In February of 2021, two leading German business magazines—Wirtschaftswoche (Economy Weekly) and Manager Magazin published articles about the state of SAP and the implications for SAP customers. Neither article was flattering.
“SAP is vulnerable,” said Wirtschaftswoche. (Wirtschaftswoche, “Prefer to get out?” 12 Feb 2021). Manager Magazin questions the SAP platform, stating that SAP’s many acquisitions “were put under a single [S/4HANA] brand but not on a single technology platform, much to the dismay of SAP customers.” (Manager Magazin, “Why SAP is losing the connection,” 18 Feb 2021). Even the head of SAP’s German user group DSAG – Jens Hungershausen – is skeptical, stating in the same Wirtschaftswoche article that “the migration to S/4HANA is such a mammoth undertaking, customers may as well consider alternatives.”
More recently, Morgan Stanley questions SAP’s strategy, stating, “The key investor debate on SAP continues to be around its cloud transition—and therefore around Cloud subscription growth.” (Morgan Stanley, “Can Cloud outperform this year?” 1 June 2021).
At Oracle, we understand why a company might have chosen SAP for their organization in the past. Factors that contributed to this choice probably included:
After SAP acquired Ariba in 2012, you might have noticed that they didn’t integrate SAP’s core modules with Ariba. The same happened with SuccessFactors, Concur, Qualtrics, and many other acquisitions. While those solutions each individually offered good functionality, it was up to the SAP user to integrate them with the core SAP ERP. This quickly became an expensive and complex proposition. Even worse: when you create the integration yourself, you find out that this becomes a barrier to upgrades.
SAP customers have struggled with the lack of integration and customization complexities, and many aren’t convinced that the new SAP S/4HANA will solve all issues. Says IDC analyst Bo Lykkegaard, “The numbers show how unhappy SAP customers are being forced to migrate to S/4HANA. Many SAP customers don’t see any business value that warrant a migration.” (Wirtschaftswoche, “Prefer to get out?” 12 Feb 2021)
SAP is obviously aware. At its annual user conference, SAP addressed three main initiatives, but the complexities remain the same:
One of the product versions that appears to be cloud is called S/4HANA Private Cloud. The name seems to suggest that it’s indeed cloud, but this S/4HANA version is identical to the S/4HANA on-premise version—and it can still be customized, with all the potential issues that come with this approach.
To make it even look more like cloud, SAP runs on hyperscalers like Microsoft Azure, Amazon Web Services, and Google, among others. But that adds other issues: the hyperscalers only take partial responsibility, managing the lower end of the technology stack including networking, storage, servers, and virtualization. SAP (or a partner) will need to manage to the upper layers of the stack, including the operating system, middleware, runtime, data, and the SAP applications. The issues?
At Oracle, we take a different approach:
What we provide at Oracle is not an old product that is now available in the cloud, but a new, complete suite of applications designed for cloud, in an environment that is Software as a Service (SaaS). The emphasis is on “service.” You shouldn’t have to worry about how the lower end of the stack works/doesn’t work with the applications you want to run on it. Oracle manages all the hardware and software, including middleware, applications, and security.
It’s for these reasons that Boston Consulting Group ranked Oracle #15 in its list of most innovative companies (gaining 10 places compared to last year). In contrast, SAP is in 40th position, 13 places lower than last year.
Oracle SaaS customers can dramatically lower costs; deploy, scale, and upgrade business solutions faster than with on-premises systems and software; and predict total cost of ownership with greater accuracy. Modern SaaS applications have become platforms for innovation to meet the competitive challenges of the digital age, such as: