How Effective is SAP in its Acquisitions?

Executive Summary

  • Why are SAP’s new acquisitions forecasted without analyzing how SAP’s previous acquisitions fared?
  • Find out how well SAP has done with acquisitions.

Introduction

SAP acquisitions follow a very familiar path. We call this the “acquisition algorithm.”

The Acquisition Algorithm

  • The acquisition target is announced.
  • Top executives to on a full charm offensive selling what a good idea the acquisition will be.
  • IT Analyst, Wall Street analysts, and media entities normally weigh in that the acquisition fills some of the need or provides some “synergy,” or they cover the topic merely announcing the acquisition without any commentary of any kind.

And this algorithm applies to not only SAP but also to the media coverage of non-SAP acquisitions.

The Important of Never Looking Back

In analyzing many articles from major IT media that cover SAP’s acquisitions, one thing that is nearly never done is to analyze the previous history of acquisitions. Once the vendor is acquired, its financials are subsumed into the overall SAP revenues, and it becomes very difficult to check how the vendor grew or did not grow post-acquisition.

In this way, SAP and those that promote the acquisition are never questioned on the accuracy of their projections. SAP does not take out advertisements that say..

“we completely failed in XYZ acquisition,”

…and the IT analysts and IT media entities normally just move on to the next topic.

Our SAP Acquisition History Scoring Method

While researching the Qualtrics acquisition we came across the Wikipedia entry for SAP that shows all of SAP’s acquisitions. According to Wikipedia, Qualtrics is SAP’s 69th acquisition. So the question we wanted to answer is “what is the average score of an SAP acquisition.

In terms of our method, we scored each of the 69 acquisitions on the basis of the degree to which the acquisition became an important component of SAP. The scoring was not based on how good the acquisition was for customers. That would be a completely different scoring and would be lower. Let us take the example of the Business Objects acquisition to explain the logic.

The Business Objects Acquisition

The Business Objects acquisition was very bad for the previous Business Objects customers. Support for Business Objects severely declined not long after SAP made the acquisition and prices increased. Many customers that did not want to work with SAP when they first purchased from Business Objects were now subject to SAP account reps, and SAP’s acquisition of Business Objects lead to Business Objects stagnating as a product, undermining the investment by Business Objects customers in the solution. When Business Objects was purchased it was a frequently discussed vendors in BI circles, now your barely hear about the Business Objects product. Years later, Business Objects is far less important as a product in the BI space that it was in 2007 because SAP has allowed the solution to stagnate.

Secondly, the promised integration with SAP BW, a primary reason given for the acquisition, never came. On one project we tested a new crossover component which was supposed to replace the BEx, and it broke so often we stopped using it. At the time of the acquisition, there was all manner of promises by SAP of how SAP BW and Business Objects would work together. Every year that passes, we hear less about Business Objects.

SAP never changed the name of Business Objects. Yet since the acquisition in 2007, the term Business Objects has declined from (in the US) from a search term popularity of 72 to 8, where it stands now. Is this acquisition a success? It depends upon your perspective. One SAP resource told me that the acquisition was successful because Business Objects was cutting into BW sales, so the acquisition neutralized a competitor. This brings up the question of whether all of the promises made by SAP to make BW work with Business Objects were fake. 

If the rating were based upon how it benefited Business Objects customers we would assign a rating of 1 out of 10. However, SAP did get a temporary bump from acquiring Business Objects, acquired some customers and was able to ruin a competitor, etc..

We assigned a 6.5 out of 10 in that it was leveraged to some degree by SAP. SAP failed to meet any of its promises around Business Objects at the time of acquisition, but from a purely SAP perspective, and without considering the dislocation to Business Objects customers, and how it undermined their investment, the acquisition was still mildly beneficial to SAP.

SuccessFactors

SuccessFactors was another of the most successful of SAP’s acquisitions. Notice the increase in popularity as tracked by Google Trends.

Just prior to the acquisition in 2011, SuccessFactors had a popularity of 32, however recently they have had a popularity/interest over time of 52. SuccessFactors along with Ariba, have been two of the most heavily promoted acquisitions in SAP’s history, with the joke being that when Bill McDermott wakes up in the middle of the night from a deep slumber, he often screams “SuccessFactors.” 

However, any increase in SuccessFactors has not come from the originally intended place, which is migrating SAP HCM customers to SuccessFactors. According to Jarrett Pazahanick, our goto resource for all things SuccessFactors, SAP has only successfully converted roughly 7 percent of pre-existing HCM customers to SuccessFactors Employee Central.

SAP has kept SuccessFactors on the front burner in its marketing for seven years, and that by itself would have helped SuccessFactors’ market presence. SuccessFactors has also been pivotal for SAP in presenting itself as a cloud vendor to Wall Street. The acquisitions of both Ariba and SuccessFactors have been highly successful in giving the cloud SAP a cloud “halo” and helping to keep its multiple high.

SAP’s High Number of Acquisitions with a Score of One out of Ten

Many of the acquired vendor products (or renamed products) have disappeared from SAP’s focus, and the specialties they occupied are still not at all important to SAP. In fact, the promiscuous acquisitions are one reason why such a high percentage of SAP’s product list is filled with dead products (which we covered in the article How Many Products Does SAP Have?)

Perhaps VW should “unpimp” SAP’s acquisition strategy because so many of SAP’s acquisitions “get an F.” VW’s headquarters is in Wolfsburg, Gemany, which is only 275 miles from SAP’s headquarters in Waldorf, Germany, so it would be a reasonably short distance to travel. 

This means that these acquisitions (for which there are many) received a 1 out of 10 for acquisition effectiveness. If an acquisition is made, and then years later the specialty is either barely known and or SAP receives very little revenue from the category, clearly this cannot be considered a successful acquisition. Many of these acquisitions just seem to disappear a few years after the initial marketing push. One prominent example is SAP’s acquisitions in the 2005 to 2008 timeframe when SAP acquired multiple manufacturing execution related vendors. Today SAP is not known for this software category in any way, even though they made three acquisitions in this space (Lighthammer, Factory Logic, and Visiprise).

Exclusions to the Scoring

The most recent acquisitions were excluded from the analysis. Qualtrics is an acquisition which has as close as possible to zero chance to be effective, but we did not want to mix up the future with the present. Because the last seven SAP acquisitions are within a year or so old, it is not yet possible to evaluate if they have been successful. Therefore the most recent acquisitions are listed as “TBD” and not scored. Several other acquisitions were more of a consulting company than a software vendor, so we marked those as “N/A” and they were also not scored.

