some degree of integration to ECC, but it does not have that integration to S/4HANA. Secondly, so many of the applications that make up the C/4HANA suite (like CalladiusCloud) for example are very recent acquisitions. That means they have no integration currently. This overall paragraph by Crifasi is deliberately deceptive. Crifasi is taking advantage of the reader’s lack of knowledge to promote a false understanding of what a customer of C/4HANA could expect regarding integration and when they could expect it.

Why is (All of a Sudden) Roadmap Necessary?

“SAP has already shared with its partners a detailed 3-year development roadmap for the C/4HANA portfolio. There are still quite a few clarifications needed before partners can confidently advise their customers on their own roadmap. Personally, and maybe because I have been a solution architect for so long, I would like to know more about the key integrations points for all the recently acquired products mentioned earlier, both for master data and the transactional process.

After getting this far in the article, having proposed that most of the integration issues are worked out, it is odd to find Crifasi switching course and saying he needs to know more about the key integration points. This seems to be where he tells the audience that he is “not just a parrot for SAP.” The fact is, C/4HANA is not a product and will not be for quite some time. There are plenty of CRM applications to choose from that a quite inexpensive. I use one that costs $10 per month and works great. But Cristasi and Bluefin Solutions would like you to consider a solution that has a roadmap as to when it can be used as an integrated suite, seems to lack a CRM system, is from a vendor that has no history of producing a competitive CRM application and will have most likely the highest TCO in the CRM space when all is said and done. Clearly, people should be scrambling to bring in Bluefin Solutions as quickly as possible!

Leaving Out SAP’s History?

Something else predictable is that no consulting partner of SAP will ever publish anything in SAP’s history that is remotely unflattering. However, SAP has a  long history of problems with CRM. This is explained in the following quote from the book SAP Nation 2.0.

“At SAPPHIRE NOW, in May 2015, SAP Digital announced a new set of products including a CRM solution at $29 per user per month. SAP Claims to now have 17 million Jam users and 2,000 HANA start ups. The executives responsible for such SAP initiatives proudly brag about them, even though they contribute merely 1 to 2 percent of SAP revenues and they keep adding to the sprawl.”

This was certainly known by Bluefin Solutions, but it was not included in the article. In fact according to Bluefin Solutions, SAP’s history of futility in CRM is to be entirely hidden from readers.

Conclusion

This article is written by an author with little interest in communicating anything that is true to the reader. If this consultant’s article were an indication of the advice that one can expect from Bluefin Solutions, one could expect Bluefin Solutions to take advantage of any lack of knowledge on the part of the customer to create the impression that C/4HANA is far further along than it actually is. As with other articles written by Bluefin Solutions, seeds of distrust are sown merely through reading the article.

This article receives a Brightwork Research & Analysis score of 2 out of 10 for accuracy.

Financial Disclosure

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.

Search Our Other SAP Content

SAP Contact Form

  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

References

*https://www.amazon.com/SAP-Nation-2-0-empire-disarray-ebook/dp/B013F5BKJQ

https://www.bluefinsolutions.com/insights/brenton-o-callaghan/march-2018/leonardo

How Accurate Was SAP on the Sybase Acquisition?

Executive Summary

  • SAP acquired Sybase in 2010.
  • We review the coverage of the Sybase acquisition by IT analysts.

Introduction

In 2010 SAP acquired Sybase. This is before HANA had been introduced. SAP was within a year to promote the idea that it had developed a massive innovation in in-memory and columnar database design, which was a pre-existing produce called Sybase IQ.

In this article, we will review the accuracy of the reported statements about the Sybase acquisition.

Quotations from Dennis Howlett’s Article in ZDNet

“John Chen, CEO of Sybase said: “We see potential in the combination of the leader in business applications and the leader in mobile…I firmly believe this transaction is about growth. ” Vishal Sikka said: “This will dramatically increase our presence in mobile…supporting all platforms, Blackberry…Windows…Google…Apple”

“The last couple of years, SAP has talked implicitly about proliferating SAP via devices so at one level this acquisition fits into a strategy that’s been unfolding for a while. However, as Ray Wang notes:

SAP has broken its promise of no more big acquisitions after the BusinessObjects deal.  However, these acquisitions make sense toward the path of next generation applications.”

IT Analysts Always Seem to Love Software Acquisitions

It might have, but the acquisition did not work. Is there some reason that IT analysts don’t ever seem to say that an acquisition is a bad idea? Is this, so they don’t lose access to the larger software vendors?

“During the analyst call, much was made of the in-memory database core that SAP has developed and Sybase column stores as an enhanced baseline requirement for analytics in large-scale environments.”

That is curious.

Hasso Plattner created a storyline where he and his PhDs invented HANA without the influence from much else outside of SAP. This is covered in the article Did Hasso Plattner and His Ph.D. Students Invent HANA?

SAP Ended up Degrading Sybase Database Market Share

“One short-term problem will be a perceived confusion over database selection and the future of the relational database in SAP environments.”

This turned out to be a problem. SAP was not successful in migrating customers to Sybase databases, and Sybase databases have been in decline ever since the acquisition.

Howlett Gets it Right on SAP Penetrating Finance Industry

“Vishal Sikka disputes that, describing the market as both mature but diverse. Sybase has a significant market share in financial services, a market around which SAP sees huge potential despite the recent financial services sector meltdown. But how real is the likelihood of SAP emerging as a key FSI player?”

Vishal Sikka was wrong about this too. SAP never was able to leverage Sybase’s market share in financial services.

“Co-incidentally, earlier in the week, I heard a presentation from Deutsche Bank which showed SAP at the core of the bank’s applications strategy as part of a complete applications overhaul. SAP is only providing back office and even then a pared back version with emphasis elsewhere. It is others that are providing the applications and services that will make an operational and value led difference. Deutsche Bank is a marquee SAP customer in its own back yard. If this is representative of the extent of SAP’s ability to develop profitable relationships in this market then that is anything but a done deal.”

Dennis Howlett was prescient with this prediction.

Sybase’s Disappearing Mobility

“On the mobile side, questions must be raised about what this means for applications – again in the financial and telco utility space. Most applications in these markets are driven by opportunistic marketing campaigns requiring the development of new offers. That in turn often means custom development. Does SAP think that Sybase and in-memory gives them an entree to this massive market? If so how does it plan to manage all the integrations required? Where is the rapid apps development environment that would make SAP a natural choice? It has no real ownership in these markets such that the new combination makes direct sense.”

Here is what we wrote about the Sybase Acquisition back in 2012.

Will Things Change and Improve?

“In a word no.

Although SAP did purchase Sybase, but this does not change SAP’s history or its data architecture for the vast majority of its product database. SAP does not integrate their products with those companies that they acquire. Notice the lack of integration with Business Objects. SAP as a development organization is too self-centered to think that other companies have good solutions and they feel they are the best in every domain. This is called the “SAP Bubble,” and is very similar to the “Microsoft Bubble.” Therefore, most mergers are primarily driven not by development, but by the strategic decision makers in order to co-opt a vendor who is giving them trouble, as was the case with Business Objects. These acquisitions are driven by the desire to capture customers. Over time the main brains in the acquired company leave for other ventures and the captured customers are fed a steady diet of pro SAP marketing. There are questions to whether SAP bought Sybase really for its database or its lucrative customer base in the financial industry. The long and short of this is that SAP does not actually do much to leverage or further develop the technology that it purchases.”

