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 negotiate 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. 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, they 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 large 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

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.” 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 to 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 says 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 to 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 required with honorary Ph.Ds. That is, you are not supposed to pretend it is a real Ph.D. They are 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 four years to attain and only about 1 out of 140 people (in the US at least) to achieve an undergraduate degree ever attain a Ph.D.

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

However, how can a person who has never completed a Ph.D. program start up a pseudo-mini-university? It’s 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. The University of Potsdam benefits from having the Hasso Plattner Institute on its 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. This is 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 established, 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 always 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 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 excellent 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 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.

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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 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 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 the 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 intended 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 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.”

Yes, a “global head” for a solution that almost no one uses but is what allows frozen ice cream to be delivered (as covered in the article, Is it SAP Leonardo that Ensures Frozen Ice Cream Delivery?).

Is this all really necessary? It is if you are trying to make an exaggerated impression.

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 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 reliable 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 into one another. I

t usually 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.

Let us review a curious slide from SAP on C/4HANA.

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. That is if we use past history as a guide. However, that is not what SAP or SAP consulting companies want. Instead they want projections about the future to ignore SAP’s history.  

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 weak.

But does Bluefin Solutions point this out to the reader?

No. It is critical; SAP would not like, 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 huge market, second only to ERP, and on its current trajectory soon to surpass it in sales. And SAP has a mighty sales machine connected to their software. However, it does not follow that SAP will be able to capture very much of CRM, primarily since all of the applications that make up C/4HANA isn’t actually core CRM.

Indeed, 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 that have resulted in only 1500 attempted implementations?

HANA has been a better story, but HANA is no longer growing, or at least not in relation to other databases. 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 its 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 into S/4HANA. Secondly, the C/4HANA suite is not integrated into 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.”

SAP ECC was indeed 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 currently integrated.

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 are 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. And which 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 authentic 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.

What We Do and Research Access

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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, and Sybase has become almost invisible ever since.
  • We review what SAP said and 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

To understand why it is improbable 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 merely another way for the consulting company or 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 possible. The SAP ASAP Methodology, (which we cover in Did SAP ASAP Methodology Ever Reduce Project Timelines?) was primarily 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 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 use 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 essential features that the DT Navigator will not tell you.

  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. 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 precisely what SAP wants them to do.

The DT Navigator for Saving Money on SAP Consultants?

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

We think there might be.

After 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. 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 DT Navigator. This is 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. 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 essential 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 the information supplied 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 several 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 repeat what SAP tells them.

Financial Disclosure

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References

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 it 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 the 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 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 SuccessFactors suite. This is the 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 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. Curiously, 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 substantially 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 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 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 an 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.

Are Cloud Investments 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 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, Microsoft. 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 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 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 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 will 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, 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 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 utterly 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 complicated 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 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 manage 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 pleased 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. The entire term platform is meaningless the way Bill is using it. It is merely 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 usually 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 tiny.

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 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 has many millions of dollars in stock options. 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.

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.

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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 the 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 comprehensive 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 makes any sense. CTM also is somewhat 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 correctly. 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 (unlikely 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. SAP consulting companies continue to tell their customers that they can maximize 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 complicated than what is in the Sales and Distribution module of ERP. However, the expense of setting up GATP is exceptionally 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 costly software and to staff highly lucrative projects for a long 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. Many of these concepts have been proven ineffective, but the software has not changed.
  4. APO is usually 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 valid.

See the Brightwork TCO calculators in 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 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 implement SAP more quickly (their intended purpose), they seem to have petered out and have 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 implement usually don’t appreciate them.

Advice on Enjoying the SAP Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.

 

Conclusion

This page was an inaccurate take on APO that does not reflect the reality of what occurs typically on APO projects. If taken at face value, this information would lead to significant 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.

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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.
  • SAP does this to keep customers from learning.

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 merely 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 blended 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 challenging 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 on change management does not solve the problem.

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.

When Change Management is an Excuse for Bad Software

Change management is a frequent topic of conversation. It has become common to say this or that is a matter of change management. The term is often used as a cover for a bad system. It has become routine for companies to choose software from SAP or Oracle without ever showing the software to planners, implementing it poorly with the help of a large consulting company, and forcing bad systems on the user community. This is what I call the IBM Systems Implementation Approach. After this approach fails to get the users to use a system that provides the bad output, the individuals who responsible for either the selection or the implementation like to use the term change management. Change management covers everything. It provides the political cover necessary to justify why the company cannot get value out of the new system.

Good Products Enable Usage by Themselves

Not all products require change management. iPods did not. After they had been introduced, people found them very easier to use and an improvement over what came before them. No one has ever had to develop a workaround for an iPod because they are expertly designed and do everything the user wants. This is not to say that systems do not require training. I am a firm believer in investing in implementations, and more complex solutions need more socialization, as I describe in this post. This is not the same thing as change management as an excuse for bad software. I never use the term that way. I will say, “look, the software is weak,” not when a weakness is pointed out that “oh, that is change management.”

Use the Bad Things I Gave You

It is amazing to me how often I have discussions with people on systems that extremely difficult to use and very poor in functionality, and I am told that the users just need more training on the system. Inevitably the next statement relates to the users “not getting it.” This gets back to an essential point, which is the following:

Did the users ever have a chance to use the system your selected before you bought it?

Almost always, the answer is no. I have an enormous observation to provide to people trying to get users to adopt any system. Let them try the different systems and provide their input into which one they like best. First off, this significantly improves the likelihood of software being selected, which the users will use.

Secondly, it puts the decision-makers in a better position because they can now say the users were part of the decision. After seeing this time after the time, the evidence is clear; users can select better systems that executives that are on selection committees or consulting companies that typically have financial ties to the software companies that they choose.

How to Rig an RFP to Maximize Billing Hours

The RFP is a common feature of software selections. In this article, we will provide the truth about software RFPs.

The Truth About the Software RFP

When managed by consulting companies, the software RFP is critical to serving as justification for the software selection to select the software from the vendor that the consulting company has resources ready to bill for. We spend time talking about what software is right for the customer’s needs. However, why do we do that when Deloitte and Accenture and so on have already decided software, they want to implement?? That is why they and other consulting companies use the same RFP template. It’s based upon you know, “best practices.”

The Peculiar Match of the Software RFP to Oracle or SAP

Isn’t it odd how often the RFPs match up so perfectly with either Oracle or SAP? And how those consulting companies primarily have consulting resources trained in those products? Hmmmmmm.

Did that software that Deloitte or Accenture or IBM or Infosys etc…turn out to be a bad fit for your company? Well, first, it was not selected for you. It was selected for the financial needs of the consulting company. But don’t worry, if you pay them enough money they can make even the worst fitting application below average with enough custom coding. 

The Greatest Software RFP of All Time

One of my favorite RFPs ever was put together by IBM Global Services. It compared an analytics application against a coding environment. The logic offered by the selection document was that you could create the same thing in the coding environment as the application. And you might have guessed at this point, but IBM Global Services had resources for the coding environment, but not for the application. So if the client chose the application, IBM GS would lose out on consulting hours.

I pointed out that this comparison made no sense and that you can’t compare a finished application to a coding environment. But the IBM consultants told me to think outside of the box. Telling someone to think outside of the box appears to be a reflexive statement used to defeat questions related to consistency. In the rock paper scissors of arguments, it is undefeated.

IBM Will Look Out for IBM

I will always remember a quote from an IBM Sr Manager on the project when I brought up some misrepresentation explained by the IBM partner. He said,

“IBM is going to look out of IBM.”

So remember that. If you bring in IBM, IBM is going to look out for IBM. They may pretend to be client-focused, but in fact, they do not feel any responsibility to the account. As a client, you might be paying them, but they are there for themselves. If they can deceive you, if they can backward engineer the RFP to maximize their billing hours, they will do it.

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.

Advice on Enjoying the SAP Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.

 

How SAP Controls Accounts

SAP has a tried and tested way of taking control of its accounts. This is explained by the following graphic.

 

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 misleads 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 that 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. The removal of the software RFP would be damaging to the consulting companies. It would probably lead to better decisions and better outcomes, but as is often explained to me, it would be negative for the implementation “ecosystem.” An ecosystem is a vibrant community of consulting companies and value-added resellers that backward engineer software RFPs, overstaff projects and manage from the combination of the two most critical items in consulting — the billable rate and the margin per hour.

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

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.

What We Do and Research Access

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References

https://www.asug.com/news/sap-s4hana-customer-story-hana-s-4-rev-group-thoughtfocus

Why SAP Leonardo Seems So Fake

Executive Summary

  • Leonardo is an IoT/Big Data “solution” that has been marketed far too early by SAP.
  • We evaluate the exaggerated claims of Leonardo and how SAP has attempted to blend SAP with IoT in the minds of customers.

Introduction: The Real Story on Leonardo

Leonardo has so much hype around it that it requires a calm and unbiased analysis of what it is and the probability that SAP’s statements on Leonardo are true. You will learn both SAP’s projections on Leonardo and our analysis of this by an entity with no association or financial bias.

What is SAP Leonardo?

SAP announced something called Leonardo at SAPPHIRE 2017. SAP Leonardo, according to SAP, looks something like this.

These are a collection of things that SAP has been talking about for some time. One of them, Design Thinking, is not something in SAP’s software per se but is an approach that SAP has rolled out to everything from product development to sales. 

The Logical Problems with SAP Leonardo

SAP demonstrates a problem when it describes, SAP Leonardo that has plagued it for some time. And that problem is an overreliance upon buzzwords and concepts that have yet to meet with much commercial success. In an article by Sanjeev Singh, I found the following terms used.

  1. …kick off your digital innovation journey
  2. …an innovative portfolio of IoT (Internet of things) solutions to help you extend your digital core (SAP S/4 HANA) with adaptive (machi.ne learning) applications, big data applications and connectivity to imagine and implement new business processes, new business models and most importantly, new possibilities in human life.

When you start using language in this way, it becomes evident that there is a lot of salesmanships and marketing puffery involved.

  • Why would SAP use the term a “digital innovation journey?” Is the implementing company innovating, or are they engaging in systems implementation?
  • Does SAP have an innovative portfolio of IoT? Does SAP presently actually receive revenue of any substance from IoT?
  • Why is the term digital core being used to replace the term ERP? What was wrong with the term ERP?
  • Does SAP receive revenue of any substance from machine learning? Is SAP known as a machine learning company?
  • Why is the term “new possibilities in human life” used? What is that adding to one’s understanding of SAP Leonardo?

The PLAT.ONE Acquisition

SAP acquired the very small PLAT.ONE software vendor. PLAT.ONE is doing what SAP would like to do (although on a tiny scale), so SAP purchased them. However, PLAT.ONE had nothing to do with SAP before its acquisition. In fact, for some reason, Plat.One did not connect to HANA.

“PLAT.ONE is built using Hadoop and HBase to store unstructured and high-volume data streams. It provides a rich database abstraction layer that integrates with MySQL, MS SQL Server, Oracle and other SQL and No-SQL storage.”

I assume that this web page will be updated to point out that PLAT.ONE will connect to HANA, and the other databases will be de-emphasized. Most likely SAP marketing is already at work changing the web page to say that PLAT.ONE works with SAP—however, PLAT.ONE did not need or connect to an SAP HANA database. And one should also notice that there is nothing here talking about PLAT.ONE connecting to any ERP system, for instance, S/4HANA. That is because IoT does not have anything to do with ERP systems. But SAP will need to superimposed S/4HANA into the mix so that the IoT data is in S/4HANA so the connection argument can be made.

As a researcher who is primarily dedicated to studying SAP, I find it unlikely that SAP will be able to do much with PLAT.ONE. SAP did not integrate BusinessObjects into BW as promised. It did not leverage SuccessFactors except for learning about Cloud/SaaS from them. It is not leveraging Ariba. It did not leverage several acquisitions in the CAD/CAM space and PLM space to do anything with its PLM solution. It did little with the Sybase acquisition. So, therefore, it seems more likely than not that SAP will not do much with PLAT.ONE.

What The Usual Suspects Say About Leonardo

The usual suspects of SAP consultants publishing material, Computer Weekly, Diginomica was serving as repeating engines for SAP’s press packets present a positive viewpoint on Leonardo. None of these entities questioned anything that SAP wrote, and performed their duty to SAP admirably. They once again helped to create the echo chamber that SAP desires. SAPPHIRE 2017 is still pretty recent, so what will come next is a series of pro-Leonardo articles by consulting companies that see Leonardo as a way selling more consulting business. In one that is already published, all of SAP’s projections were accepted as true. Then some case studies were mentioned that intend to illustrate that companies are already using Leonardo to improve their business.

Exaggerated Claims on SAP Leonardo

Something like SAP Leonardo requires exaggerated claims. According to the SAP IoT Overview presentation, Harley Davidson is already using SAP’s IoT.

“Reduced production lead time for customized motorbikes from 21 days to 6 hours.”

No explanation is given how this was done. But one is supposed to accept it uncritically.

SAP has a video on The Port of Hamburg, which provides very little information on what was done to the customer.

This video has been removed for whatever reason. 

The following video is on digital farming is far better, as in at least some details of what was done are explained.

The problem with this video is that it covers a lot of different areas, IoT being just one.

Secondly, it seems to make the mistake of generalizing all technological advances in farming to SAP. In one scene, the farmer is using a non-SAP system to measure the composition of feed. In another there is a digital readout on a combine – that is being sent to a central location (I assume). In another, there is a drone that is selectively dropping insect predators onto parts of a field where it has determined that there are pests.

How much of this is SAP software?

Is SAP explaining what their software does in this video, or providing a documentary into new information technologies used in farming? SAP’s logo shows up at the end of the video, but it unclear why as nothing that was shown seems to have anything to do with SAP.

This is the IoT video of an Italian train operator named Trenitalia. The idea is first presented by the CIO of Trenitalia that its IoT strategy in improving predictive maintenance, by recording train data, is dependent upon HANA. However, according to this CIO, the amount of data collected on an annual basis will exceed 700 terabytes. If that is true, this data cannot be kept in HANA.

HANA for Big Data? Or Big $$$$ Data?

HANA is the most expensive database you can purchase, and it is priced by GB (this is covered in the article The Secret to Not Talking About the Cost of HANA). And it also has the highest TCO due to rather apparent factors (immaturity, labor costs, cross-component requirements, etc.). Therefore for Trenitalia, the maintenance data may be housed in HANA for only the shortest of times, and then very quickly be migrated to a database with unlimited storage, or storage who’s price is not related to the size of the data. This will be challenging as, according to Trenitalia, roughly two terabytes of data per day will be collected. Because of this volume, I see a difficulty how HANA fits into to Trenitalia’s plans.

Later in this same video, the Head of Technical Division states that the system is processed by HANA. That is not technically accurate. It is stored in HANA. HANA is a database, so it is not processed, as in, analyzed by HANA.

Leonardo as Enabled by HANA?

Leonardo was further promoted by SAP as a mechanism for leveraging HANA in the PR release by SAP SAP’s HANA Bet Seems to be Paying Off.

The ability to handle IoT data is quickly becoming a “must have” in the database world, and we’re just beginning to see how sensor data can be leveraged to create new efficiencies. Mercedes Benz, for example, combines sensor data from automobiles in production with ERP systems hosted on HANA and then applies machine learning analytics to improve development and reduce production costs.

This isn’t easy to do from scratch — and that’s where SAP’s new release provides big wins. It offers 70 predictive algorithms out-of-the-box including those that run on live streaming, series and spatial data. These algorithms learn and self-improve to facilitate machine learning.

SAP has been trying hard to co-opt IoT and Machine Learning…

Ahhh….the White Unicorn of Machine Learning!

If we look at machine learning, which is the new rage among buzzwords, how much machine learning is there currently implemented in companies. I ask because I don’t see any.

Now it is true that more massive data sets and more powerful processors along with specialized logic provide more opportunities for machine learning. But machine learning is connected to AI, and AI goes back decades. And how many applications have we seen of AI? The most AI thing I have been exposed to is my Google Home unit. However, it seems like AI, but it has a somewhat limited number of pathways that it follows. But Google is far better positioned than SAP to bring out machine learning.

Then the description continues:

“SAP HANA Cloud Platform is the key strategic platform as a service infrastructure and provides framework for SAP Leonardo Innovation System. The figure below shows the key components of Leonardo – SAP Leonardo Foundation, SAP Leonardo Bridge and SAP Leonardo for Edge computing and how they tie together in SAP Cloud Platform or SAP HANA Cloud Platform framework.”

If that is true, then SAP Leonardo is not off to a good start. The SAP HANA Cloud Platform, which is now just called the SAP Cloud Platform as it never had anything to do with HANA, as is explained in the article Was The HANA Cloud Platform Designed for HANA Washing?

SAP loves to distribute Leonardo through their presentations because it allows SAP to promote virtually all of SAP’s solutions, as Leonardo is presented as a universal glue.

Leonardo is a toolkit that is used by very few SAP customers, and most of what SAP says about Leonardo is what SAP would like Leonardo to be, not what it is. SAP states that the SAP Cloud Platform will help companies leverage Leonardo, but there is no truth to this. SAP’s website says that Leonardo is a significant benefit of moving to the cloud.

The Reality of SAP’s Cloud Platform

The SAP Cloud Platform has not received uptake very much, and it is a PaaS or platform as a service. There is a question as to whether it makes sense to use SAP as a PaaS as you can receive a more competent offering from AWS, Azure or even Google. But if SAP Leonardo ends up being the value-add that SAP says it will be, then there is no reason that it can’t be hosted at one of these PaaS vendors.

“SAP Leonardo Foundation provides Leonardo business services that enable you to build IoT applications through reusable application services and applying predictive algorithms, and Leonardo technical services to process high velocity data with ability to stream analytics and run predictive scenarios. The Leonardo business services are nothing but reusable microservices framework that allow you to rapidly build your IoT model and connect it with business contexts from back-end systems and by also leveraging configuration tools. Leonardo technical services leverages SAP Cloud Platform that provides end-to-end microservices for machine learning, analytics, big data connector, security, user management, and back-end integration APIs.”

So this paragraph has SAP marketing’s hands all over it. It is entirely unrealistic and filled with buzzwords. BTW, this paragraph continued, but it merely progresses along the same line of describing SAP Leonardo as some infinitely complex Rube Goldberg device.

Leonardo Foundation as Development Environment

If I can paraphrase, SAP Leonardo Foundation is a development environment with a set of components where you can build IoT applications using analytics. Now we will get to the quotations about what SAP Leonardo “connects.” At SAPPHIRE 2017, Hasso Plattner called SAP Leonardo “a set of tools to build new-style applications.” Therefore, this means that SAP Leonardo is a naming for a template on things that already existed before SAP Leonardo being named. SAP has HANA; they have Lumira; they now have PLAT.ONE. If you buy these different components from SAP, you can build an IoT system. And SAP has some ideas about how you should configure these components to capture and analyze IoT data.

