Sapphire Now Five months after SAP launched its RISE plan, a half-loaf cloud lift-'n-shift + business transformation service, the German software company is still struggling with unanswered questions.
As the Sapphire online-only event kicks off, a CTO at one system integrator whose business relies on SAP spoke to The Register of the lack of clarity since the emergence of the new strategy.
Speaking at the launch of the RISE strategy in January, CEO Christian Klein promised an "end-to-end" service for application modernisation, business transformation and the move to the cloud.
"We have our partners behind [us], but we are going to make it work. You are getting from us the SLAs ... for system availability. Accountability is a very important aspect here," he said.
However, this does not include application management services, a rich vein of work for systems integrators and other partners.
A CTO at a systems integrator who spoke to The Reg said of this issue: "In a typical SAP outsourcing contract, you would have the technical and the application management, but of course RISE doesn't include the application management. Now, SAP will quote that separately, but they're not even trying to default that into the deal. It's very important that customers don't think of RISE as being synonymous with an SAP outsourcing contract."
He added: "Business transformation, in my experience, is delivered at the application layer. Business process reengineering, optimisation and understanding your current business processes: people spending time discussing, looking, analysing, making recommendations and implementing those recommendations. Those hours are not included in RISE."
Our systems integrator techie told us: "We're already seeing customers who are interested in RISE, but would like to continue with our application services and the application relationship. But they start to realise that by doing that, they're changing the nature of the entire end to end. There isn't a single relationship covering the whole thing."
Although SAP could subcontract the application management piece to SIs, the commercial model for that has still not emerged, the CTO said.
"There's no guarantee that SAP would be able to put something on the table that will be commercially more interesting than the partner anyway. We simply don't know that until we've seen more engagements out there," he said.
SAP is under pressure to make RISE work. In October last year, it cut full-year guidance in a move that saw 23.49 per cent disappear from its stock market value.
Having bought itself time, SAP saw opportunities in the shift to the cloud, it said in an earnings call.
RISE, which launched at the start of 2021, is the strategy designed to help achieve that ambition. In March SAP CFO Luka Mucic said it planned to convert €5bn in revenue from support and software licences into cloud subscriptions over the next five years.
While reporting Q1 results in April, CEO Klein said "RISE with SAP" was "rapidly becoming a massive accelerator to our customers' business transformations." In the first quarter alone, he said SAP had closed more than 100 transactions including Carrefour Brazil, Sono Motors, KIA Chile, Hillrom, and Grupo Feromax.
But doubts clearly still remain among some.
Gartner research director Paul Saunders said: "SAP started off with good intent, but it quickly deflated partners who thought, 'we think we know the value here but we're actually a little bit wary because, is SAP trying to cut us out of the picture?'."
Saunders said the marketing for RISE to make SAP a single accountable partner was confusing the market. "It's not one accountable company. When RISE first came out they said it's one contract and we thought, 'OK, so this is effectively kind of the McDonald's Happy Meal that brings everything together'."
But unwrapping the deal, Saunders said customers discovered business transformation, implementation and data management were all roles for partners. "So, what's SAP doing?"
Meanwhile, traditional SIs have made good money out of doing things the old-fashioned way, Saunders said, and were themselves offering alternatives to RISE.
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Paul Cooper, chairman UK & Ireland SAP User Group told The Reg users want to see the meaning of RISE being sustained and consistent globally across different sectors.
SAP was "cognisant" that it did not have enough people to fulfil the business transformation aspect of RISE and would be heavily dependent on the channel. "They're going to have to work on messaging with the partner community."
Cooper also said that SAP account managers were beginning to work in the medium and longer-term, rather than simply focusing on winning big tactical deals.
While RISE might appeal to small customers or those new to SAP, large corporate clients would take some convincing, said John Appleby, CEO of US-based SAP SI Avantra.
"Most of these big organisations have one enterprise service management support model, where they've got multiple vendors: one for infrastructure managed services and another for application managed services. So, the moment you want to talk about RISE, you have to undo some of that and add additional vendors," he said.
On top of that, these large corporate entities have separate relationships with public cloud hyperscalers which they are comfortable managing, he said.
For now, global customers are happy to "play a little bit of a waiting game" on RISE, Appleby said. "They will see how it shakes out, to see how the strategy comes together over a period of multiple years."
Whether investors will share their patience is another matter. ®