Having gone through these clarifying topics, we have included the following acquisition table.

The SAP Acquisition History Table

The columns in blue are directly from Wikipedia. The orange column is the Brightwork Research & Analysis score. Items in Orange text were adjusted after input from Mark Chalfen.

The average score for all of the acquisitions that were rated is a 2.2 out of 10. 

The first thing to notice is the high number of scores of 1 in history. This is applied when SAP does not have very much business in that software category or when we have first-hand knowledge that the acquisition did not do anything for SAP. The logic for acquisitions is often that the acquired vendor will grow because they will have access to SAP’s account base. But it is extremely difficult to find a small acquisition by SAP that did that. This means that the proposal that SAP makes sales increase because of account exposure is a myth. Interestingly, SAP has been able to force extremely weak products into customers. Applications ranging from PLM to BW. However, SAP is far better in pushing internally developed applications into customers than acquired applications.

Many of the acquisitions were in categories that are never discussed in SAP circles or on SAP projects. In fact, if you told many people that worked with SAP that SAP had an application that covered the area, they would not know.

The Acquisition Outlier of Top Tier

There is one very prominent exception to this pattern of failing to grow acquisitions, and that is the acquisition of Top Tier. Tom Tier is one of the only acquisitions we could find that actually grew in a way it could not have without being acquired.

Top Tier  is one of SAP’s most successful acquisitions, and we gave it a score of 7 out of 10. Top Tier may be a particularly controversial scoring. SAP acquired Top Tier to obtain what a small ERP system named Menahel or Top Tier, which would be renamed to BusinessOne. BusinessOne became a popular SMB ERP system and one with a fertile ecosystem that developed industry-focused extensions to the core ERP system. However, BusinessOne was never very profitable for SAP, and it also served to distract SAP by putting into a market for which it is a poor fit.

Secondly, customers that buy BusinessOne are not good customers for other SAP products, and BusinessOne integrates to few other SAP applications. Therefore BusinessOne customers have little follow-on purchases of other SAP products, primarily because they can’t afford them, and they are not designed to work with BusinessOne. Therefore while Menahel/Top Manage/BusinessOne did grow, it did not necessarily have a positive impact on SAP, and one could argue it simply distracted SAP. BusinessOne helped SAP get into the SMB market, but the SMB market is a very bad fit for SAP.

  • SAP’s bread and butter are extremely high-cost projects for large companies that can endure constant run rates of billing hours. This is not the SMB market. (See our TCO estimator for SAP ECC, and observe the difference in the TCO estimate for ECC versus BusinessOne).
  • Consultants that work on BusinessOne projects, don’t work on ECC projects. There is little overlap between BusinessOne and the rest of SAP. The term “red-headed stepchild” comes to mind.

The Top Tier acquisition also had negative side effects in that it brought in Shai Agassi into the company, which lead to problematic implications when he later headed up the Netweaver initiative. Netweaver was a failed program to modernize the integration and infrastructure of SAP. Many years after Netweaver, SAP continues to be as difficult to integrate to SAP and non-SAP applications as it was in the mid-1990s, a subject covered in the article How Non Programming Integration Hurts SAP Projects.

Netweaver left SAP with components that it continues to try to use but which handicap anything connected to them. Everything that is part of Netweaver has a better open source offering.

Knowing what is known today, it is an interesting question to ask whether SAP would acquire Top Tier again.

An Incomplete Acquisition List

After we reviewed the list, we realized that this list is not a complete listing of SAP’s acquisitions. We covered in the article Did Hasso Plattner and His Ph.D. Students Invent HANA?, that SAP suppressed acquisitions that it made that made up what eventually became HANA. This is because SAP contributed very little to HANA.

SAP purchased both Trek and P*TIME, but likes to pretend that they didn’t. This was to do to try to create a false storyline that attributed innovation specifically to Hasso Plattner that he had nothing to do with. Therefore, SAP’s policy with respect to publicizing an acquisition varies. If they want to pretend that they created something new, then they keep the acquisition secret.

I have not included a score for Trek and P*Time. However, their scoring would be complicated. HANA became a moderately popular database, but it has also been an enormous distraction, they are being sued by Teradata in what looks to be an expensive lawsuit to defend, and has alienated customers and vendors in a way that will cost SAP for years to come.

IT Analyst, Wall Street Analysts, and Media Coverage

Throughout the years, IT analysts, Wall Street analysts and media entities have normally framed SAP acquisitions in a positive light. There is a strong tendency of media coverage to put a positive spin on an acquisition, even though the history of acquisitions is quite poor. However, the evaluation of SAP’s history with acquisitions demonstrates that IT analysts, Wall Street analysts and media entities repeatedly provide inaccurate information on SAP acquisitions.

From a policy perspective, there is sufficient evidence for governments to deny acquisitions out of hand, and to only allow them on exceptional grounds. This subject broaches topics related to how to maintain competitive markets. Topics which IT media entities and Wall Street analysts have opposing interests. Media entities obtain advertising from large corporations that tend to make acquisitions, and Wall Street itself makes money from mergers and acquisitions and prefers monopolies. The perfect investment vehicle for Wall Street is a company whose customers have no options in the marketplace and are locked into a particular supplier. This is the final end state that Wall Street would prefer for each industry as it leads to the highest possible profits.

For these reasons, they both have undeclared financial biases when they make projections or otherwise comment on acquisitions. This brings up the question of when IT analysts, Wall Street analysts and media entities cast a provide views on a new SAP acquisition, are they offering an honest appraisal, or merely singing from their wallets?

The Implications of the Score in Forecasting Future SAP Acquisitions

An average effectiveness rating of 2.2 out of 10 is obviously a very poor score. It should be used to evaluate future SAP acquisitions to observe that SAP is not generally effective at performing acquisitions. And therefore, future acquisitions are also most likely to not be successful.

Motivation

It should be stated, we don’t care one way or another what is the final score for SAP’s acquisition effectiveness. This is our best estimate of SAP’s acquisition effectiveness. The curious thing is that no SAP partner or IT analyst would want to publish an analysis of SAP’s acquisition as they would fear the response from SAP. This fear of SAP prevents any analysis of SAP that might come up with “the wrong answer.”

If someone were to reach out and make a compelling case that a score should be changed, we would consider doing so if the argument were compelling. We can’t have specific knowledge of every single acquisition. However, even if several acquisitions scores were increased or decreased, the overall tendency is quite clear.

