It was one of my favorite events of the year last week — the annual conference for the members of the UK and Ireland SAP user’s group, UKISUG Connect 2023, in the ICC in Birmingham.
As is customary, Paul Cooper, UKISUG Chairman kicking things off with the results of a member survey highlighting current concerns:
….Take the issue of indirect licensing […] after a bumpy ride, we, along with the other global user groups, managed to get SAP to recognize that the customers needed a more transparent and fairer approach to licensing.
The point is that the road has always been bumpy. But when we work constructively together, challenges can be solved. Right now we’re at a point where we are facing a breakdown in trust. On premise and hosted customers are unhappy, to put it mildly. With the statement from Christian Klein stating that SAP would only be releasing new innovations into the cloud.
This isn’t a small minority of customers. When this was announced, we decided to survey our members. First, before we joined and commented on the debate, research we have conducted amongst our members, shows 79% of you that have moved to S/4HANA are an on-premise or hosted deployment. And that of those that are planning to move to S/4HANA, 70% plan to move to on-premise or hosted versions.
Back in 2020, SAP board member Thomas Saueressig, talked about giving customers choice between cloud and on-premise deployments. We were told that SAP believed in a hybrid future. Yet Mr. Saueressig didn’t once say that cloud deployments came with full innovation while other flavors of S/4HANA didn’t. We were also told that S/4HANA would be supported until 2040. There was no caveats that major innovation could only be delivered to public and private cloud customers, using RISE with SAP or GROW. Why did SAP not tell us that new innovations only going to be available to cloud customers? Did they not think it was important in our decision-making process? These are the questions our members have been asking us.
I’ve heard the more cynical amongst you suggest that SAP didn’t disclose this strategy before because customers choosing to stay on-premise might not have made the S/4HANA move at all. Also there are members that SAP itself have told to remain on-premise. Why? Because the size, complexity and criticality of their SAP implementations were deemed too difficult and risky to move to the cloud. Will they be exempt from this future SAP innovations? If so, surely there should have been told when they were initially investing in their move to S/4HANA.
The bottom line is customers that have moved to on-premise or hosted implementations of S/4HANA feel misled. From a UKISUG perspective, this is a significant percentage of our membership. If SAP refuses to communicate more on this matter, there is a real risk many of those planning to migrate to S/4HANA may change their plans. Of those who have already migrated to an innovation-less future, will they choose to invest in other SAP platforms. I’ve already heard a number of on-premise and hosted customers suggest they expect large-scale reductions in support maintenance costs as they are now running an inferior version of S/4HANA. I can see that point. Surely a less future rich product costs less to support than maintain. Others are asking if SAP intends to refund or partly refund them, is they are not providing the product or service they were told about.
We’ve raised these issues with SAP and today they’ve remained publicly silent and for those of you at SAP listening today, I urge you to engage and work towards a solution that rebuilds trust and address the concerns of our membership, the majority of whom, as we said before earlier, have on-premise or hosted deployments. Work with us to build bridges and enable on-premise customers to access innovation.
In private, some SAP executives have told individual on-premise members that there’s no technical reason why they couldn’t access the majority of innovations through BTP. If this is true, then tell us if it isn’t please stop miscommunicating. As customers, what we want is open and transparent relationships with our vendors like SAP, where we can feel valued and we can trust SAP.
This isn’t something that can be resolved by the local team in the UK island where our collaboration is extremely strong. Instead, it requires action from those at the top of SAP. Rather than choosing to please investors over customers, think about pleasing your customers, as without them, your investors will soon disappear.
At the Germans user group conference in September, SAP’s CEO said no customer would be left behind. Hopefully in coming months we can work together to make this a reality and ensure that all customers and our members have access to innovation and aren’t penalized for investing in an on-premise or hybrid version of S/4HANA.
Before I finish today, I’d like to wish Conor Riordan, who will take over from me as Chairman next year, the very best of luck as he steps up to Chair. It’s been an absolute pleasure to serve as Chair of your user group for the last six years. We’ve continued to flourish and evolve.