SAP’s History With Their Data Layer

In order to understand why it is very unlikely that very much will change it is important to understand SAP’s history with data and data management in general. Unlike companies such as Teradata or Oracle, SAP, has no history of effective data management within any of their applications.

Examples of serious weaknesses in their data management development include the following:

  • No transactions to easily query the master data of a system (SE16 and SE16N are very limited, and too often lead to the brick wall of a Structure, which cannot be queried. While fields can be looked up in the SAP GUI, in many cases the table that the technical details will show is a structure. This is a virtual table and not a “real table.”
  • Poor data update tools
  • No ERD diagram or publication of all the SAP tables and how they relate to each other
  • No ability to use standard SQL tools to manage or interrogate the database. All data tools are custom front-ends and are universally terrible.
  • Why anyone would think that a company that is done this poorly bad at simple basic data strategies is strange, and why anyone would entrust their reporting solution to them, is even stranger. SAP built its empire based upon application logic, not on the user interface or data management. Essentially SAP just does not fundamentally “get” data, and they have created the very inefficient data backend of any enterprise application.

Sybase’s mobility applications turned out to be a total write off.

Conclusion

The Sybase acquisition did very little for SAP. Once again Vishal Sikka continued his losing streak of being wrong in his statements in this article.

Financial Disclosure

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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References

https://www.zdnet.com/article/sap-acquires-sybase-for-5-8-billion-but-why/

How to Best Understand the SAP Digital Transformation Navigator

Executive Summary

  • Digital transformation was adopted by software vendors and consulting companies that place the process as the desired outcome.
  • Ding Ding Ding….we have a new Golden Pinocchio Award Winner!

Introduction to the Term Digital Transformation

After many years analyzing various methodologies, tools or assistive items offered by both consulting companies and SAP, it is curious how often the item in question ends up being simply another way for the consulting company or for SAP to get the customer to do what they want. SAP’s Rapid Development Solutions (as we covered in How to Best Understand SAP’s Faux RDS, turned out to be primarily a way to get customers to think they could implement SAP faster than was actually possible. The SAP ASAP Methodology, (which we cover in Did SAP ASAP Methodology Ever Reduce Project Timelines?) was essentially intended to do the same thing.

Neither of these items had any positive effect on projects, and most likely worsened projects by creating unrealistic expectations.

Why Digital Transformation is a Term of Propaganda

It should be noted that the term digital transformation actually is a meaningless term as applied to modern IT projects, which we cover in the article The Problem with Digital Transformation and Modern IT Projects. The reason being is that term digital transformation applies to a change that occurs when something is first converted from non-digital to digital. You can’t apply the term to a movement between two processes that are both digital. So we are beginning this journey with what is a term of propaganda. The definition of which is a term that allows the user to present unsupported assumptions to the listener.

Enter SAP’s Digital Transformation Manager

The following video explains the Digital Transformation Manager.

Interesting actions of note are the following:

Here the “Open Decision” under the category of Supply Chain Management is that what the customer uses is not the recommended solution from SAP. 

Once the previous screen’s Open Decision button is selected one taken to this screen, where the customer is allowed to choose between the Public Cloud and On Premises. If the user selects, then they are taken to the following screen.

Here the customer is using SAP Demand Planning today, but SAP recommends SAP Integrated Business Planning or IBP.

 

Well, that seems so simple, but that is a huge decision with many cost implications. SAP DP happens to be an application that few companies get very much value out of. Here are some important features that the DT Navigator will not tell you about.

  1. IBP is still not widely implemented.
  2. IBP has maturity issues.
  3. IBP does not have the same functionality set as SAP APO, so one cannot merely say “migrate to IBP.”

Naturally, SAP would like companies to move to their newest software, but SAP DP never met any of the claims for it that SAP set forth. Obviously, another option would be to either replace DP with a non-SAP application or to augment DP with a non-SAP application. Those are real options, which we have covered in great detail in separate articles. However, the more the customer uses the DT Navigator, the less they will be likely to ask those questions. In this way, the DT Navigator can be seen as an anti-decision making tool.

The DT Navigator is designed very simply to get customers to do exactly what SAP wants them to do.

The DT Navigator for Saving Money on SAP Consultants?

Is there a way to actually derive value from the DT Navigator?

We think there might be.

At the conclusion of the video, it is stated that the DT Navigator is designed for both customers and partners. So consulting partners will use the DT Navigator to come up with what they should tell customers to do. As SAP consulting companies don’t do much else when it comes to advise but repeat what SAP says if one views the DT Navigator as simply SAP’s official position on products (that not that the DT Navigator necessarily contains 100% truthful information) then a customer could use the the DT Navigator to cut out the middleman of having to pay an SAP consultant to tell them what they can find from the DT Navigator.

Ding Ding Ding!

SAP’s Digital Transformation Navigator receives our Golden Pinocchio Award for extreme deception. Seriously, you would have to be a twit to take the DT Navigator seriously. 

Conclusion

The SAP Digital Transformation Manager is a sales tool designed to get the customer to do more of what SAP wants. It is presented under the cloak of providing a clear and easy tool, but has as an important built-in assumption that the user accepts the information presented as “recommendations” and that SAP’s only motivation for providing this tool is to “help their customers!”

One should be suspicious of information provided by software vendors or consulting companies that are only introduced to help the customer. 

The pure SAP marketing message is delivered to the Digital Transformation Manager. For example, SAP IBP is still very lightly installed — and requires purchasing HANA, which comes with a number of negative issues in addition to being the most expensive database among all of the options in the category.

Perhaps not surprisingly, these details are left out of the SAP Digital Transformation Manager.

But the DT Navigator can add value to customers, but primarily to reduce the number of hours that are billed by SAP consultants to simply repeat what SAP tells them.

Financial Disclosure

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.

Search Our Other SAP Content

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  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

References

Enterprise Software Risk

See our free project risk estimators that are available per application. The provide a method of risk analysis that is not available from other sources.

How Much Should Hasso Plattner and SAP be Cut Slack for Lying?

Executive Summary

  • Hasso Plattner and SAP tell a large number of lies compared to the typical software vendor.
  • Some have proposed that these lies are not lies but exaggerations.

Introduction

In this article, we will discuss the interesting double standard that seems to be applied to SAP lies. And the idea that SAP should not be held to a standard to truth-telling.

A Resistance to Criticize Obvious Lies by SAP

In debating various articles that I have written about SAP many people on LinkedIn who are SAP surrogates or general proponents seemingly have not been interested in addressing my questions concerning the accuracy of statements made by Hasso Plattner. The reason for this is, in my view, no matter how false the statement by SAP, SAP resources are fearful of being seen as publicly repudiating it.

The interaction often goes something like the following.