Conclusion

History shows that SAP is ineffective in its acquisitions. Wall Street analysts and media entities have far more resources to do this simple checking that does Brightwork Research & Analysis, however, apparently, they have no interest in doing it. The reason I think this is cannot remember ever reading an article that analyzed SAP’s acquisition history, yet, analysts are quite willing to discuss the synergies that await SAP after each successive acquisition.

Secondly, this analysis underestimates the problems that acquisitions create for SAP. SAP suffers from a distinct problem in accomplishing things that it sets out to do internally. Each new acquisition puts SAP as the overseer into a new vendor, which are frequently in software categories that SAP has no experience in managing. SAP repeatedly finds itself out of its depth in trying to manage an increasingly unwieldy software empire. As SAP has continued to make acquisitions, it has blurred its focus that much more than it was already blurred and reduced their ability to execute.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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References

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Does SAP’s Acquisition of Qualtrics Make Any Sense?

Executive Summary

  • SAP acquired the vendor called Qualtrics, a vendor that most people in SAP has never heard of.
  • Learn the likelihood that Qualtrics will be a successful acquisition for SAP.

Introduction

I research SAP nearly full time, yet SAP continually educates me as to “strategy.” Is survey software critical to SAP’s future?

I thought the Concur acquisition was off the beaten path with travel and expense software; now we are completely off the reservation.

The Need for Acquiring a Survey and Survey Analytics Firm?

SAP has one product that they use to open accounts and to sell other applications. This is their ERP system (currently ECC, the new version being S/4HANA). Every acquisition SAP makes needs to be interpreted by how its sales can be enhanced through association with SAP ERP. Both Qualtrics CEO Ryan Smith and Billy McDermott stated that:

“Qualtrics has completely transformed the experience management category.”

That seems like an odd statement. What is that category?

Here is the pitch.

SAP seems to think this is a logical breakdown of how data works or should be viewed.  

“Operational Data (O-Data™) tells you what is happening. Experience Data (X-Data™) tells you why.”

Bill McDermott addressed this concept as a distinct separation between X and O data in the following quote.

“In that context, he saw the deal as transformative. “By combining this experience data with operations, we can combine this through Qualtrics and SAP in a way that the world has never done before, and I fundamentally believe it will change this world as we know it today,” McDermott told TechCrunch on Monday.”

The problem with this construct is that SAP has very few forward facing applications. SAP primarily makes internal enterprise software. Surveys can be added to these, but companies normally don’t care what their employees want, so there is little overlap with what SAP has to offer. This makes the acquisition a problematic fit, particularly given the valuation.

SAP Cares What Users Think?

I have been telling companies for years that SAP’s solutions leave their employees less able to do their jobs, but the response that I normally get is that “the decision has been made” to go in XYZ direction with SAP. So as far as I can ascertain, companies normally don’t care about employee satisfaction or feedback on the software they acquired. SAP plays into this by force-feeding media entities to write complimentary things about their software and by “going over the heads” of the users and selling to the “C-suite.” SAP’s overall strategy is to disregard the input from users. And in fact, if SAP brought users into the decision-making process during the sales process, SAP would lose a lot of deals.

This is the type of survey SAP is used to giving the users to its customers. There is only one acceptable answers. 

Normally SAP likes to push the user feedback as far as possible after the software acquisition, and when users complain, they have a series of explanations that help the company’s management divert the dissatisfaction back on the users themselves. A common approach is to state that the users..

“are not ready for digital transformation,”

or the users are..

“pushing back on best practices, and on a strategic decision that has already been made.” 

Faux Experience Management Dovetails with User Experience

Bill McDermott stated that Qualtrics is “not surveys,” no, “its experience management.”

This seems like some combination of surveys and analytics. Why use the term “experience management?” Because if Qualtrics is called what it is, which is survey and survey analytics, it won’t sell for as much money.

This fits into the trend of SAP using glamorized terms for what is already established terms. Some time ago SAP stopped using the term UI or user interface, and modified it to “user experience.” A bit like the use of the term “Digital Transformation,” nothing changed except the word. The term “experience management” is essentially similar. The reason for this terminology churn is at its essence deception. SAP keeps customers off balance by taking the “high ground” with respect to terminology. It sets up SAP as superior because it is using terminology that others are not familiar with (as SAP made it up) and creates the implication that SAP knows something that the receiver of the message does not know.

In this video, Bill McDermott batted down the comparison between Qualtrics and the company Survey Monkey. However, in fact, these two companies are quite similar. But one big difference is that Survey Monkey publishes its pricing, and does not use the same type of high-pressure sales tactics used by Qualtrics. 

Another reason that Bill McDermott does not want the comparison made between Qualtrics and Survey Monkey is Survey Monkey publishes their prices. That would make it even more apparent that Qualtrics is not in a category that makes it worth anywhere near its $8 billion acquisition price. This is explained in the following quotation.

“Qualtrics is a premium product, it is often difficult to sell against similar freemium services”Glassdoor

Qualtrics pricing is a premium to Survey Monkey, but those that know both offerings state that Qualtrics is not worth the premium. Survey Monkey is around the same size as Qualtrics, but significantly more profitable.

Something else undiscussed is why does this type of software — which is a textbook case of the type of software that would follow a cloud sales model, have hidden pricing and a push/call center model?

Do Surveys Work?

Something that surfaced after this article was initially written was the question of whether online surveys work. This was brought up by the following quotation from Ahmed Azmi.

“Surveys have been scientifically proven to be a failed method of capturing customer and employee sentiment. In fact, the scientific evidence is overwhelming. Google “survey bias” to learn why you should never make important business decisions based on customer or employee satisfaction surveys.”

SAP would never care if the foundational principle of the vendor was true. Still, it is curious to find that research seems to counter the benefits claimed by Qualtrics. We do not have a background in surveys, and the analysis in this article is from other dimensions, but Ahmed Azmi is normally right when he makes proposals. It should be observed that whether online surveys work is not even a topic brought up in any of the media coverage or other comments surrounding the Qualtrics acquisition. Apparently the question of whether software actually works as promoted is a level of depth far too extreme for the major media outlets.

SAP’s “Experience” Acquisition Repeat

It was long-term ABAP and development resource Rolf Paulsen who brought up the fact that SAP already purchased a…

“Real-time behavioral marketing company that optimizes each website vistor’s path to purchase.”

…that was called SeeWhy. The current SeeWhy.com website defaults to this page.

This acquisition seems quite similar to Qualtrics. It was made back in 2014. Why was SAP not able to do much with it in the 4 years since the acquisition? Why does it need to acquire other vendors instead of figuring out what to do with SeeWhy?

The Financial Side

Qualtrics has not been a profitable company. According to Wikipedia, their recent revenue history has been the following:

  • Qualtrics reported revenue of $190.6 million in 2016
  • $289.9 million in 2017.
  • In 2016, Qualtrics reported an overall net loss of $12 million.
  • In 2017, Qualtrics reported a $2.6 million net profit.

If we take total profits for 2016 + 2017 and divide by total profits for 2016 and 2017 we end up with -9.4/480.5 or a -2 percent profit. How does losing a combined $9.4 million over the past two years translate to an $8 billion valuation? Let us put this in context. SAP could put $8 billion into a bond and receive a return of 5% and receive $320 million per year. $320 million is more than Qualtrics 2017 revenues, much less Qualtrics’ profits. Consider for a moment how long it will take Qualtrics to grow to the point where it provides $320 million in yearly profits, and one can see what a bad investment SAP just made.

The interpretation of this acquisition is very simple — SAP was bamboozled by Qualtrics. SAP got into a bidding war with Qualtrics planning an IPO. Notice the following quotation.

“Utah-founded cloud unicorn Qualtrics was set to have one of tech’s most hotly-anticipated initial public offerings this week. Then SAP swooped in.”

With Qualtrics good but rather generic functionality, why was the IPO hotly anticipated?

This brings up questions about SAP’s acquisition competence as well as the analytical capability and or financial bias of those entities that underwrite and bring tech companies public. How lipstick was put on the investment opportunity “pig” of Qualtrics has to lead one to scratch their head. If we look at historical acquisitions by SAP, Qualtrics is ridiculously expensive. Ariba was purchased in 2012 for 4.3 billion. That is roughly 1/2 what tiny unprofitable and unsustainable Qualitrics was purchased for. That tells us how big this current bubble is.

How Reliable are Qualtrics’s Financials?

In 2018 Qualtrics’s revenue will be higher than in 2017, but as they were preparing for an IPO before they were acquired, sales deals are pulled forward. This means that it is less likely Qualtrics will be able to reproduce that performance in the upcoming years.

This quotation was found from the Glassdoor website, and it is concerning.

“Almost cult-like. It is a great company and they should be proud of it, but it is weird how highly they think of themselves.
Most of the money is for enterprise reps. They seem to all hit their numbers, but the lower level AE’s hit their numbers at a MUCH smaller percentage – less than 5 reps in 2017 in Dallas office were at 100% of quota – only 1 of which was fully ramped quota. Management skews data by talking about people who hit quota, but only because they use ramping reps with smaller quotas to make their numbers look better. Or they use quarterly numbers but dig into the data – most reps do not hit their numbers in consecutive quarters or on any kind of consistent basis, but then they will spike. They say they hire the best of the best (only 3% of applicants get hired) but they pay very low. This defies logic. Why would you be so picky about who you hire, but then not pay them well enough to keep them? Arrogance – which runs rampant in this company. Upper management who have been here for a long time thinks they can do things in 2018 the way they did them in 2010. Qualtrics is now a consultative sale for large dollars, it is NOT (most of the time) a 3k solution where you can hit your numbers if you make enough dials. The sales are bigger, so the cycles are longer, but upper management has not changed how they approach the sales cycle. Instead, they focus on an antiquated quadrant (which most everyone fakes their data) and tell people to make more and more dials, rather than be strategic. Speaking of management – just because someone did well in sales, does not mean they are a good manager. Really need to focus on improving the leadership of the management team. Speaking of the role specifically, you will be overpromised A LOT of things in the interview process. Be careful. You will not make nearly what they say you will unless you get a whale. That is basically the only way people hit their annual numbers is if they are fortunate to get 1 huge sale every 9 months or a year.”

This means that Qualtrics is an aggressive sales culture where implementation is secondary and that normally means that problematic sales will come back to bite Qualtrics. And it gets worse. Qualtrics has a number of short-term oriented sales reps at the company.

This is explained in the following quotation.

“PAY your senior reps. Again, why do you have such strict requirements in hiring but then do not pay them accordingly? Attrition will be high, especially after we IPO.”

Short-term oriented sales reps trying to meet their quota long enough to get past the IPO (what turned out to be an acquisition) sign even worse deals.

“Joined the Sales team as an AE and didn’t expect it to be run like a call center. I’ve never seen a company treat experienced account executives this way. I’m pretty sure not all of the offices are run this way, but the one that I work at the managers walk around the sales floor pushing you to make more dials–they hover over you and micro manage like crazy. It would be nice to get some coaching instead of getting hounded on metrics all day. All they do is refresh the dashboards all day and push us for more dials dials dials. If you don’t hit your metrics or “points” you can’t leave the office, you literally will be forced to work 10 hours.”

Well, that sounds like a boiler room operation, similar to the one run by Gartner in Fort Myers. Qualtrics has demonstrated a pattern of misleading nearly everyone they come into contact with. The includes customers, employees, investors. I was not able to determine if they mislead suppliers, but given their behavior in other areas, it is likely that they do. Bill McDermott stated that he was attracted to Qualtrics’ culture, but it is a culture of lying. What does that say about Bill McDermott that he finds this “culture” appealing?

Conclusion

Qualtrics is a multidimensional case study. It just depends upon what aspect one wants to analyze. We started off only mildly interested in this acquisition, but as this article length demonstrates, we kept finding different aspects to explore and we ended the process quite interested in this acquisition. It is amazing that a company with these types of characteristics and these type of reviews (see below for more details) would still be a Unicorn or “venture darling.” This shows the degree of the bubble currently in technology. This is one of the worst software acquisitions I have ever analyzed, and it has all the signs of a “high water mark” acquisition that one will look back on to observe the height of the bubble.

Let us review the logical criteria for an acquisition for SAP.

  1. Does the Vendor Have Tantalizing Technology?: Is the software itself impressive?
    1. Our estimation is (Yes)
  2. Is the Vendor Financially Strong?: Does the vendor have a reasonable history of profitability?
    1. The obvious answer here is (No)
  3. The Degree of Overlap With SAP ERP?: That is can SAP entice/coerce companies into buying Qualtrics because they are already SAP customers.
    1. Our estimated rating here is (Low)
  4. Can SAP Leverage Qualtrics?: Can SAP specifically leverage Qualtrics for its other SAP applications?
    1. Our estimated rating here is (Low)
  5. Will SAP Have a Natural Ability to Manage the Aquistions?: SAP has demonstrated a weak ability to manage acquisitions, how likely is it that the story with this acquisition will be different?
    1. Qualtrics is so far afield from anything SAP has experience in managing our estimate here is (Low)

Media Coverage of the Acquisition

With such an obviously bad acquisition, we wanted to see what the media coverage would be. The insane nature of the acquisition is a good test for media independence.

