Last Updated on March 13, 2021 by Shaun Snapp
- SAP gained cloud market share exclusively via acquisition. This playbook demoted in-house development into a second-class citizen.
- We cover how SAP’s dysfunctional acquisition strategy works.
Bill McDermott became CEO at SAP on February 7, 2010.
His goal was to make SAP number one by market share in cloud apps.
He looked at the market and found lots of fragmentation.
Many smaller app companies waiting to be “consolidated.”
Bill went on a shopping spree in 2011 and never stopped.
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Between 2011 and 2018, SAP acquired
Crossgate, SuccessFactors, Ariba, Hybris, Fieldglass, Concur, Callidus, and Qualtrics.
In the same 8 years, SAP also acquired
Coresystems, Recast, Gigya, Abacus, Plat.Altiscale, Fedem, Roambi, SeeWhy, KXEN, Camilion, SmartOps, TicketWeb, Syclo, Datango, RightHemishpere, Crossgate, Cundus, and Secude.
The Cloud Story
Every cloud app SAP sold since 2011 was acquired not developed internally.
Every year, acquiring three companies for eight years looks great on Excel sheets and sounds great in press releases.
Instant revenue growth, more market share, and more products. In reality, getting that many companies, teams, and products working together is absurd.
Too many apps that were never designed to work together.
None of the acquired cloud apps is integrated with SAP’s core.
The acquisitions just transferred the fragmentation to SAP’s product portfolio.
Dozens of functional silos added to SAP and customer landscapes.
Tech stacks and technologies that don’t work together.
Duplicate apps and overlapping functionality.
High cost and failure rate of integration projects.
Internally, SAP sales targets were never achieved.
Product development and integration deadlines were never met.
Eventually, SAP called in a “cleaner.”
Elliott Management convinced the board to remove top SAP sales and product executives and approve a massive restructuring plan to consolidate the exploding portfolio.
Multiple products to be “de-emphasized” then jettisoned, others combined or replaced by technology partner offerings.
Thousands laid off last January.
8 years of acquisitions (instead of in-house development) killed the engineering culture at SAP.
SAP in-house development still builds apps using ABAP and 4GL NetWeaver technology.
Other than that, great strategy.