  1. Postponing the Reckoning: The proponent states that I don’t understand the vision of SAP and that in the future the things that the SAP spokesman says will happen and all I have to do is wait. This is one of the common strategies that are not considerate of whether the claim is even possible. I outline this extensively in the article When Articles Exaggerate HANA Benefits and When Articles Exaggerate S/4HANA Benefits. However, my entity, Brightwork Research & Analysis has been virtually the only media entity to describe the impossibility of many of SAP’s claims. Something that is impossible does not require time to determine if it is true. IT media entities normally consider their job done if they simply repeat statements by vendors. After all, they have a source.
  2. How Calling Out SAP on Falsehoods Results in Accusations of Bias: A second approach that is used is for the SAP proponent to question my bias. The evidence of this bias is fact-checking SAP, which is not supposed to be fact checked. SAP is supposed to be agreed with, but never fact-checked. The amusing thing about this is that the entire SAP ecosystem is incredibly financially biased. Large consulting companies recommend SAP because it’s their highest margin item that they can bill the most hours for. The major IT media entities, as well as it analyst, are almost all paid in some shape or form by SAP. The bias that the SAP proponent identifies in this corrupt morass is bias against SAP. When I bring this up to the SAP proponent, they again, are not interested in addressing real bias. Instead, they prefer to use the term bias dishonestly. And when I point out their undeniable financial bias, they tend to leave the conversation.
  3. Silence on SAP’s Exaggerated Statements: When I list the statements by SAP when I list the statements by SAP which often sound ridiculous and false (HANA has 100,000 times the performance of any competing technology, S/4HANA is ready to be implemented, SAP is only based upon best practices), and I asked the SAP proponent to support them or contradict them. Invariably SAP proponent changes the subject.

A Consistent Pattern of Lying

After many years of analyzing sap in one of the few full-time SAP analysts, the amount of inaccurate information that comes out of SAP is it a consistent theme. And these lies are accepted by SAP proponents for obvious reasons. Actually, beyond acceptance, these lies are most often repeated.

Should SAP Be Immune from Charges of Lying

This does bring up the question of whether SAP should be considered immune from charges of lying.

  • That is is SAP in a special category of company.
  • That large company should never be held to what is true because being large means they have natural authority, and that authority should not be questioned.
  • SAP is German. And German companies don’t lie.

That is should we accept that SAP has the right to lie as much as it seems necessary to meet its objectives and should not be criticized.

Are Lies Part of Capitalism?

I bring up this question because in a recent discussion with an SAP proponent I was told that in a capitalist system it should be expected that software vendors will exaggerate.

It has been proposed to me that lying is ok if it is within a capitalist system. It is unclear as to whether lying is considered a part of communism. According to some, we have to accept lying if we want to participate in capitalism. And it implies that lying is acceptable depending upon the economic system that a country chooses. 

How SAP’s Accuracy Level Compares to Other Software Vendors

However, SAP exaggerates far more than other software vendors, and I have the evidence to prove this which anyone can see at A Study into SAP’s Accuracy. This is the most comprehensive listing of SAP’s accuracy documented. When we ask SAP proponents to provide their research into SAP’s accuracy, they disappear.

I know quite a few software vendors that while they certainly present their product in the best possible light do not so consistently lie about their product as SAP, which is why we rate them in the bottom of vendor accuracy in our Honest Vendor Ratings. And of course, all of these software vendors operate within a capitalist system as well. But this research tells a different story of SAP’s lying. It illustrates that SAP’s lying is out of line with the lying of other vendors in scale and scope. This should not be seen a blanket endorsement of other vendors, which is why we created the ratings for a reasonable number of vendors and rated each individually. This research both in the accuracy of other vendors and in a great deal of detail into SAP, allows us to say that SAP lies at a far higher level than the majority of software vendors.

The Problem with Justifying Lying on the Basis of the Economic System

Capitalism just means that the means of production can be kept in private hands. It does not say anything as to whether companies should be lying to meet their financial objectives. There are very few scenarios where lying results in good overall outcomes and the acceptance of lying say quite a bit about the honesty of these person making the determination. And where would this end?

  • Can food companies change the expiry dates on their product in grocery stores?
  • Can pharmaceutical companies lie about the efficacy of their drugs? (oops bad example, as they already do this)
  • Can child care facilities lie about whether children were taken care of after being dropped off, versus being locked in a closet?

Where does the natural extension of the lying argument go?

Overall, SAP proponents seem to be looking for an excuse to cover up for why SAP lies so much. That is they are “cool with it.”

Lying and Market Efficiency

The argument that lying is a part of capitalism is weak and weaker than the proponents of the argument seem to realize. They appear to be forgetting the foundational principle of market efficiency. It is well known that capitalist systems and systems operate better when the market is efficient. However for a market to be to be efficient, it must have access to accurate information. Lying and deception do nothing but reduce the quality of information in the market making the economic system less efficient. Therefore it would seem that any economic system capitalist or otherwise does not benefit from the companies within that system lying to the buyers within that system.

However, faux capitalism is the norm. If we look at large companies, they frequently discuss the free market, and at the first opportunity send in political donations to receive special favors and contracts. Banks pretend they are “rugged individualists” when in fact their entire money creation power comes from the government, and they live almost entirely off of the public nipple.

How SAP Clearly Prefers Executives that Lie

Hasso Plattner is an aggressive liar. It is to the point where when I analyze statements by Hasso Plattner my first assumption is that in some way it contains a lie. His knowledge level is not particularly deep, and there is little to learn from him. What do look for in Hasso quotes is the lie. And I am never disappointed. Some people have ascribed his recent lies to age. However, I know people that knew Hasso 20 years ago, and he has always had a deceptive approach. Hasso tricked many executives in his life, and it has paid off for him handsomely.

Hasso Plattner is by no means unique with an SAP. For people that know SAP the statements made by Bill McDermott average on the comedic.

  • Vishal Sikka told an enormous number of lies about SAP HANA before he left the company some years ago.
  • Rob Enslin appears to be a pathological liar, and I have been amazed by his lies in SAS quarterly analyst calls.
  • I have criticized Steve Lucas for telling enormous lies and for not even understanding the topics of which he writes as I covered in the article Analysis of Steve Lucas’ Article on What Oracle Won’t Tell You About HANA.

I could create a long list of SAP executives that habitually lie, but hopefully, the point is made. I am probably one of the largest consumers of SAP content and of executive statements I cannot think of a single SAP executive who I find to be a reliable source of information on SAP.

This brings up the question of the nature of the executives that SAP promotes and attracts to its company. From the outside, it looks as if the line and lying in extreme forms is a prerequisite for being a top-level executive at SAP. The question that should be asked is why is that acceptable. Why are customers so comfortable with the track record of SAP executives line over such a large period.

Financial Disclosure

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.

Search Our Other SAP Content

SAP Contact Form

  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

Inaccuracies in SAP’s Q2 2017 Earnings Call

Executive Summary

  • SAP made a large number of inaccurate statements to Wall Street analysts in the Q2 2017 earnings call.
  • We cover the accuracy of SAP on this earnings call.

Introduction

On July 20th, 2017, SAP held its Q2 call with analysts. This article is an analysis of some of the information provided by SAP in this call. Much of the information in the call was breathtakingly inaccurate. Understanding why is quite interesting I comment on the quotes below.

Article Quotations

False S/4HANA Numbers

“S/4HANA adoption grew to more than 6300 customers, up over 70% year-over-year. Many other leading companies also went live on S/4 in Q2, including MG [ph] and Bloomberg.”

No that is inaccurate in that very few of those customers are using S/4HANA. This is covered in the article How SAP Controls Perceptions with Customer Numbers.

Exaggeration of the Cloud

“S/4HANA is the number one and fastest growing cloud ERP solution in the market hard stop. We are growing new cloud bookings triple digits and we see an enormous pipeline going forward. Customers are going live with S/4 cloud in as little as six weeks. Deloitte selected S/4 cloud in Q2 among many other signature companies. Centrica, a multinational utility company is using S/4 cloud as the digital core, along with an IoT solution running on SAP Leonardo. This is SAP integration at its finest.”

That is false. S/4HANA has very few customers of any size that are using S/4HANA in the cloud. Furthermore, this will not grow all that much in the future. The reason why is covered in the article Is S/4HANA Actually Designed for the Cloud? 

SAP + Google Cloud?

“We also announced that Sapphire that we have expanded our co-innovation partnership with Google Cloud to deliver integrated cloud solutions for our customers.”

This will not amount to much because Google Cloud is not a big player in the space. Secondly, why is SAP using Google Cloud in the first place? Well, SAP had to drop the pretense that they could compete in the cloud infrastructure space, which is covered in the article How to Best Understand SAP’s Multicloud Announcement.

Digital Boardroom for Growth?

“Overall, new cloud bookings grew 33%, while cloud revenue was up 29% in Q2 and 31% in the first half. Led by SAP digital boardroom our re-invigorated analytics portfolio posted triple digit new cloud bookings growth in Q2.”

It is extremely doubtful that digital boardroom has many sales, so its growth would be larger as the base was so small.

SuccessFactors Employee Central

“SAP SuccessFactors, we saw another big quarter with a new customer additions. SuccessFactors Employee Central now has over 1900 customers worldwide and that was up 48% year-on-year.”

SAP is frequently showcasing the growth of Employee Central. But this is only one component in SuccessFactors. SAP and Bill McDermott, in particular, like to continually trump up SuccessFactors, but SuccessFactors always seems to be in transition. It is really only strong in a few areas of HR. For example, the payroll functionality in SAP’s ECC system is one of the few goods things SAP’s old HRM solution. However, SuccessFactors has nothing close to as good, which is one reason why many of their customers have been so reticent to move to SuccessFactors.

SuccessFactors also continues to have integration issues going back to ECC. This really should have been taken care of at this point as the SuccessFactors acquisition five and a half years ago.

The use of the 48% number was used by Bill McDermott because it is more impressive than growth in any other area of the SuccessFactor suite. This is standard of all the comments made by all of the SAP executives in this session. The only part of the story and the most pleasant part ends up being verbalized.

The Ariba Network

“SAP Ariba now has over 2.8 million companies in a 180 countries, trading nearly 1 trillion U.S. dollars in goods and services annually on the Ariba network.”

That might be good, but SAP has not been able to leverage Ariba very well. Very few SAP customers actually connect Ariba to their SAP ERP systems.

Time to be Intensely Clear?

“Let me be intensely clear, the Internet of Everything requires hyper connectivity on a global basis. SAPs business networks lead the industry, connecting not only our customers, but also our competitor’s customers. It is the world’s network.”

Interestingly, this term “being clear,” “crystal clear” or in this case being ‘”intensely clear” seems to be a marker for a person who is about to tell a lie. It is curious that this same language appeared with Trump’s Lawyer, Jay Sekulow in recent weeks.

Trump is under investigation. Everything stated after “I want to be clear” was a lie.

And similarly, Bill McDermott states he wishes to be “intensely clear” that….IoT requires hyperconnectivity on a global basis.

That may be true, but the following statement about SAP business networks leading the industry is incorrect, but at the same time is nonsensical. What business network is Bill McDermott talking about? SAP owns a procurement application in Ariba – that has a marketplace, but this has nothing to do with IoT. SAP gets a very tiny amount of its revenue from IoT. So if this control over “business networks” is a strategic advantage for SAP in IoT, it is not showing up in the sales numbers.

Fast Cloud Growth for SAP?

“We believe SAP is the only company in the business software industry at scale to deliver both fast growth in the cloud and core license growth.

This is because SAP takes a much more customer centric approach to the transition in the cloud, protecting legacy investments, while offering the most complete vision for the cloud. The breadth and depth of SAPs end to end portfolio is the clear differentiator.”

The problem with this being that SAP is not delivering fast growth to either the cloud or to the “core” which would seem to mean core license growth.

SAP Cloud Platform Incubating Innovation?

“SAP’s innovation agenda ensures a clear path to future growth. Without API Hub and open SAP Cloud Platform our ecosystem is actively incubating new innovations. We’re excited that new partnerships will proliferate the SAP platform across the hyperscale public cloud providers.”

No, the SAP Cloud Platform isn’t incubating much of anything, because barely anyone uses it. On SAP projects, it is difficult to even get a glimpse of anyone using the SAP Cloud Platform.

Bill McDermott’s Digital Revolution and Leonardo

“At the Epicenter of the digital revolution is SAP Leonardo. Why? Because Leonardo integrates breakthrough technologies such as AI, Machine Learning, Big Data, Analytics, IoT and Blockchain.”

What particular digital revolution is Bill McDermott talking about? The move from downloading music to using services like Spotify? Bill could benefit from being a little more specific. Leonardo is a very recently introduced solution that is SAP’s renaming of its IoT solution. But it does not yet have real customers doing anything and it’s not an application as much as a toolkit you can build things with. It greatly lags other complete IoT solutions. This is covered in the article

“Customer interest in SAP Leonardo is really high. As you know there was well over 20,000 Sapphire attendees this year from 4600 companies and they all experienced in some form the potential of Leonardo. Nearly 1000 customers in 48 countries attended our local SAP Leonardo event in Frankfurt earlier this month.”

It may be, but that does not address the fact that Bill McDermott does not want to talk about that there is not very much to Leonardo and it does not have customers live on it. SAP has customers live on some customer solutions at various accounts, but Leonardo is yet another pre-released product that SAP is pretending is ready to use.

Everything About SAP is Best in Class?

“In conclusion, everything about SAPs business is best in class. It’s integrated and focused and it’s delivering on the shareholder value promise. We’re building great products, telling a great story, delivering a great service and most importantly building a great team.”

Does Bill McDermott listen to himself when he speaks?

SAP’s Exaggerated Pipeline

“We also are just getting started with more than 80% of our ERP customer base still in S/4HANA pipeline. The upside is amazing. Our company has never been stronger, more engaged and more inclusive. In fact, we have reached our goal of having more than 25% women in management positions across SAP.

  • SAP has a lot more than 80% of the customer base in the pipeline (taking Bill’s assumptions that they all convert to S/4HANA, which is not actually true), because the vast majority of S/4HANA customers don’t have S/4HANA operational. Many S/4HANA customers are not customers in the traditional sense because they received the software for free. Some customers purchased S/4HANA to setting an indirect access claim on the part of SAP. Therefore, they don’t really willingly own it.
  • What Bill McDermott is doing here is switching a negative into a positive. SAP has had very poor adoption of S/4HANA by customers. The primary reason for this is that S/4HANA close to impossible to implement. This is covered in the article How the Overall S/4HANA Suite is Not Yet Released.

So therefore I’d like to acknowledge, recognize and thank the 87,000 women and men of SAP worldwide for their immense dedication to our customers and our shareholders. For SAP, the best is yet to come, a sustainable growth company for the ages.”Bill McDermott

This line was stolen from Frank Sinatra. It is a song actually. And the idea that SAP is a sustainable growth company for the ages is really out there. Especially since outside of acquisitions, SAP has not been growing enough to be considered a growth company anymore.

Rapid Cloud Growth for SAP?

“Firstly, our committed future cloud revenue or new cloud bookings has grown by 33% and our cloud revenue growth came in at 29%, marking the 17th consecutive quarter of consistent rapid growth in the cloud.”

SAP’s growth in the cloud may have been consistent, but it has not been rapid. If it had been SAP would not have to cloud wash so hard. It would not have had to acquire cloud vendors to make the impression on Wall Street that they are more cloud-based than they are.

