TechEd 2013: SAP gives up its Trump Card

[authorBox image=”” name=”Jan-Martin Lichte”]Even if SAP consulting is not necessarily THE central theme of our portfolio, we are still interested in all developments concerning this German mammoth software. In the following, our manager Jan comments on the latest announcements of SAP’s marketing department.[/authorBox]

Last week, the “Computerwoche”, a weekly journal for CIOs und IT managers, reported on SAP AG’s plans to restructure their product portfolio. The journal article referred to the opening speech of SAP’s Chief Technology Officer Vishal Sikka during the SAP TechEd Vegas 2013, the biggest SAP conference for architects, software developers and engineers.

With reference to Douglas Engelbart’s ABC model, which defines A and B activities as follows,

  • A activities: activities of the core business
  • B activities: measures that support A activities in terms of time efficiency and quality,

Sikka said, surprisingly:

“Our A activity is the platforms. The B activities are the applications that allow us to build these platforms”

By “platforms”, he primarily refers to Hasso Plattner’s invention HANA, a new database technology that, using an in-memory technique, results in a tremendous speed increase when accessing huge amounts of data.

So far, so good. It is great, in my opinion, that SAP finally works on an increased performance.

But is it really necessary to shift this multinational corporation’s strategic concentration to the platforms? From my point of view, this does not make any sense and is completely counterproductive. SAP loses the focus of its biggest trump and its strength: the company-wide integrated business applications lead to a tremendous increase in production in the 80s and 90s and founded SAP’s supremacy as the world’s leading ERP system. As far as I can see, dismissing this core competence now as a B activity is not only ignorant, it is dangerous.

The Complexity lies in the Application

Having more than 20 years of experience as a SAP consultant, I have learned one thing: It is all about the logic of the application, as this is where the transfer from business to software happens and where true creativity and pragmatism are needed to find satisfactory solutions for various demands in business under strict time constraints and on a tight budget.

Hardware, network infrastructure and database – called “basis” in SAP jargon – are important and very complex for big corporations, no doubt about that. However, it is basically a matter of “commodity”, i.e. a primary product for the actual application, which is available at will for a small price.

Certainly, the prices in the application business are going down due to the flourishing open source scene. But when it comes to hardware and infrastructure, Moore’s law holds true: every two years you get double performance for the same money. For software and service, things are completely different and they have to be different, for reasons that I am very willing to discuss over a glass of Kölsch beer.

Doesn’t Sikka overlook something?

SAP obviously has a problem: the applications for the most important business processes have long since been implemented and licensed, which makes it difficult to generate new business for the market leader. We as a partner who is responsible for implementation are clearly better off. But is this a reason to downgrade the global corporation’s core competence and the unique selling proposition to a B activity? I have the suspicion that one of the controllers only paid attention to the sales figures and deduced from them what will be the business areas of the future. In my opinion, however, trying to create a vision from bare figures is presumptuous. That is definitely not how you promote technological innovation. It is Sikka himself who hints to this mere financial motivation:

“Our business is currently decreasing […]. But our new business grows more quickly, so that it can compensate for the decline. We are already in the middle of a transformation.”

With this mere commercial thinking you cannot stay the leading innovator.

That is what I would call lagging behind instead of thinking ahead.

SAP, quo vadis?


In my commentary, I am referring to the article “SAP setzt alles auf HANA” (SAP goes all in with HANA), published in the “Computerwoche” on October 23th, 2013.

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