What SAP Leonardo “Connects”

“Connected Products enable end-to-end visibility of product life-cycle operations and provide ability to connect, monitor and control large number of customer facing products, manage, control, and respond to changing conditions with a digital operations center for response.

Connected Assets allow us to track, monitor, analyze and maintain all fixed assets across the network. With connected production systems, assets, manufacturing and maintenance business processes, we can reduce operational and maintenance costs and increase the up time of assets.

Connected Fleet enables businesses and public sector organizations (owning fleet) to collect live telemetry and sensor data and integrate it with core business processes to improve services and safety for operators, improve visibility to logistics, and finally, provide a better service to their customers.

Connected Infrastructure delivers new forms of digital operational intelligence to transform physical-infrastructure systems. Leveraging real-time building insights, we can optimize energy consumption, maintain facilities and equipment and ensure improved customer satisfaction. We can manage end-to-end construction projects and optimize energy utilization by integrating processes and information.

Connected Markets enable innovation, production, deployment and business formation of local relevance at the right moment in time to meet challenges of tomorrow and transform it into opportunities for today. In this market we can interact in an all knowing digital or physical market place to provide an excellent all around personal experience.

Connected People will improve lives, work and health by connecting people and communities and providing better lifestyle experiences and opportunities for organizations to evolve into new business models. It can help workers stay safe, build a connected health network, and make home life more comfortable, and secure.”

So basically, SAP Leonardo, according to SAP, will allow one to connect various items and then analyze them. But actually, that can’t be accurate.

Findings or Repeating What You Were Told by SAP?

SAP Leonardo does not provide for the connections because those connections are enabled through the actual data collective devices. So SAP Leonardo allows the analysis of connected devices, and I consider that an important distinction.

At the bottom of the article, this is stated by the author.

“Information and views expressed in this article are based on my findings and I do not claim its accuracy and validity in any way.”

This can’t be right. Something is very wrong as an author when you write something like this. It is an abdication of your responsibility to fact check for the reader.

First, this article is not the author’s “findings.” This article is a restating of what SAP stated. You cannot use the term “findings” to describing copying something. The author of this article has what are quotations from SAP, but has not listed them as quotations in his article. This is a problem for many SAP consulting companies that are using SAP’s quotations, but without providing the source. These are the statements of SAP, and one may not claim its accuracy or validity. If one calls something findings, that means that you analyzed the information.

But at least the author admits what they do not know. Most people that write on SAP restate SAP’s statements and then never cover the fact that they don’t know if any of it is true. SAP states it, and in their mind at least, it must be true.

Criteria for Predicting the Success of an SAP Initiative

There are a couple of criteria I look for to determine if a new SAP initiative will be successful.

  1. Criteria 1: Previous Experience: Is what is being introduced something SAP has been successful with before, or is it related to something SAP has been successful with before?
  2. Criteria 2: SAP’s Area Capabilities: Does SAP have capabilities over other vendors in the area aside from merely their size?
  3. Criteria 3: Ability to Use the Integration Argument: Can SAP use its control over the other applications a company uses to extend into this area?
  4. Criteria 4: A Logical Software Category for SAP?: Does the area that SAP is describing inherently make any sense? That is, does it hold together?

From that set of criteria, I then give each item a 1 to 10 rating with one being low or no and ten being high or yes. Let us see how SAP Leonardo scores on this system.

Criteria 1: Previous Experience

SAP has never been successful in anything similar to SAP Leonardo previously.

Previous Experience Score: 1

Criteria 2: SAP’s Area Capabilities

SAP has some of what SAP Leonardo describes with its analytics offerings. However, BW and Business Objects are again applications that aren’t worth porting to this solution. The best analytics SAP has is Lumira, but it apparently has all types of implementations limitations and is not seeing much uptake. That would be by choice to be part of SAP Leonardo, but SAP needs to build out its backend. However, outside of analytics, SAP does not have anything else that matches what I see described here, aside from their acquisition of PLAT.ONE, which is an acquisition and was very small at the time it was acquired. SAP has never had anything predictive outside of forecasting. In forecasting, they have SAP DP which would not be useful to include in this overall design. The same applies to IBP, which I covered in the article SAP’s IBP Open Questions and Opportunities.

So SAP is starting from scratch there. In machine learning, SAP has no prominence, and while I searched, I could not find any machine learning acquisition they had performed. In my reading, SAP has done little but issue statements that they are interested in machine learning and see it as the future.

SAP’s Area Capabilities, Score: 4

Score Reasoning (The things that SAP does have for Leonardo many other vendors have. The things that SAP needs, which are are more complicated to develop, SAP has no background in)

Criteria 3: Ability to Use the Integration Argument

SAP always has the advantage in SAP customers as it can often convince customers to use their offering as it connects to ECC or SAP’s ERP system. That allowed SAP to get into many areas where they had no background and poor quality offerings. But the issue is that are things like people and assets connected to the ERP system. Well in HR they have the records of people, but they are not connected to physical people. And SAP is moving away from HR in ERP to a stand along the solution. In vehicles, they aren’t. In other assets like factory equipment, they could be, but they aren’t. MES systems connect to the actual equipment in the factory, and MES systems are often connected to ERP. So it is a bit of a mixed bag. But this is SAP’s most potent play. They would need to get companies to see ERP as a way to connect all of their devices.

This is not actually what ERP was designed for, and it would not have an advantage over creating a separate hub for this type of IoT information. But SAP still might be able to convince companies to do this, and for those companies, SAP would have a substantial advantage in then selling them something like SAP Leonardo. This is, in fact, likely why SAP Leonardo has been so pre-announced. There may be little to SAP Leonardo, buy SAP is signaling to their customers that they should be connecting devices to SAP ERP.

Ability to Use the Integration Argument Score: 4

Criteria 4: A Logical Software Category for SAP?

It is difficult to say.