“Let me first be very clear, from a profitability standpoint we have been all the way through the year very clear on what our priorities are for this year and how this will impact the overall gross margin. We continue with conscious investment decisions in 2017 and we will still see mix shift effects.”

Here we go with the “be clear” preamble. And then, that SAP is “very clear” about priorities.

Cloud Investments are Causing Declining Margins?

“Remember, the majority of our investments are in our public cloud business. Our decision to invest in a new data center in the Middle East is yet another perfect example of how we are getting ready for future growth. But this, of course, put additional pressure on the public cloud margin which was 57.6% in Q2, if you back out our highly profitable business networks business.”

The problem with this is that SAP has actually invested very little into data centers. This was covered in the book SAP Nation by Vinnie Mirchandani. Secondly, why have few of these investments paid off? SAP has had a long time to get their cloud infrastructure going and they chose to invest elsewhere. At one time SAP said that they were going to go head to head with AWS. What happened to that idea?

The issue is that SAP’s margins are declining, but they are not primarily because of SAP’s investments into its cloud business, although the cloud acquisitions are related to the decline. Here is how. As SAP increasingly diversifies away from its core offering, the profit margins are lower. This is what SAP does not want Wall Street to figure out. SAP is facing a long-term decline in its profitability. This is the same long term decline that has already been experienced by, for example, Micrsosoft. Microsoft still has high revenues, but the profitability outside of Windows and Office are far lower than its profitability among its first products. Microsoft, as it has diversified from its first products, has become less efficient in profit generation. And guess where the growth is coming from? (hint, not the core products).

This is covered in the book The Software Paradox.

“As we strive for running each and every business more effectively and efficiently, we continue to see improvement in the margin of our private cloud infrastructure as a service business, as well as in our business networks. Since however public cloud and private cloud are continuously increasing their share within cloud revenue, this revenue mix shift effects negatively impacted the cloud margin by approximately 2 percentage points.”

And the faulty explanation continues.

“As for our services gross margin continue – continued its very nice upward trend as expected and was 23.5% for the quarter, which is the 5.6 percentage point year-over-year increase. This was driven by the completion of previous investment projects and a strong top line increase.”

SAP gets roughly 2% of its revenues from consulting services. So why would that matter?

“So what should you all take away from this quarter? To put it in short terms, SAP is the best positioned company to shape the digital enterprise. Our cloud growth is fuelled by the breadth and completeness of our cloud offerings. All our products are linked to our S/4HANA digital core, providing a real end to end offering to our customers.”

What company is today not a digital enterprise? Companies in Somalia? The correct term is “enterprise software.”

All Cloud Offerings are Connected to S/4HANA?

SAP does not have completeness to its cloud offerings. All of the products are not only not connected to S/4HANA, but they also lag in their connectivity. This is really a straight up lie by Luca, who as a finance person would not have any idea if it is true as she would have never worked with SAP’s technology.

SAP to Become Carbon Neutral?

“In line with our goal to become carbon neutral by 2025, we reduced our second quarter CO2 emissions by over 40% compared to the prior year.” – Luca Mucic

How is SAP going to become carbon neutral by 2025? Are all SAP buildings going to be powered by rooftop solar, and will all plane and car transport be powered by small nuclear generators? It is interesting that even on the ancillary statements, SAP never stops with the inaccuracies.

Bill McDermott Wants Analyst to Not Give It a Moment’s Thought?

“Yeah. Hi. Thanks very much for taking my questions. I’ve got one question on the clouds and then just a clarification. If I look at the cloud revenue growth sequentially it looks like it slowed down marginally in the second quarter. I guess it’s quite a small change and momentum, but it does come at a time of management change. So I guess the questions off, firstly, are you confident that you can sustain the 30% growth rate as that business scales?

And secondly, are you confident that with the departure of Steve Singh, the management position of the cloud is still robust. And thirdly, can you just give us some metrics around the bookings duration. Obviously, that the year-on-year growth is strong, but can you talk about duration. – Charles Brennan

Thank you so much for the question, Charles. I’ll start it off and then hand it over to Luka. So first and foremost on the cloud, the bookings and the revenue don’t even spend a moment on it. Basically when you book the software, obviously you’re booking the contract and that will go into revenue to be recognized.

The revenue that’s actually recognized has something to do with timing and timing in the quarter for sales and so on. And some of these sales happen to have been a little bit more back ended than usual. The pipeline for the cloud is fantastic. The 30 plus percent cloud growth and the pipeline to support that is ever intact. The business looks really, really strong.”

Right. So according to Bill, anything that looks different than what SAP is presenting “don’t even spend a moment on it.”

And then Bill wants to convince the listeners that the sales are more backend than usual. But why would that be? What was different about this quarter than Q1? Then Bill goes on to praise the pipeline. Well, the pipeline cannot be validated by the analyst. So Bill is changing the topic from something the analyst can verify, to something where the analyst needs to trust Bill McDermott.

Are SAP Executives Friends for Life?

“And just to show you the class of SAP. I next week along with the executive board will be flying out to Seattle to have a going away party for our great friend Steve Singh. So this hotel when you check into SAP you don’t check out, like we’re friends for life. And that’s the kind of company we are.” – Bill McDermott

Well, this is nice. Bill did an interesting thing here. He pivoted away from the question. The question was not whether Bill and Steve would be friends for life. That seems like a personal matter. The question was how was SAP going to deal with the loss of a strategic executive.

On top of this, he then goes back to praising SAP for being very classy. So this is a non-answer.

“A question for Bill and maybe you know, Luka if you could touch on this too. I mean, obviously we’ve seen the S/4HANA customer account number go up 70% this year, but and I’m assuming that’s a big part of what’s driving that that license growth.”

This is a bit of accuracy. Let me be “crystal clear,” S/4HANA is doing very poorly and has few live customers.

“How do you think, where are we, I guess, what’s hitting our win with S/4HANA, because the customer count might be high. But you know, our checks still say that penetration still has the way to go even within side those. So how do you think about where we are in the cycle and I guess the sustainability of some of these you know, the six consecutive quarters of growth on license?” – Philipp Winslow

And that is true. The S/4HANA sales numbers are highly exaggerated versus those companies actually using the application or implementing the application. Many companies that started implementing S/4HANA stopped after what they learned about S/4HANA.

Early Days for a Product that is 2.5 to 3 Years Old?

“Thank you very much, Phil, first of all for your kind remarks. We are in the really early days of the S/4HANA momentum. First of all, if you apply the 80:20 logic, you know, you’d be a lot closer to 15 or 20 then you would be to 80% in terms of the penetration and all the opportunities that are out there.

And you know that’s the traditional base we’re talking about. We’re making a bold move into customers that haven’t seen SAP and may not even be thinking of SAP in the mid-market, in the upper mid-market.”

But it isn’t early days for S/4HANA.

  • SAP released Simple Finance in June of 2014.
  • SAP released the rest of the suite (S/4HANA overall or EM) in Feb of 2015.

That is now between 2.5 and 3 years ago. How is July 2017 still “early days?”

Here are some of the statements from that announcement.

“When Hasso Plattner invented SAP HANA, we knew the day would come for SAP Business Suite to be reinvented for the digital age. At a moment when businesses around the world need to enter new markets and engage with their consumers in any channel, there’s now an innovation platform designed to drive their growth. This is an historic day and we believe it marks the beginning of the end for the 20th century IT stack and all the complexity that came with it.”

Hasso did not invent HANA. That is a myth distributed by Hasso Plattner and by SAP. For details see the article Did Hasso Planner and his Ph.D. Students Invent HANA? That is of course not relevant for an earnings call, but it highlights the difficulty SAP in telling the truth on even ancillary topics. Even how invented something is altered by SAP. Of course, Bill McDermott will suck up to Hasso Plattner. He works for Hasso Plattner. Therefore, Bill helps sustain the myth of Hasso inventing HANA.

Furthermore, it seems like something that is so great that it should have had no problem in adoption. Right? Well according to even the SAP biased ASUG in their S/4HANA survey of 2016, S/4HANA had 350 live customers. 350. This is covered in the article How to Best Understand ASUG’s S/4HANA Survey.

“So as we assert our will in different marketplaces in different industries, I would call this the earliest possible days of S/4HANA in terms of the rotation and the real catalyst for continued growth in the company.” – Bill McDermott

Yes, in McDermott-speak 2.5 to 3 years is the earliest possible days. If we create a time chart for McDermott-speak, it would look something like the following:

  1. Earliest Possible Days: Up to 3 Years After Launch
  2. Early Days: 4 Years After Launch
  3. Adoption Begins in Ernest: 5.5 years After Launch

“Yeah. It’s hard to add anything to that. I think adoption always in our industry is kind of an S-shape and we are clearly basically still in the early adopter phase. As you pointed out some of the early adopters have a long way to go to really roll it out across the entire end state. And now we see the first emergences of fast followers kicking in. So we have lots of room to grow.” – Luca Mucic

Luca has the same strange time concept that Bill McDermott, where an application begins wider adoption somewhere around the 5.5 year mark?

“And more importantly even S/4HANA is invigorating growth in other elements of our portfolio as well. CUC was very strong I highlighted this. Analytics was strong in the quarter that goes along nicely with the digital board room concept that S/4HANA really brings to life. So we will be having a lot of fun with this baby which is just barely becoming a toddler by now.” – Luka Mucic

From the beginning of this statement until the end this is false. However, apparently, Luka thinks about babies pretty often. And in a few years from now, when S/4HANA sees adoption (according to Bill and Luka) it will really be something!

Run Simple Ahead of its Time?

“And Phil you know, one CEO said something interesting to me yesterday, he said run simple was actually ahead of its time and I think he said right, because the most intractable challenge of our era is complexity, and when you think about the idea of a digital boardroom simplifying the management process for executives around the world and you think about taking cost out and improving productivity with HANA and S/4HANA and aligning all the management team with the line of business cloud and the network, you’re talking about just a story that doesn’t end because there’s so much room for all these companies to radically simplifying grow if they can apply the right digital technology. So it’s really early days and it’s an exciting era for us Phil.” – Bill McDermott

Run Simple was a marketing construct that was dropped as was covered in the article Is SAP’s Run Simple Real?

Run Simple has been dropped as a marketing construct not because it was “ahead of its time” but because it was completely false. SAP makes the most complex software with the highest maintenance costs in the categories that SAP competes in, which can be seen at Brightwork’s online TCO Calculators.

As a long-term SAP consultant myself, I found it the height of deception to have a “Run Simple” marketing campaign. The idea behind Run Simple was a simple counter-marketing to message the opposite of SAP’s well-earned reputation for being complicated and expensive. Furthermore, HANA and S/4HANA, in particular, are even more complex than what customers were exposed to by using Oracle of DB2 as the database and ECC as the ERP system. SAP has drastically increased complexity on SAP projects by introducing HANA and S/4HANA while pretending that these two items allowed companies to “Run Simple.”

S/4HANA to Beat Up NetSuite?

“And then secondly, perhaps for kind of Bill, you know, it’s now been a couple of quarters that the NetSuite deal has been closed. What do you see from a competitive perspective form that kind of combination and perhaps also give us an update on Workday? Thanks. – Gerardus Vos

And Gerardus, I’ll offer you an answer to your question on NetSuite. You know, Oracle strategy seems to be – to stay relatively large enterprise with Fusion, but to have a two tier strategy with ERP and take NetSuite down market and that’s understandable, the platform has been around for 20 years. So it will probably do better in the low end markets. We see them. We compete with them. S/4HANA is just going to be a runaway story in that place, up or mid-market, even lower mid-market.”

So far has this turned out to be true? Not from Brightwork’s research into S/4HANA.

Workday is Good, But Only for Parochial Buyers?

“Workday obviously, Workday can hold their own. If you’re – especially if you’re in the United States and you’re dealing directly with the Human Capital Management Executive. It gets a little bit more interesting for us when it’s a more comprehensive decisions for companies than just HR Director.

For example, they don’t really have a platform. So the SAP Cloud platform and the extensibility of that. If you think about S/4HANA and the nucleus of the 21st Century Enterprise and all line of business executives evolving their use of their individual line of business with the center of gravity, the data and the process of the company. You know, that’s game set match for SAP.

And when you talk Total Workforce Management, we’re the only one with the network around contingent labor and therefore Total Workforce Management and that’s why Gartner and others say, if you have more than 5000 employees it’s all about SAP, because what you see with Workday against SAP is a good fight with the LOB HR director in the United States.”Bill McDermott

So this is how Bill is trying to distract from the fact that Workday is having good success versus SAP. Workday customers tend to be far happier than SAP customers. It is true that the larger the company and the larger the decision-making apparatus the more SAP will tend to win against Workday. Workday is limited to HR and finance.

Workday customers tend to be far happier than SAP customers. But according to Bill, they should not be happy because they don’t have a platform? The SAP Cloud Platform which was the renamed HANA Cloud Platform and which is covered in the article Was the HANA Cloud Platform Designed for HANA Washing, has very few customers using it. Therefore, in terms of use SAP does not have a “platform” either. In fact, the entire term platform is meaningless the way Bill is using it. It is simply a way to take an unsubstantiated shot at Workday which is pulling business from SAP.

Also, is it true that the larger the company and the larger the decision-making apparatus the more SAP will tend to win against Workday? Workday is limited to HR and finance.

This is simply an executive attempting to cover up a weakness. Secondly, SAP has ridden SuccessFactors for years now. However, the acquisition is old at this point. SAP’s acquisitions normally decline in competitiveness the longer they are held by SAP.

S/4HANA Has 850 Live Customers on S/4HANA?

“Yes, sure. I think Bernstein [ph] as well. But we have over 850 live customers now to just over two and a half thousand projects ongoing, so it continues to be very successful. And as Bill said these customers are also investing in the top product. So this is really a tremendous success story for a city and the more they go live, the more expansion we will see.” – Rob Enslin

Nope. S/4HANA has far fewer live customers than this. The biggest story about S/4HANA is how low the uptake has been and how immature and problematic S/4HANA continues to be. SAP has been continuously misrepresenting the uptake of S/4HANA as is covered in the article How SAP Controls Perceptions with Customer Numbers.

If SAP has 2500 S/4HANA customers in ongoing implementations, it would be unmissable. But the S/4HANA job market is actually very small.

S/4HANA as a 21st Century Digital Platform?

“This is Bill, Ross. You should think about S/4HANA as a growth story. We shouldn’t spend all of our time on how much of that growth story and what percentage of that will be recognized one way or the other. I think what you should think about it is the 21st century digital platform for a successful company, is the best run SAP and S/4HANA is central to that.”

Bill’s similarities to a politician become more and more observable the more one listens to him. And like a politician, he continually diverts his audience away from details, up to the higher level of abstraction, where Bill feels more comfortable. Bill actually detests details, and that shows in his constant redirections of questions. And the finishing piece is the description of S/4HANA as a “21st-century digital platform.”

The Bill McDermott Timeline of Retroactive Expectations Lowering

“Do I believe that the theme is there for continued growth on a positive basis even on the upfront license recognition for S/4HANA? Absolutely. And do I think that the cloud and the full rental model for S/4HANA in the high end, as well as upper mid-market in mid has only scratched the surface so far? Absolutely. That’s why I say it’s such an early moment in the evolution of this growth story, you should just feel really great about it.” – Bill McDermott

Once again, Bill is trotting out the “Bill McDermott Timeline.” This is where things that he predicts that do not come true, have not come true only because a sufficient amount of time has not passed.

“And we are very confident that while we talked today a lot about HANA, we talked a lot about S/4HANA, when we talk again in one or two years, Leonardo will be equally important to our financial success than what we talked today about S/4 and HANA. So this should give you some inspiration what’s possible.” – Bernd Leukert

This is the most important quotation in this call. This indicates that SAP is about to switch horses to Leonardo. If SAP keeps analysts focused on S/4HANA, they will catch on that SAP has been misleading them the entire time. Therefore, SAP needs to change topics. Now Leonardo will be the rallying cry, while SAP hopes that they can distract analysts with the “great Leonardo story” so they do not ask any questions about S/4HANA.

Bill McDermott’s SAP Synopsis for Simpletons

“And if I was just to summarize it for you in five simple points, HANA, S/4HANA, the line of business cloud, the business network and Leonardo and IN five fingers you can tell the entire SAP story and what’s so compelling about the SAP story is in all areas we have the greatest breadth, depth and reach into industries and global markets of any competitor in this space.”Bill McDermott

And the master of oversimplification explains SAP in a uniquely false way that one would use on preschoolers, and misdirection drops the mike.

“This is our product that we resell, has nothing to do with databases. Clearly S/4HANA and HANA, therefore, is the absolute standard. That’s the main contributing factor what support profitability has actually continued to climb up and continues to be a positive contribution.”Luka Mucic

Luka knows nothing about SAP’s products and proves it with every new statement she makes.

Conclusion

SAP’s mislead the analysts on this call multiple dimensions. Each of the people speaking from SAP obviously has many millions of dollars in stock options, so this model where you obtain information from people that have a clear financial bias to mislead you so that they can exercise their options at the maximum price makes little sense.

It is reminiscent of the newspapers I used to read when I was in Pakistan. The information is interesting, but only from the perspective of analyzing what the powers that be would like people to believe. It has no inherent validity.

Clearly, when SAP anticipates that it will be speaking to people who can’t directly validate their statements, the lying is in a different dimension.

Financial Disclosure

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.

Search Our Other SAP Content

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  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

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References

https://seekingalpha.com/article/4089120-saps-sap-ceo-bill-mcdermott-q2-2017-results-earnings-call-transcript?page=2

https://www.successfactors.com/en_us/solutions/core-human-resources/employee-central.html

https://diginomica.com/2015/12/09/saps-steve-lucas-on-why-hana-beats-oracle-ibm-microsoft-and-aws/

https://news.sap.com/sap-unveils-next-generation-enterprise-software-new-business-suite-sap-s4hana/

How Accurate is SAP’s Page on APO?

Executive Summary

  • SAP provides information on APO, however how accurate was this information?
  • What is APO’s ROI and its history with constraint planning.

Introduction

In this article, we will review SAP’s APO project page to check for accuracy.

SAP APO: Balance Supply and Demand?

Here is what SAP says about APO’s overall capabilities.

“Enhance supply chain management (SCM) with SAP Advanced Planning and Optimization (SAP APO). This solution offers integrated, best-in-class functionality for demand, supply, and production planning – as well as global available-to-promise (ATP). Maximize supply network efficiency, and take forecasting and demand management to the next level.”

It is widely known that APO does not provide best in class functionality for demand, supply and production planning and available to promise. For each of these application subcategories, there are far superior applications. The concept is that none of SAP’s applications in this area are best of breed or best in class, but the selling point is that they are integrated.

Why SAP Advanced Planning and Optimization?

Here is what SAP has to say about APO’s more detailed capabilities.

To stay a step ahead of demand, you need a powerful platform that supports and integrates all of your supply chain planning activities. With SAP Advanced Planning and Optimization you can:

  • Improve supply and demand planning for both internal and external supply chains
  • Tightly integrate with SAP ERP to access sales, material, and other data
  • Increase forecast accuracy and minimize inventory buffers
  • Align mid- to long-term demand plans with your overall supply capacity
  • Create optimized production plans for all of your factories
  • Provide reliable sales order confirmation dates

As a consultant who has seen many APO implementations, it is rare to see companies benefit very much from APO modules. APO is integrated to ERP, but the integration, called the CIF, has a high degree of overhead. And companies that use APO do not end up minimizing inventory.

The Problems with Constraining in APO

Mid to long range demand plans cannot be constrained by supply planning constraints because neither the SNP (supply planning module) optimizer really makes any sense, and CTM also is rather illogical and has many problems and a very high overhead on projects. These are the only two constraint-based methods in SNP, and they basically don’t work properly. Therefore, constraining in SNP is not particularly feasible, but even if it were,  there are all manner of problems in now SNP maintains resource/constraint information. The abbreviated explanation is that the master data maintenance in APO is so time-consuming that few APO projects have updated constraint master data. We cover some of this complexity in the book Setting Up the Supply Network in SAP APO. We have covered other applications that do an exceptional job at master data maintenance in their applications, one of these is profiled in the book Superplant: Creating a Nimble Manufacturing Enterprise with Adaptive Planning Software.

One thing that it is impossible for APO or PP/DS (impossible in reality, not as per the advertised functionality), which is the module for production planning, is to create optimized production plans. This is because PP/DS’s optimizer cannot be taken live or should I say “kept live.” This is covered in the article The Failed PP/DS Optimizer. Yet while SAP has virtually no customers using the PP/DS optimizer, they continue to tout the ability to optimize in their sales literature, and SAP consulting companies continue to tell their customers that they can optimize their production plans, when if they investigated, they could learn that this does not happen on real projects.

In some cases available to promise dates can be provided to sales orders, but GATP, the module in APO that does this is so complex to set up, that in most cases the rules are simplified down to the point where they are not much more complex than what is in the Sales and Distribution module of ERP. However, the expense of setting up GATP is extremely high.

APO ROI

Here is SAP’s statement about APO’s ROI.

“Ensure a successful implementation and maximize your ROI with information resources that support the different phases of SAP Advanced Planning and Optimization – from planning and installation to operation.”

SAP has no studies that demonstrate any ROI with APO implementations. SAP has found that they can make any claim they like about TCO or ROI, because the vast majority of customers never ask for any evidence to support these claims. When SAP does fund a TCO study, as they did with Gartner (for HANA) is it engineering to show whatever SAP wanted to show as is covered in the article How Accurate is Forrester’s HANA TCO Study? SAP and their consulting surrogates want it both ways. They want to sell very expensive software, and to staff highly lucrative projects for a long period of time, but then they want to declare that they have the lowest TCO? How is that possible? As long as no one checks, it makes sense to continue to make the claim.