  • Forbes, Fortune, and ZDNet were generally positive on the acquisition. This was expected as all of these media entities are large SAP customers.
  • The New York Times, which should be more objective as SAP is not a major advertiser, but was written by an editor at Reuters, which is normally quite compliant to SAP. The New York Times/Reuters article was complimentary.
  • SeekingAlpha proposed that the price paid was a “nosebleed” level, but seemed to state that it was warranted given how the enterprise software market is so overheated. The article proposed the deal would not generate meaningful “catalyst” for 12 to 24 months, but did not critique the acquisition.
  • TechCrunch did virtually no analysis in their coverage in their article on the topic.
  • The Register where we expected criticism, as The Register as proven to the be the most independent of websites, had no criticism in its article and mostly repeated SAP’s talking points.

The FinancialTimes covered the acquisition superficially but did quote a dissenting analyst at Mirabaub who questioned the reason for the acquisition and stated..

“It is an extremely high multiple which ever way you look at it,” he wrote in a note. “Is SAP trying to mask slowing organic growth in the core business? Is SAP trying to bolster a cloud business that is struggling to get significant scale, growth and margin leverage?”

But the FinancialTimes was careful to not critique the acquisition itself.

The overall review of the media coverage makes one wonder where non-SAP biased coverage at major media outlets can be found.

Something else important to note. I did the math to see the valuation. Notice that while the media coverage stated it was expensive, they did not (by in large) show the exact math. The math is ridiculous…it is beyond nosebleed. I think that was premeditated. If you do the math, you can’t write the article the same way. The story goes south. So you just say “it was expensive.”

Every writer is operating under the editorial control knowing that SAP is a major advertiser.

You want to keep your job…….don’t make waves.

SAP Increasingly Becomes a Software Conglomerate with Generalized Acquisitions

What Qualtrics does, has little to do with SAP. The Qualtrics acquisition is another example of SAP’s shotgun approach to acquisition. Most of SAP’s profits come from on-premises applications and very high margin support. Over the past ten years, their strategy is to use these profits and the market capitalization they engender to purchase (mostly) cloud companies. However, none of these companies have the profitability of their on-premises software, much of it only purchased by companies because of the consulting company recommendations, that are made because consulting companies make the most money from SAP consulting.

The result is that increasingly own a number of cloud vendors that don’t have much to do with each other. And for which they pay high valuations, but which do not contribute in proportion to their acquisition cost to revenues or profits. Secondly, SAP has a very poor record of managing acquisitions, so outside of Ariba, the point of acquisition is the high point of the vendor, and the vendor’s application becomes less and less prominent the longer it is owned by SAP. SAP has some acquisitions like Sybase, that have drastically declined since they were acquired.

 

SAP produces graphics like this, that are meant to make sense of SAP’s stable of acquisitions. Very few SAP customers use many of the items on this list. And the integration story is inaccurate. Due to SAP’s development inefficiency and lack of focus, it takes years for the adapters to acquisitions to be developed.   

Qualtrics Did Not Sell Out to SAP For Money? – But to Create a Category

Ryan Smith is the CEO of Qualtrics, he told this massive whopper.

“I feel more at peace about this than going public,” Smith says. “We didn’t need to go public. We had no investor pressure, no financial pressure, and we had no employee pressure. We were going public for the sole reason of creating the category. And nothing is bigger for that than this combination. It would take ten years to do what we are going to do tomorrow.”

It’s difficult to see how that can be read without falling down laughing. This is a company with no profits that is being bought for $8 billion. Ryan Smith and other members of the Smith family at Qualtrics will make $3.3 billion. Yet Ryan Smith appears to be saying that the only reason for taking the $8 billion is to “create a category.” That is curious because it makes sound like the money was a non-factor. SAP massively overpaid, where is Ryan Smith going to get a better deal than the one just made with SAP?

That is clearly a massive lie, and it along with other things I learned about Qualtrics, it makes it difficult to believe other things the company says. As the quotes below demonstrate, Qualtrics had a very pressing need to issue an IPO (or be acquired, either one will do), and a primary reason is that Qualtrics had fished out its potential prospect base. It must access a new customer base, and SAP is a potential fit to help them do this. Although it remains to be been how comfortable large consulting firms will be in emphasizing Qualtrics. It is difficult to see consulting companies training up resources to implement Qualtrics, which is probably too simple of an application to bill a sufficient number of hours, and is too niche to justify the investment. SAP consulting firms only recommend complex applications (like S/4HANA, BW, APO, etc…) for which they can keep consultants on projects for many months.

Another $1 billion will go to the venture capital firms Accel, Insight Venture Partners and Sequoia Captial. This means that SAP will be paying out a total of $4.3 billion just to the Smith family and to venture capital firms.

Our Proposed Outcome to the Qualtrics Acquisition

The most likely outcome of the acquisition is that SAP will attempt to work Qualtrics into their C/4HANA solution. (Qualtrics will need to be worked in with Hybris and the recent acquisitions CalladiusCloud and Gigya) C/4HANA is the only forward facing set of applications that SAP has. The impact will be minimal, but Qualtrics revenues and profits will be hidden from this point forward as they will be part of SAP’s cloud revenues. After clashing with the SAP culture, the founders of Qualtrics will leave in a few years.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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References

https://en.wikipedia.org/wiki/Qualtrics

https://www.glassdoor.com/Reviews/Qualtrics-Reviews-E323717_P3.htm

*https://techcrunch.com/2018/11/12/analysts-weighing-in-on-8b-sap-qualtrics-deal-dont-see-a-game-changer/

https://www.forbes.com/sites/alexkonrad/2018/11/11/sap-swoops-in-to-acquire-qualtrics-for-8-billion-just-before-its-ipo/#43606b76be15

https://www.zdnet.com/article/sap-buys-qualtrics-for-8-billion-aims-to-combine-experience-operations-data/

*https://www.nytimes.com/2018/11/12/business/dealbook/sal-qualtrics-acquisition.html

*https://techcrunch.com/2018/11/11/sap-agrees-to-buy-qualtrics-for-8b-in-cash-just-before-the-survey-software-companys-ipo/

https://www.ft.com/content/3ecfff5e-e613-11e8-8a85-04b8afea6ea3

https://seekingalpha.com/article/4221391-sap-acquire-qualtrics-8-billion-cash-deal

https://www.theregister.co.uk/2018/11/12/sap_qualtrics_acquisition_user_group_2018/

More Amazing Qualtrics Review Quotes from Glassdoor

The comments show a very interesting window into Qualtrics. The positive comments seem to frequently center around the environment being “fast-paced” as if that is a natural virtue. The building also gets high marks. Other positive comments about their being free soda or lunch come across as quite narrow. And it seems odd that one of the most references positive aspects at Qualtrics is the buffet at the Provo office.