Something that goes unmentioned is that companies drastically underuse the information they already collect. IoT creates haystacks of information that must be organized and analyzed. In short to medium term, I would not see IoT as a big opportunity if we take the example of factory equipment. Do companies benefit from knowing exactly what that equipment is doing at any time? So the milling machine is milling at a specific rate per hour, and that compares versus the specification as it is running 20% below capacity. I suppose there could be a benefit to knowing that, but there is also the question of analytical bandwidth. Developing what SAP is describing is a lot of work and will require many new areas to be developed. Some things, like truck locations, are already known by companies through GPS tracking.

Longer-term, it is much more difficult to project as who could have imagined that you could have a computer in your pocket that you would use as a phone? Furthermore that everyone would have one? But it is difficult to see the vision of SAP Leonardo happening for some years:

A Logical Software Category for SAP Score: 2

Score reasoning (Based on the short to medium time horizon).

The average of these four scores is 1 + 4 + 4 + 2 = 11/4 = 2.75. I could correlate this to a probability, so a 27.5%, roughly of course, of SAP being successful with Leonardo. 

SAP’s Neophyte IoT Status

If I offer to come over and bake you a cake for money, you should not accept my offer. Why? Well, for one, I have never baked a cake in my life. Now I may have some of the ingredients in my home. But those ingredients can be found anywhere. I have not brought anything special to the table that you can’t get anywhere else.

SAP will continue to talk up IoT; they will be reinforced by their complaint partner network. However, SAP is starting with really nothing for SAP Leonardo. I am quite confident that if a customer were to purchase SAP Leonardo right now, it would end up being a development project.

One thing that SAP cannot answer is why an ERP system like SAP ECC or S/4HANA, which as been designed to decrement inventory, post goods issue, etc., is an efficient platform for aggregating IoT data?

What is SAP’s “Real Control Over” IoT Master Plan

SAP is not currently a player in IoT. In fact, IoT is a bit of a future-oriented technology or set of technologies at this point. SAP has big plans for IoT, and they talk about it regularly, even when the topic being discussed has nothing to do with IoT as the following quotation from their Q1 2017 analyst call demonstrates.

“Yes, I think people forget that the S/4HANA ERP, there is nothing out like it in the market at all. When you look what it does and how it changes businesses and how it connects digital supply chains, it is by far the next generation ERP and everyone else is far way behind. And then when you connect everything, the machine learning and IoT and analytics space…”

SAP continually does this, even though SAP does not have IoT business. So they don’t have a real IoT offering and don’t make money from IoT, but they continually talk about IoT.

Get Customers to Commingle SAP with IoT in their Minds

Therefore, SAP needs to get companies placing its data into SAP’s ERP system so that then SAP can apply the integration argument to divert customers away from better providers in IoT and machine learning. This is not actually what ERP was designed for, and it would not have an advantage over creating a separate hub for this type of IoT information. But SAP still might be able to convince companies to do this, and for those companies, SAP would have a substantial advantage in then selling them something like Leonardo. This is, in fact, likely why Leonardo has been so pre-announced.

And this gets into what is SAP’s current control over IoT data.

SAP’s Control Over IoT Data?

This is a logistics graphic. It covers all the modes, ports, rail yards; it even includes drones (in the upper right-hand corner). The title of this slide is SAP Leonardo Connected Fleet. However, what is the major problem with this slide with regards to SAP? Well for one, SAP has almost none of the transportation market in software. SAP makes a product called SAP TM, but it is very lightly installed. I have analyzed TM versus competitors offering in this article SAP TM Verus MercuryGate. 

SAP makes another product for warehousing called EWM, which is again very lightly installed. SAP ERP has a mini-module called WM, which is a highly simplified WMS, but it is a glorified inventory management module. Therefore SAP’s installed base when it comes to logistics is very low.

Therefore, SAP is proposing something in this graphic that does not exist. SAP provides and maintains none of the data for what is in this graphic.

To SAP to pull off its integration argument, that is, customers should accept lower capability SAP applications in any area; SAP needs to already control the data to be accessed.

Here you can see SAP is proposing the ability to track all manner of vehicles. 

How is SAP going to get information from so many dimensions? We can see Forklift Analytics, Ride Sharing. Where is all of this happening…anywhere?

Here is another thing that does not exist and is not used.

Where is SAP Vehicle Insights being used? None of my clients use this.

The SAP’s Embarrassing Leonardo Ice Cream Video

https://www.youtube.com/watch?v=AKee2nhLsy8

*Unfortunately due to what appears to be embarrassment SAP has taken this view down. But the webpage that hosted the video is still at SAP here.

SAP’s Proposal as to the Criticality of Leonardo in Keeping Ice Cream Frozen During Delivery

I can’t recall worrying if ice cream would melt on the way to the house. The reason for this is that I have always lived in countries that had mobile refrigeration. When I was a kid, the ice cream truck used to drive around the neighborhood playing that enticing music. Again, each ice cream truck had a refrigeration unit, which meant that unless the ice cream man ran out of fuel, the ice cream would stay frozen.

All of this occurred before computing, as I used to purchase ice cream from the ice cream man back when almost no one had heard of computers.

Who Was Leonardo Da Vinci Again?

The video takes the strange tact of explaining who Leonardo Da Vinci was.

Is there anyone who does not know who Leonardo Da Vinci was? I understand that Leonardo was named after Da Vinci and not DiCaprio, and we can probably skip the explanation of this well-known icon. In the next SAP video, we can expect an explanation of the Wright Brothers.

Razor Thin Grocery Margins Impact Ice Cream Temperatures?

The video also implies that there is a relationship between the grocery store’s razor-thin margins and melting ice cream. This only way this would be true is if the margins were so small that the grocery chain could not afford to refrigerate their trucks. But all grocery delivery trucks use refrigeration units, so this can’t be true.

The video further implies that grocery chains are now going digital. But is it true that grocery chains like Ralphs or Sprouts did not have computers until just recently or are installing them presently? That seems like an odd proposal to make.

The video states that there is a transition to digital that Leonardo will support or is supporting. But this transition is not established, and outside of SAP saying it, there is no evidence for it. This is because the grocery chains moved to computer-based inventory systems, accounting systems, etc.. decades ago. Delivery trucks have been using GPS for roughly a decade and a half.

The primary transition to storing information in a digital form was in the 1980s, not the 2010’s, or as we are, close to 2020.

We can see where this is headed. This is because we covered the fraudulent use of the term Digital Transformation. This term has been incorrectly reintroduced by SAP and goes back to the 19th century, as we covered in the article The Problem with Using the Term Digital Transformation for Modern IT Projects.