APO implementations have a hard time obtaining positive ROI for the following reasons:

  1. All of the modules in APO are overly complex and difficult to configure as well as difficult to use.
  2. APO is an expensive set of applications.
  3. APO is based upon a lot of concepts that harken back to the mid-1990s, and many of these concepts have been proven ineffective, but the software has not changed.
  4. APO is normally implemented by large consulting companies. These consulting companies are so expensive, and they lengthen out the implementation by such a degree that the costs of implementation are very high. APO has the longest predicted implementation timelines of any supply chain application in any of the categories in which APO competes.
  5. APO, due to the fact it was developed by SAP and the fact that each module is so complicated and dated means that APO modules have the highest TCO of any set of modules in the planning space.

How are these things a recipe for lower TCO and higher ROI?

We have put a lot of work into estimating not only APO TCO (we don’t estimate ROI), but the TCO of many applications, and there is no way these claims by SAP can be true.

See the Brightwork TCO calculators at this article.

Consider a Faster (APO) Deployment Option?

Here is what SAP says about APO deployment.

“Get up and running even faster. SAP Advanced Planning and Optimization rapid-deployment solutions bring together software and services to speed go-live for a rich set of supply chain planning functionality.”

These are the so-called “RDSs.” There is little of value in any of the RDSs for any of the SAP products for which RDSs exist. In our view, the RDSs are simply sales and marketing constructs that create the false expectation that the RDS can allow the software to be implemented faster than it will be.

As none of the Rapid Deployment Solutions (RDS) solutions contain much of value, and none demonstrated any ability to actually implement SAP more quickly (their intended purpose) they seem to have petered out and have basically stopped being sold. Brightwork covers the RDSs in this article.

Even though they are essentially dead, SAP sales and marketing still enjoy referring to them as if they are a “thing.” However, the people who have to actually implement normally don’t appreciate them.

Conclusion

This page was an inaccurate take on APO that does not reflect the reality of what normally occurs on APO projects. If taken at face value, this information would lead to large expenditures of money to engage in implementations of functionalities within APO modules that have already failed at many SAP customers. The specifics mentioned by SAP simply don’t occur in real life. SAP’s presentation of APO has zero correlation with reality and does not match APO’s implementation history.

This article receives a Brightwork Accuracy Score of 2 out of 10, mostly for how much information it leaves out.

Financial Disclosure

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.

Search Our Other SAP Content

SAP Contact Form

  • Interested in Our SAP Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

References

https://www.sap.com/products/advanced-planning-optimization.html

How to Understand The Misdirection on SAP Change Management

Executive Summary

  • SAP uses change management to pivot away from the customization required for their system. They do this to keep customers from learning.
  • SAP provides a false construct regarding change management which is directly connected to customization, best practices, process rearrangement to whatever SAP’s functionality does.

Introduction to SAP Change Management

SAP frequently uses the topic of change management to control perceptions on projects. In this article, you will learn how SAP uses the concept or accusation of the resistance to change as a cover for lack of functionality to meet customer requirements.

SAP and Customization

SAP has had a long-standing policy of trying to get customers to change their business processes to match SAP’s functionality. SAP exaggerates how much their software does and presents a false construct called best practices, which states, somewhat absurdly, that all best practices reside within SAP’s software. This absurdity is covered in the article The Basis for SAP’s Best Practice Claims.

After an SAP sales cycle completes, it is always found that SAP cannot do as much as it was proposed that it could do to meet the business requirements. In most cases, the requirements have been rigged by the consulting company supporting the software selection to select SAP no matter the requirements. As users begin to push back on having to change their business processes, SAP, along with the consulting company will trot out the argument that the company is simply being resistant to change.

Change Management + Little Customization + Best Practices + Process Rearrangement to Whatever SAP’s Functionality Does

SAP is interested in fitting whatever their customer’s business process is into their software. SAP consulting companies want to maximize their billing hours, so in fact, they are pro customization, while SAP is anti-customization.

But overall, SAP has developed a very effective strategy where they use these various concepts to cut off a customer’s options and to brand anyone who does not agree with SAP as fundamentally a problem. The options of a customer narrow even more after the software is implemented. At that point, a series of new restrictions are put into place.

The Challenge of IT Change Management

In the article by ASUG which provided false information regarding a S/4HANA implementation for S/4HANA, some germane statements are made regarding how change management is most often explained and commingled with other topics to control the behavior of SAP implementations.

“The key challenge in any “vanilla” implementation is acclimating people to an environment where they are adapting their work processes to a system, rather than adapting a system to their work processes. That means a change management strategy is as important as a technology strategy.”

This has been the boilerplate statement of SAP and SAP consulting companies for decades. It is extremely difficult to find SAP implementations that don’t have moderate to extreme customization. And it is not like these previous projects did not have change management as a concept. Secondly, the issue of entirely relying upon change management does not solve the issue.

There are often processes that it does not make sense to change to SAP’s way of doing things. These may be key business requirements for the company that they can’t change. For example, ECC has always been weak in process industry manufacturing.

Adopting ECC Functionality for Process Industry?

Companies cannot simply adopt ECC’s functionality for process industry manufacturing because they simply don’t make any sense for the company. Doing so would be a force fit, that would leave the company unable to function properly. SAP is often confused, thinking that everything that the company does must be sacrificed at the altar of how SAP works. However, there is a different idea, which the software should support what the company wants to do.

“The only way you can crack that nut is by not only having change champions within the organization but by also simplifying the solution as much as possible,” says Sharma. “People will accept change only when they know that their job is going to be easier.”

Here Sharma is commingling two issues into “change management.” One is the issue of simplification and change resistance, and the other is the requirements of the company.

Process Industry Example

In the example of the process industry, it is not a question of simplification of the process. The issue is that process industry companies perform manufacturing in a way that SAP does not effectively model. Any process industry manufacturing company that uses vanilla ECC or vanilla S/4HANA will lose money if they don’t either customize ECC or S/4HANA or use other applications to perform some of the functions and then integrate back to ECC or S/4HANA. This example does not have anything to do with people resisting change simply to resist change. SAP and their consulting partners enjoy placing any resistance to SAP into the category of “resisting change,” but this is inaccurate.

Resisting change due to being set in one’s ways can occur, but it is not the majority of the resistance to SAP generally. The main reason for resisting SAP is that SAP cannot meet certain business requirements.

Conclusion

Change management is a euphemism that is used by SAP and SAP consulting companies to make customers feel bad for the fact that SAP’s applications can cover far less of the functionality than was expected during the sales process. I have personally been in multiple scenarios where SAP mislead the customer as to what certain functionality could do, and I have never seen SAP own up to this with a customer. Instead, SAP will blame some “miscommunication” that may have occurred.

In this way, the terms that SAP uses, such as “change management,” serve as terms of propaganda which allow SAP to remove itself from criticism. The problem, according to SAP, is never that they mislead the customer as to what requirements could be covered by SAP functionality.

Secondly, SAP consulting companies support this perspective of SAP change management philosophy, because they normally rig the requirements so that SAP will win the software selection. Which is why companies cannot trust consulting companies to create RFPs for them, the RFPs will invariably lead to buying maximum services from the consulting company, through the software that is selected.

Therefore, they provide the same false messaging as SAP regarding SAP change management. From this, the customer often believes they are receiving objective advice.

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References

Enterprise Software Risk Book

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Rethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

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.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
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

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