The Provo Qualtrics building checks out! Apparently, you can bring you dog to work. Isn’t having a dog at work a bit co-dependent? Doe the dogs come to the meetings also? If so, do they have input? Who wants to have to accept recommendations from someone’s dog? Also what is Qualtrics’ position on parrots and other pet birds? 

This quote is not particularly relevant, but it is amusing, so we included it.

“So many dogs running around the office. It’s like a zoo now. If you are allergic, stay clear of this office.”

The negative comments are in some cases responded to by quite ridiculous damage control comments from Qualtrics HR, which appears to have picked up a vibe of propaganda from the old Soviet Union. Qualtrics’ HR comments are not remotely convincing but do provide insight into the mindset of HR and the apparent disdain that HR has for their employees. The Qualtrics HR department lies so much, that its difficult to take anything they say seriously.

Comments of particular note, along with analysis are listed below.

Misleading Employees

“Management lies to show more positive numbers to their investors, clients, employees, and public. Sub 16% of reps actually hit their quotas each quarter.

They are actively firing reps, because they over-hired for a product that is misplaced in the market and has no realistic quantifiable value impact for customers. They still need to show growth for their investors in order to IPO, so they’ll still hire college kids to throw into the meat grinder, but you’ll notice they’ve slowed their hiring for the Provo office. Recruiters lie to candidates. The money potential and opportunities are not actually there. You could be the smartest, hardest, best sales person out there – but unless you’re part of the aforementioned, you will only spin your wheels.”

“Management uses scare tactics to keep their employees. They parade around companies nearby who have failed to let people know the grass is not greener. When people leave for better jobs, they slander them – even their best employees. Definitely not how a company should operate.”

Qualtrics is constantly critiqued for how it treats employees.

“Since day 3 on the job, I hated if for the 20 or so months that I was there. In Opportunity Development, all you do is cold call. 
-Transparency: In the interview and recruiting process, they proudly say that all employees are owners and have restricted stock units. In reality, those units aren’t worth anything. Only the founders and some top executives have shares that are actually worth anything. If you are looking at Qualtrics, don’t even think about the potential stock options, because it’s of no value, and definitely not worth taking a 20% pay cut for. The CMO and VP of Engineering all left suddenly while I was there, and we were told bogus reasons explaining why they left. If they really want to be as transparent as they say they are, talk about why the VP of Engineering left in the middle of the biggest product launch in the company’s history.”

Falls into the common criticism that Qualtrics premeditatively misleads new employees as to non-salary compensation.

“Here’s the deal, if you aren’t concerned about getting paid well and only care about cool “perks” and showing your workspace off to friends/family, Qualtrics is great. They distract you from how bad your salary is with cheap perks, like microwavable food and swag. Salaries are hidden very well and odds are someone who came in after you with less qualifications is getting paid more. Management isn’t looking out for … “

Product Quality and Value

Its difficult to find individuals that have experience with the software who think the software is a good value.

Product sucks – SurveyMonkey and other products have caught up to it, and are far cheaper.

Others have proposed that any lead Qualtrics had has dissipated.

“Constant state of transition/repair in products”

There are a number of comments about the instability of Qualtrics’s offerings.

“Products are unusually buggy. Much of life at Qualtrics is spent managing fires. Upper management has little apparent vision for its teams. Occasionally, the supreme executive wand waves to divert all attention to the latest hot topic and disrupt all momentum. A huge productivity drain and short-sited.”

Sales Management

“Heavy politics. If you’re not Mormon, in “the boys club,” or suck up to your boss, you won’t get ahead.

“Really bad SFDC data. Lots of territory changes. Rules of engagement (how leads, accounts, or half-baked deals are distributed) are murky and ill-enforced.”

Bad and unethical sales management is a constant critique.

“I get it, you sold your soul to the devil and finally took VC funding. now you’ve got investors that are demanding a return, but you need to stop putting the cart before the horse! develop an operating model that is scalable first, then start ramping revenue. the pushing sales first and figuring out how to operate it later approach is killing your workforce”

This contradicts Ryan Smith’s statement that there was no pressure to do the IPO.

“As an Account Executive at Qualtrics, I was treated like absolute garbage. There is zero training. Management ruled through fear, constantly making me feel that I’d be fired at any moment. I also had 12 territory changes in 12 months. As soon as I’d start to develop a territory and make some headway they would take it from me and give it to someone else. I would then get to see someone else close my deals and collect my commission. The one time I brought the problem up to management that person ripped into me and said if I didn’t like things I could try my luck somewhere else.”

Lack of training is another common theme from sales comments.

“Since day 3 on the job, I hated it for the 20 or so months that I was there. In Opportunity Development, all you do is cold call. Bonuses depend on how many set meetings get accepted by your Account Executive, so some OpDev reps will have AE’s who cheat and accept meeting that aren’t good or even happened. Those OpDev reps are praised and quotas for everyone are in turn raised. When you become an AE yourself, you will have zip code territories with mostly very small businesses who 1) can’t afford Qualtrics, 2) have no or little need for it, and 3) have no idea how to do research (e.g., it’s an onion farm). It’s extremely hard to sell as a new AE and most fail. There is a huge retention problem regarding AE’s, but the leadership insists that’s it’s not a problem.”

This gets to several issues, but one is that Qualtrics potential market is clearly fished out. With the SAP acquisition they will have an enhanced ability to access SAP accounts, but Qualtrics clearly needed to do something because they have exploited the customers they have access to without some type of large vendor association.

Fear-Based Management Style and Employee Turnover

The fear-based management style in addition to arbitrary treatment of employees is common as a theme in comments about Qualtrics. The changing territories fits into the narrative of disorganized and political sales management.

“Extremely high turnover. Don’t expect this to be a permanent position. You will not get the compensation that they promise when you are recruited. Culture attempts to be bro, tech-y, entrepreneurial and laid back on the surface, but in reality, it couldn’t be anything but.”

The approaches listed in the comments would naturally lead to high turnover. This connects to the need to show appealing numbers to maximize the IPO value by any means necessary.

Sales Rep to Opportunity Ratios

“Do not join this company as an AE 1-3. Honestly even some AE 4’s struggle because the original 400 reps have locked down any good account. As an AE 1 you will have a quota of 300k selling to companies that at most can afford 1k-5k licenses. Your days will consist of calling and mining all day every day.”

As with a number of companies, Qualtrics hires too many sales reps given the number of actual opportunities. This leads to heavy sales rep competition and sales rep turnover. This is emphasized in the following quotation.

“Overall, the best sales opportunities are taken and the quality of the work/jobs are not very good. They’ve grown the sales team way too big, leaving low quality accounts for the rest. This makes it difficult to perform against a steeply increasing quota, so expectations are unrealistic given the accounts you typically have. Only 30% of reps are hitting quota each quarter, and a very few hit OTE. As a sales rep, you have to generate your own business with zero to very little help from supporting reps and marketing. (aka A LOT of cold calling and cold emails. If you’re doing it as they expect, you’ll prospect for several hours a day.) You sell highly priced enterprise-level products, so it’s hard to win deals against companies that have a better SMB offering. Turnover is extremely high because sales reps are dissatisfied. Qualtrics is largely unwilling to change many of its problems, so it continues to deal with high levels of dissatisfaction and turnover.”

Marketing Support

This is extremely consistent with other comments but stated in different ways.

“Marketing- you will have no support from them. It’s the black hole of Qualtrics. There is incompetence and an unwillingness to spend (except for on events, where they spend insane amounts of money). Inbound leads are almost unheard of. The coordination between marketing and sales is practically non-existent. Marketing doesn’t know how to do effective lead and demand gen and the results show.”

“No Marketing at all: a cold call strategy. You have the feeling to be paid to harass people. US leads mentioned once: ” We are a cold call organization.”

Amazon and Tesla Work Practices?

This comment about the ineffectiveness of marketing is also a theme. The entire philosophy appears to be outbound.

“Among the worst corporate culture in tech. From top to bottom, the Seattle office is filled with ex-Amazon managers. They brought over the toxic culture rewarding backstabbing engineers, management driven by short-term metrics, and abysmal work-life balance”

It is curious how Amazon has developed such a poor reputation as a place of work. This is of course not an analysis of Amazon, but these comments about Amazon keep coming up on different comments on various technology companies.

“Very few processes in place (It’s a young startup), lots of competition and credit-grabbing, and politics. The open floor plan became distracting at times, and it felt like I couldn’t get promotions without working 80 hour weeks.”

This constant higher number of hours per week is similar to stories from Amazon and Tesla. With the stock option compensation entirely overrated, once has to wonder what the hourly rate of employees at Qualtrics actually workers out to. This is emphasized by the following quotation.

“Working at Qualtrics was the worst year of my life. First, in the interview, I was told to not worry about the very low salary because I would be making more than triple that in bonuses if I performed. I performed over and over and no such bonus came. Management will lie to you, and this wasn’t the only time it occurred. I was told “Qualtrics is like Google in the 90’s”, and what’s crazy is this is there sales pitch to get employees to continue to work near minimum wage jobs. I was constantly harassed by my manager to the point where I almost took action. Whatever you do, avoid this place at all costs. The sole purpose of the cool building and free food is to disguise you from what’s really going on, which is practically indentured servitude. Ask them what their turnover is and this company will speak for itself.”

Overlap with MLM Tactics?

International readers would ordinarily not know this, but Utah, where Qualtrics is based is known for multi-level marketing MLM scams. This is where people are recruited to be salespeople for home-based businesses that don’t work out for most of the participants, but where people in early can make a lot of money. There is even material on websites that explain what a problem MLM schemes are in the Mormon community (most people that in Utah are Mormon) and why Mormons are particularly susceptible to them. Therefore it was curious to read this comment…..that sounded very similar to the pitch of MLM schemes.

“Qualtrics attracts young, high energy, and entrepreneurial people. Unfortunately, these people typically lack experience and therefore the savvy necessary to know when they’ve been taken for a ride. Leadership will tell you my attitude is poor. They will talk about how difficult it was for them to get to where they are and promise similar opportunities for you in the future. The problem with that line of thinking is that their struggle resulted in major share percentages with massively high salaries. Very few, if any, people hired after the basement or “across from the practice field” days, will ascend to that level. Can you become a Regional Lead? You bet. But if you think you’ll be allowed into the inner circle, you’ll be sorely disappointed.”

This argument obscures the fact that most of the employees will never make it into the inner circle, therefore they should not be expected to put out the way those who made it into the inner circle did. This is the exact logic presented by upstream MLM individuals to their downstream.

“Don’t put yourself in the same category as your employees. Most of them will never be worth hundreds of millions of dollars. They will, however, work just as hard as you. Yes, they will and do. I don’t care how many private jets you take. And no, you didn’t take a massive risk by starting this company. “Bootstrapping” for the Q equates to having a lot of family money that could be independently invested without real risk. When you start working a 60+ hour work week for a company that pays you a 36K salary and who tells you to “invest in yourself” to make a livable wage – when you do that for several years and simultaneously start a billion dollar company, then you can give yourself a pat on the back.”

If true, this is quite despicable behavior. And while not stated in this exact way, this is stated generally on many reviews. For it to be inaccurate, it would mean that multiple people would have to log in and report what amounts to the same thing.

 

How SAP and Oracle Broke the Rules of Commercial Software

Executive Summary

  • SAP and Oracle take advantage of the standard rules of commercial software.
  • How did they do it and what has it means for the software industry?

How Oracle and SAP Broke the Agreed Upon Rules of Commercial Software

It is common to propose that SAP and Oracle are merely following the normally accepted rules of commercial software. It is difficult to see how this is true. The original idea of compensated software was that work in creating and maintaining software required compensation. That is certainly fair. However, SAP and Oracle have moved the goal posts. Moreover, they use licensing rules to extract far above the value of their software. They spend far more on sales and marketing than they do on development and maintenance. The licensing agreements SAP and Oracle give customers are like credit card contracts. The complexity of the terms and conditions places Oracle and SAP in a dominant position versus the customer. Oracle and SAP have their customers so restricted by rules and restrictions that the goal of the software is often a secondary concern.

Furthermore, Oracle and SAP have been using this position to coerce their customers into things they don’t want to buy.

