No customer left behind, SAP's Klein tells users angered by cloud-only decision

Data quality, system complexity and SAP’s future rely on cloud adoption, CEO relays to German-speaking user group

Facing users angered by SAP's decision to introduce its "newest" innovations only in the cloud, the German software giant's CEO promised not to leave any customers behind in his mission to move them off-prem.

Christian Klein fielded questions from the German-speaking SAP user group DSAG at its 2023 Annual Congress in Bremen last week.

It follows a meeting in July when he told investment analysts that certain future innovations would only be available in the cloud on its terms, such as the RISE with SAP lift-shift-and-transform program. Crucially, customers who made massive investments in migrating to the latest S/4HANA ERP platform on-prem would not see these newer features in upgrades.

"It's also very important to emphasize that SAP's newest innovations and capabilities will only be delivered in SAP public cloud and SAP private cloud using RISE with SAP as the enabler," Klein said at the time.

Facing down the user group in Bremen must have inspired some trepidation in the high-rising exec, who is still in his 40s. DSAG — which represents users in Germany, Switzerland and Austria — had said SAP's decision to only offer certain innovations in its cloud products, seemingly ignoring the majority of those remaining on-prem, so soon after committing to S/4HANA as the platform for the future for ERP, wherever it is hosted, threatened to break users' trust in the vendor.

"To be very clear about that, we won't leave any customer behind. There may be others that have acted differently [but] SAP will continue to invest in functions and features for our on-premises customers. We will continue to hold more than 200 ERP versions in more than 130 countries. We will localize them and we will maintain them. For that, we will spend several billions of euros to take these customers along," a translation of his speech said.

However, Klein maintained that so-called "strategic" innovation, such as the introduction of generative AI into enterprise systems, could only be achieved in the cloud.

He argued that SAP could only produce generative AI tools from aggregated customer data in a standardized model, not from different versions of on-premises systems with siloed data.

"Many customers have got these data silos, connecting them to AI models can only be as good as the underlying data quality. SAP won't benefit and our customers won't benefit if we deliver something that has got no chance to reach a high performance," he said.

Klein also argued that it would be difficult for SAP — which builds the software on which some of the world's largest industrial companies run their business — to achieve the necessary pace of product development if it has to address a wide on-prem portfolio lacking standardization.

"SAP will only withstand the competition, if we no longer have customers on more than 200 ERP versions. It is our task, our duty to take [customers] along on this journey," he said.

Lastly though, there was a nod to how investors see the situation, which is arguably where the current trajectory began.

In October 2020, the company reset its earnings guidance — causing a 23 percent share price crash — as it assured markets it was going to use the time to become more like the high-growth SaaS companies they love.

Last week, Klein told German-speaking users: "I want to be very clear about one thing: as a CEO, I've got a responsibility that you in the future can act in a highly competitive way. And I also have the responsibility of giving a future to SAP. The future is in the cloud." ®

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