SAP UK Managing Director Ryan Poggi was next on stage to respond to the remarks. He emphasized joint SAP and customer success, and the importance of transparency:
The latest innovations are what keep us—and you, because I firmly believe that we live [in the same environment] competitive—in an extremely challenging environment. And what we’ve heard consistently is that you expect us, as a partner, to be one step ahead. And to challenge the status quo when we believe that jointly we’re not maximizing our potential.
Change is never easy and we face the same challenges as everyone. How do we direct a finite number of resources to provide the most value to our customers and ensure that we maintain our place at the forefront of an industry we helped create? —which is what you rightfully expect from us. How do you bring the latest technology, for example, generative AI, to you in environments where they add the most value, many of which require the cloud? And finally, how do we ensure that inflation, which in the last year has been as high as 9% and impacts us all, doesn’t create an environment that detracts from our ability to deliver?
And the reality is, like it is for many of you, this requires some tough investment decisions. But this will never change our commitment to supporting all UKI customers at any stage of your transformation, which is something our board has also committed to. But I also note that no matter how much time we dedicate to this topic on this stage, there will still be questions.
So my commitment to you and my ask of you is that we continue to have these transparent conversations with our teams and encourage a connection to the right stakeholders on both sides. Our door is always open. And as I discussed with Paul when we first met, or met rather, at the podcast, I really do believe that the basis for a true partnership is that open, transparent discussion. And part and parcel of that is what I refer to as understanding the why.
That doesn’t mean that understanding why we make the decisions we make, or you make the decisions you make, will solve everything. But it will, I believe, help create that foundation of trust. Now, after what’s just been said, this may seem a little tone deaf, but I’m sure none of you are surprised to see RISE here or around.
I know that for many of you it has felt like all you’ve heard us say is “RISE is the answer, what’s the question?”. But let me take a moment to explain the context of why we launched RISE. And to everyone thinking, well, to sell more S/4HANA Cloud, give me a moment. RISE was actually born directly in response to customer feedback. You shared with us that it was too difficult to work with SAP, that it felt like SAP was only focused on selling products. You were rightfully demanding more from us. The market was also very clear.
If we want to be the cloud company, we need to be a proactive partner and move from a solution and project-delivery focus to being accountable for the operational delivery and outcome. RISE was born from that feedback, to become the proactive partner that you were demanding, bringing the best of our ecosystem together, while still giving you flexibility of choice in terms of hyperscaler or services provider, all while ensuring SAP remains accountable for the outcome.
RISE isn’t only about S4, it’s a cloud operating model that leverages the power of our ecosystem for you. And this year, we have seen that the understanding of RISE across the UKI has progressed significantly, thanks to the help of our joint workshops and this forum, the user group. We’ll hear a little bit later directly from one of our customers about how and whether they perceive this change.
As I said, understanding the why doesn’t solve everything, but hopefully it provides a better understanding of how we’re trying to build that partnership. And this means evolving the way we partner with all customers, because history has proven that lasting economic turnaround in UKI requires growth in the SME market.
Employing over 16 million people, these organizations make up over 80% of the market. Many of you here today, we cannot overstate the importance of these companies to economic recovery. But not only can SMEs out-compete with the right partner, they’re able to change the entire playing field.
The challenge, however, is not to allow complexity to creep in as they grow. And this is where technology comes to the fore, by allowing you to focus on your growth by providing a platform that delivers stabilization. GROW with SAP makes this accessible to all organizations, a proactive partnership across our ecosystem, giving you the ability to leverage fit to standard in the cloud from day one.
[… my door is] always open and we value transparent conversation. I trust that over the course of this event our team will continue to demonstrate how we are laser focused on earning your trust and the followership in the UKI. I very much look forward to continuing to work with all of you and all of our customers in 2024 and beyond and it’s been a pleasure to be here. Thank you very much.