But the term is nonsense. There is no disputing that the word is popular, but it is nonsense nonetheless.

Digital transformation is a term that is used to wrap things in a fake blanket of innovation and or prestige.

The use of a term like “Digital Transformation” has a specific purpose. It is designed to get the listener or reader to turn off their brain and accept the message being presented because the presenter is using the right “code word.”

A term that carries no information, but is designed to present a desirable context or to invoke a subconscious response is referred to as a term of propaganda.

IoT Prevents Not Only Melted Ice Cream but Spoiled Food?

The video states that IoT monitors refrigeration units to prevent costly breakdowns and spoiled food.

But before we evaluate that claim, first is it true that mobile refrigeration units been breaking down?

If so, when did this begin becoming a problem?

Furthermore, why do the refrigeration units need to be remotely monitored? Maintenace Checking fluid levels, etc… is performed periodically when the trucks come back to the DC. They go back to the DC nightly or more often than that. What does SAP thinks happens to the refrigerations units for the 10 hours or so they are out on deliveries?

Insulation Rediscovered!

Insulation means that food does not immediately spoil in the unusual circumstances where the refrigeration unit breaks down. Local delivery is just that, local. Loosely translated, this means the delivery truck is never very far from the DC. It can easily make it back to the DC to have the refrigeration unit repaired.

But again, this implies that refrigeration units break down frequently, and they don’t. It is easy to make highly reliable refrigeration units, and they have been made for a long time. And we will get into that topic in detail further on.

How Is Global Ice Cream Delivery Managing Without Leonardo or IoT?

Furthermore, as a point of comparison, most ice cream in the world is delivered without the benefit of Leonardo. Many ice cream truck operators can’t afford Leonardo. How is all this ice cream staying frozen? Could it be that this has something more to do with the existence for decades of refrigerated trucks?

It seems quite likely.

Real-Time Delivery Information is Necessary for Keeping Ice Cream Frozen?

The video further claims that real-time information shipping information optimizes delivery. But why is this true? Upon inspection, this seems to be another curious claim.

Let us review how truck routing for local delivery works.

A truck is route planned when it leaves the DC. Real-time information allows for what in this scenario exactly? If new orders come in, the truck does not have the inventory to fulfill the order on hand (this is because they were not loaded on the truck as the system had yet to receive the order). It must return to the DC, which it won’t do until it has completed its delivery run.

What all that real-time information about the delivery will accomplish is state the progress of the delivery. However, let’s think this through.

Is this IoT?

Or more specifically, how is this IoT that has anything to do with SAP?

When I chart my progress around town with Google Maps, is that also IoT? The pace of the delivery can be tracked through Google Maps. Yet, what does that have to do with SAP?

Is SAP involved in route planning? Does that information need to go to the ERP system (excuse me — the digital core) With SAP’s TM solution, that is rarely implemented? (why is SAP TM still a sold product by the way?)

The answer to all of the above questions is a resounding no.

SAP’s Confusion on What Does What in the Ice Cream Delivery Process

The video claims that the ice cream then arrives frozen, apparently because of all the previous items listed. But is that really why? SAP seems to misunderstand what computing does versus other components, such as the delivery equipment. That is the ice cream arrived frozen because the truck is refrigerated.

Kudos to the refrigeration unit on the truck!

This is a refrigerated truck. The refrigerated unit is in the front. (See the graphic.)

(If you know this already, feel free to skip this part. But this graphic and explanation are really for SAP. They have to, at some point, learn this.)

Two things make the refrigerated truck work.

  • The refrigeration unit (it often connect to the diesel tank, so has a virtually unlimited source of fuel), combined with
  • The insulation of the truck’s box.

SAP seems deeply confused as to how the ice cream delivery and ice cream refrigeration process works. 

SAP’s Confusion on “What Does What” in the Ice Cream Delivery Process

SAP claims to have the world’s best processes in their software. But SAP here, can’t figure out what is doing what in a simple ice cream delivery process.

At this point, we are not sure what other parts we also need to articulate. For example, other things that Leonardo does not do is drive the truck. That still requires a human to drive the truck around.

You Need a Digital Partner to Deliver Frozen Ice Cream?

The video finishes by stating that you need a partner to go digital and SAP is that partner. But nothing up to that point explained why SAP is involved in keeping the ice cream frozen. To keep ice cream frozen you need a refrigeration unit, not a digital partner.

Luckily for you, you can buy a refrigeration unit very easily!

We recommend both Thermo King and Carrier as they have excellent units.

What can we say about the T-1280R that has not been said already? What is not to like. Plus it has the X-430 compressor.

This proposal of a digital partner for helping to deliver ice cream seems a bit sketchy. We would lean more towards the essential transportation and refrigeration equipment.

Furthermore, a partner is not someone who lies to you about a process and what they bring to the table. That is an entity that intends to take advantage of you, which is the opposite of a partner.

SAP is not offering to be your partner. If Deloitte or Accenture are going to implement Leonardo for your ice cream delivery business, and support these lies by SAP marketing, they are also not your partner. They are your supplier. SAP or Deloitte could be your partner, but in that case, they would need not to charge you, which is unlikely they will agree to.

False Claims by SAP About Leonardo

Unfortunately for SAP, and perhaps Leonardo in its quest to penetrate the ice cream delivery business, no one is concerned about ice cream melting on the way to the house. This is primarily because the population in developed countries has become so accustomed to refrigeration that it is an assumption at this point. This fits into a pattern where things that are claimed by SAP to be improved by IoT aren’t, or aren’t IoT, as we covered in the faux IoT case study on Jabil.

Furthermore, we have a feeling the Thermo King and Carrier would be offended by this video and the notion that their refrigeration units require remote monitoring by Leonardo to keep from breaking down and letting all that ice cream melt. If it were true, it would be perfectly fine pointing it out, but the problem is, it isn’t. This is why we have forwarded this article to both companies to obtain their comments.

This video receives a 1 out of 10 for accuracy. SAP’s Leonardo does not have anything to do with why ice cream is delivered in a frozen state.

This unfortunate video indicates that we probably need to increase the education level a bit at SAP marketing. These poor people who skipped most of their science coursework are confused about how and why ice cream stays frozen.

Fortune’s Accuracy on SAP and IoT?

On May 6, 2015, Fortune published the article Why SAP is overhauling its business for the Internet of things.

I this article, we will check the accuracy of this Fortune article.

Article Quotations

At its annual customer conference this week, SAP, the German business software giant, plans to make several announcements that seem designed to appeal only to a chief information officer. But taken together, they are part of a strategy to help businesses cope with the enormous amounts of data created by Internet-connected equipment, employees, or customers. It’s an approach that’s quite familiar in the technology industry of late. Whether you are the chief operating officer of a company that’s trying to track just-in-time inventory against weather patterns, or a chief marketing officer matching your stock price against customer sentiment expressed on Twitter, the techno-industrial giants of the world seek to capitalize on one thing: an executive’s need to gain insight from fast-growing mountains—petabytes—of data. “As an industry we’re still at an exploratory stage of what the Internet of things is going to mean and get our heads around it,” said Quentin Clark, SAP’s chief technology officer. “But its going to turn every enterprise into a technology company.”

Yes, IoT has become a real thing. But Fortune is allowing SAP to carry on about it, without pointing out that SAP does not have much to do with IoT. This is covered in the article Why SAP’s Leonardo Seems to Fake.

Partnerships with GE and IBM

SAP’s goal, like that of GE, IBM, and others, is to become one of the companies selling the shovels and picks of the data-and-services economy that will be built around the Internet of things. (In this metaphor the shovels and picks are tools used in the so-called cloud to analyze and store data generated by Internet-connected sensors. They’re also the platform on which developers build applications that use data to help companies deliver services or new experiences.)

There is no question that SAP likes to sell software. However, again, SAP sells very little IoT software. And still, Fortune is not pointing this out. SAP has a lot of money, and with this money, they can influence or pay Fortune to write articles like this that draw attention away from companies that do focus on IoT and do get revenues from it.

HANA as the Basis for IoT?

At the center of SAP’s strategy is HANA, its proprietary in-memory database technology that was introduced with much fanfare in 2011. Without getting too much into the weeds, HANA is a big deal because it can handle massive amounts of data really quickly.

Well, it’s also good not to give such a high-level fly by, that you leave the wrong impression.

HANA was introduced in 2011 and has failed to live up to virtually any of the expectations that SAP set for it. Hasso Plattner stated it would represent 20% of SAP’s revenues by now, where it is nowhere close to that. They predicted they would be the 2nd largest database in the world, and they are nowhere near to that. SAP’s entire strategy for proposing a single database type (HANA’s column-oriented design) for all processing types, is out of step with database technology and understanding. HANA is not a “big deal”, and it is an inferior investment, especially considering it is easily beaten in performance by competitive products, and being fast is HANA’s only selling point.

That’s important because one of the central ideas behind the Internet of things is that it will generate a lot of data that people or machines will need to immediately react to. HANA therefore is core to SAP’s strategy.

HANA was core to SAP’s strategy, but that strategy failed. HANA did not grow quickly enough and is now stuck at the 19th most popular database, and its growth is has been negative for eight months. This is covered in the article How Popular is HANA? 

SAP’s Announcements are Always Accurate?

 This week, SAP made one large announcement and a few smaller ones. First, the large: All of SAP’s enterprise resource planning (ERP) software will be optimized to run on HANA in the near future with subscription pricing. This isn’t just big for the Internet of things movement; it also has a major impact on SAP’s business model. Clark did not go into details on pricing, but rest assured, Wall Street analysts will.

Fortune never seems to question whether these announcements are true.

  1. First, customers should not accept the assumption that it need to switch out its database to HANA. HANA has a hard time supporting an ERP system, so the concept that it is optimized to run on HANA is not true.
  2. S/4HANA cannot be run in the public cloud by anything but small companies because 92% of companies customize ECC. S/4HANA has less functionality than ECC.
  3. Analysts may get into pricing, but Wall Street is not capable of understanding SAP because they approach the company from too high of a level. This is explained in the article How SAP Mislead Analysts in the Q1 2017 Earnings Call.

Pumping Up Fiori?

When a company that makes its money selling software licenses and hefty maintenance fees transitions to a monthly licensing model, the CFO has a plan to explain how this will impact the balance sheet. From a technical perspective SAP is doing exactly what it said it would do earlier this year, which is transition its existing software to the HANA cloud. SAP’s “next generation” business software suite, S4, will run on HANA and sport a single unified interface across all applications.

Clark is talking about Fiori. We covered Fiori in the article What is in the Fiori Box? However, at this time, very few companies use Fiori. And Fiori is not a comprehensive UI for SAP. So Clark’s assertion is inaccurate. What are companies using on projects right now? The vast majority still use SAPGUI, SAP’s old user interface.

Clark explains that this offers a more modern interface for customers—It will look great! It will be responsive on mobile devices!—but it also means that the data sets that customers are using will be stored in HANA and can be re-used across all of their other applications more easily. In many cases, by eliminating the dreaded IT “silos” of different data sets stored in different places, one dumps it all in HANA and can play with it across any application. We’ve heard this promise from the largest IT vendors since 2009, but almost all of them are finally delivering with cloud-based platforms as a service.

The problem with Fiori is that it is primarily a mobile UI. Its technology underpinnings are mobile. But it is not a respected user interface by real user interface specialists, and it may not survive. SAP has had many UI initiatives over the past 15 years, and they have all failed. Fiori is the next one up.

Secondly, HANA will not be the single database for all SAP applications, so that dream is dead.

SAP’s Fantastic IoT Application?

And it’s about time, because the Internet of things will require SAP’s customers to make this transition, even if SAP has to drag them kicking and screaming. To that end SAP has built a dedicated Internet of Things platform on HANA called, cleverly, the SAP HANA Cloud Platform for the Internet of Things. (The naming is almost as distinct as IBM’s Internet of Things Foundation platform.) The SAP offering includes an asset management product, a predictive maintenance and service product, and several other things you might expect if you were managing, monitoring, and building a business around millions of connected devices.

That has been renamed to Leonardo. But there is still not much there. Other IoT vendors are far ahead of SAP, and there is little reason to purchase any IoT related technology from SAP.

SAP is also signing a partnership with its German industrial counterpart Siemens to build what the two are calling Siemens Cloud for Industry as an open cloud platform for analyzing large datasets in the industry. Like GE’s hoping to use its expertise in manufacturing to make its own Predix software and offerings for the Internet of things better, this is a similar effort, only it looks like it will be shared openly—or at least among developers that want to build applications that will live on SAP’s newly launched HANA store.

This may lead to something of significance or may not.

SAP’s App Center?

Yes, like Salesforce.com has its Force.com store where developers can put applications designed for the suite of customer relationship management software, SAP has built an application store where integrators, customers and others can build applications that will help tie other IT resources into HANA. So far more than 800 have. And this is where Clark gets really excited about SAP’s position.

This is the HANA App Center? If so, this is not a relevant item for SAP projects. I have spoken to vendors who have been enticed to put things out at the HANA App Center, but they have not seen much traction from it. Apps should be inexpensive, but the apps out at the HANA App Center are not cheap, they are just partial versions of enterprise expense items.

Because not only will Clark have the tools to make CIOs at big companies happy, he now has the tools to help the CEOs transform the business. The developer-facing platform, where a company’s data can be turned into a valuable asset delivering a differentiated service is where the future lies.

SAP Waxes Philosophically About IoT, and Fortune for Some Reason Cares

Fortune seems very confident of this. Are they verifying anything here or just writing a puff piece?

“For a company to get value out of the Internet of things there are two audiences it has to feed,” said Clark. “Those are business users and developers …and the developer [value] is ultimately expressed on the apps side. If you have a tractor maker and you can sell that tractor maker instrumentation with connected data that offers predictive maintenance and lets him in turn offers services on the other end, that’s going to provide a lot of value for him, that comes back to us.” For SAP, the Internet of things starts with its software, but it’s really services all the way down.

That is nice, but it moves around the fact that SAP has no real IoT business, so why would I care what SAP has to say on this matter? Why not reach out to a real IoT vendor and get their views.

This article by Fortune receives a 1 out of 10 for accuracy. This appears to be another paid placement on the part of SAP to Fortune.

Advice on Enjoying the SAP Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.

 

Conclusion

Now SAP has been successful in the past when it brought little to the table, but it needed to have the ERP system in place to do so. In those cases, ERP did have the data that the connecting system required. But the issue is that SAP’s ERP systems only have a small subset of the “connected” device data in ERP. SAP’s best move would be to offer free services to migrate this data to ERP (not a good step in my estimation, but I am speaking here from what is right for SAP, not what is suitable for the customer). Then they can sell their customers Leonardo using the same logic they have always used to sell software that is not competitive through its inherent capabilities using the tried and true integration argument.

SAP’s presentation of IoT does not comport with reality. SAP is faking what it has in IoT to lull companies into thinking that SAP has more to offer with respect to IoT than they actually do.

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.

What We Do and Research Access

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References

https://www.linkedin.com/pulse/so-what-sap-leonardo-sanjjeev-k-singh

https://www.cmswire.com/big-data/saps-hana-bet-seems-to-be-paying-off/

https://www.techrepublic.com/article/sap-invests-in-machine-learning-to-simplify-customer-transition-to-cloud/

https://www.zdnet.com/article/sap-aims-to-step-up-its-artificial-intelligence-machine-learning-game-as-s4hana-hits-public-cloud/

https://www.computerweekly.com/news/450419342/SAP-Leonardo-positioned-as-digital-transformation-catalyst

https://www.utegration.com/blogs/2017/5/26/what-is-sap-leonardo

https://diginomica.com/2017/01/20/saps-leonardo-points-towards-applied-data-science-service/

*https://customerthink.com/iot-becomes-outcome-orientated-with-sap-leonardo-finally/

https://plat.one/

How SAP Customers Turn into SAP Conference Monkeys

Executive Summary

  • A conference monkey is an SAP customer who provides false information at conferences in return for some type of compensation from SAP.
  • We describe how the conference monkey system works.

Introduction

In many conferences, it is customary to think that consulting companies and software vendors will tell lies to increase their sales. But what is surprising to many is that many customers also will lie. I can recall when I worked for Deloitte, I was in many meetings with individuals from my client Lockheed Martin. The Senior Manager from Deloitte was trying to get the members from Lockheed Martin to present at SAPPHIRE. I presented at SAPPHIRE that year as well. When the member from Lockheed Martin presented, I observed him entirely mislead the audience about how much progress had been made on the project. This is interesting because the Lockheed Martin representative was one of the more honest people I have worked with on a project. But the pressure he was under was too high. Much of this was while being pressured by the Senior Manager to do so. The Senior Manager needed to sell his project if he was going to be promoted to Partner, and to do that effectively; he needed to get Lockheed Martin to lie about the progress of the SAP project.

Since that time, I have witnessed all manner of people at conferences lying about how quickly they implemented SAP software, what they achieved, etc.

Case Studies

In the Brightwork Research & Analysis study on S/4HANA Implementation Study, there were numerous public case studies where the customer representative lied about what occurred on the S/4HANA implementation. The following are examples:

  • Florida Crystals: The CIO stated that Florida Crystals upgraded to S/4HANA in 3 weeks.
  • New York Life: New York Life presented the idea that they implemented S/4HANA to use S/4HANA’s ledger. The representative for New York Life stated that they moved to S/4HANA to consolidated many different ledgers. However, one could have merged the ledgers to a single ledger. Yet, that could have been done with ECC.
  • Hillary’s Blinds: The representative for Hillary’s Blinds has told all manner of incorrect statements, not only related to S/4HANA but to quite a few other applications, including pretending that moving CRM to HANA made a significant improvement in CRM.

Conference Monkeys

SAP has several customers where the members of the customers have the incentive or receive the incentive to lie about the status of S/4HANA. This is a problem that extends to all SAP products.

A conference monkey is a high ranking individual from a customer that is willing to lie about the functionality, the speed of the implementation, etc. A conference monkey may receive the benefit from SAP of being placed at a new position and a better position by SAP when a spot opens up. A conference monkey lies on command, with the expectation of receiving something in return. They are critical in providing misinformation to the market, and therefore reducing the quality of the information in the market. Just about all the conference monkeys are CIOs or out of the IT department. This gets into the topic of whom does the IT department owe its allegiance, which is covered in the following article.

  • Salespeople lie all the time to get deals.
  • Consulting companies lie all the time to get consulting contracts.
  • Senior members of companies lie on everything from the budgets to the success of their implementations. In this case, they are merely lying for career reasons. This means that much of the information at SAP conferences is unreliable.

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

Enterprise Software Risk Book

Rethinking 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