Promises Made to Wall Street

Unfortunately for customers with substantial investments in Oracle and SAP, because of the promises made to Wall Street by these companies, we see these abuses only getting worse in the future. Oracle and SAP have been ratcheting up coercive tactics to obtain revenues to hide the fact that these companies are not growing in the new areas where they tell Wall Street they are growing, but instead they are merely extracting more income from their old areas. Is the fastest growing part of SAP or Oracle is cloud business? Is it SAP’s “hot new IoT” solution called Leonardo? Is it Oracle’s Automated Database? No. Every year, support grows as a higher percentage of both of these company’s revenues.

If you listen to Oracle sales reps they put themselves in the position of being there to help. They want to “help” their customers, but if one analyzes how they are helping, it is from Oracle’s own coercive policies! If you create a coercive scenario, but then appear to “fix” that scenario, that is called racketeering. The standard approach came from protection rackets. Where a mobster would approach a store owner and declare..

“If you pay me protection money, your store will be protected from the mob.”

However, then, the same mob is the only entity that would damage or destroy the store! Wouldn’t it be a terrible thing if something happened to that store? Yes. So in a way, those that negotiate terms on protection rackets are also “helping” their “customers.”

Conclusions

We know many Oracle sales reps, and this logic of helping customers from punitive actions by SAP is one of the primary ways that they justify the often dirty business of what they do. Oracle has an internal sales culture that it is best to steer clear of which we categorize as the worst sales culture in enterprise software in the article. The Oracle Software Sales Model. There is no doubt that Oracle has developed the worst reputation for business practices in the software industry.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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SAP’s Hat Trick: Confusing Cloud and On Premises S/4HANA

Executive Summary

  • SAP has a very deliberate way of confusing people as to which S/4HANA (cloud or on-premises) they are speaking of.
  • This is illustated in this Reuters article.

Introduction

Reuters published the article “SAP Vows to Ease Cloud Transition; German Customers Less Keen.” In this article, we will review the Reuters article for accuracy.

The Article Quotations

We take excerpts of the most important parts of the Reuters article and comment on them below.

ECC to be Phased Out by Middle of 2020?

The article begins by stating the results of a poll of SAP customers but then moves into accepting SAP’s statement about its goal.

“In SAP’s native Germany, which accounts for 14 percent of global sales, only 10 percent of customers are willing to move core processes into the cloud, according to a survey by the DSAG user group that hosted a gathering in Leipzig this week.

SAP, Europe’s most valuable technology company, is trying to accelerate the adoption of its premium S/4HANA cloud suite, which it wants to replace software run on local servers that it plans to phase out by the middle of the next decade.”

That will not happen. And at this point, it’s a ridiculous goal to publish because it has a zero percent chance of occurring.

Companies will be running ECC on premises for quite a few years past 2025.

If you do the math regarding uptake and produce a forecast with an increasing rate of adoption, you still end up with most of SAP’s customers on ECC when the clock ticks to 12 AM on Jan 1st, 2025.

SAP can either deny those customers support and hand the support contacts over to Rimini Street or other, or they can continue to honor the support contract at roughly a 90% margin. And Pablo Escobar will tell you that turning away from a 90% margin is a difficult thing to do as we covered in the article How do SAP and Oracle’s Support Profit Margins Compare to Pablo Escobar?

The Cloud for Increased Margins?

Reuters goes on to say something strange about the interplay between cloud and margins.

“Achieving scale as a platform company is vital for SAP to expand its margins while weaning itself off the juicy up-front license fees earned on its traditional enterprise planning software used to run finance departments and supply chains.”

Cloud will not allow SAP to expand its margins. Cloud will shrink SAP’s margins. This is because cloud reduces the account control a vendor maintains over the account, and SAP’s margins are based on their control over media/consulting/information providing entities and its lock-in. A big part of SAP’s overall margins are found in its support. Normally a cloud subscription is supposed to include support, in fact, I don’t recall running into the opposite of this.

However, SAP is set to challenge this with their “cloud forward thinking” as they are charging support for cloud offerings.

This support model for the cloud is currently being formulated, but notice the following quotation from SAP’s support website.

“SAP Preferred Success is currently available for SAP SuccessFactors, SAP S/4HANA Cloud, SAP Cloud Platform and SAP C/4HANA Suite.”

The SAP Preferred Success support cost is 20%, which is very similar to the 22% (base) support cost for SAP on premises. SAP has a lower support level than this for cloud called SAP Enterprise Support.  

If you read the documentation for SAP Cloud Platform, it states that support is included. But the overall costs of the SAP Cloud Platform or just SAP Cloud have been changing. At one point the SAP Cloud was free. That was to bump up the numbers of people “using it” for Wall Street cloud cred. But now the SAP Cloud has jumped in price for everything except the free developer version which is a trial.

Long story short, SAP is trying to re-create its on-premises support model for its cloud products. And SAP is easing its customers into being used to paying support for cloud.

When SAP does a lot of things related to changes in policy and pricing, particularly if make the scenario worse for the customer, SAP does not announce them. You simply bring up the website at a later date and something dramatic has changed, and that is how you know. And since nearly all the information written about SAP is written by parties with allegiance to SAP, these changes receive very little coverage.

SAP Wants to Reduce their Customer’s Costs?

Reuters gets a very amusing quote from Uwe Grigoleit.

“We want to reduce both the costs for our customers and the time it takes to implement the new software,” Uwe Grigoleit, global vice-president at SAP, told Reuters in an interview on the sidelines of the SAP user conference.”

SAP has never in its history been concerned with the costs incurred by its customers or the implementation speed. If SAP were concerned with implementation speed they would have removed many consulting partners that have very long implementation timelines, but SAP will partner with any consulting company. So why the sudden concern now? That is because there is no concern.

It is just another lie to tell. Did we mention Uwe likes to lie a lot?

How Many Customers will Covert to S/4HANA?

And those surveys are always an overestimate. Similarly, inaccurate survey results can be obtained by asking people how likely it is they will lose 10 pounds in the next year. The actual is always less than the projected with estimates like this.

“Only 41 percent of core SAP customers surveyed expect to complete the transition to S/4HANA by 2025, the year the company plans to stop servicing its workhorse Business Suite enterprise software.”

SAP will extend its support beyond 2025, no if, ands or buts about it.

The Rest Want to Keep Core Processes on Their Own Servers?

Is the term force feed the right term for cloud? The way SAP and Oracle do it, the answer is Y-E—SSSSSSSS!

“The rest want to keep core business processes running on their own servers, DSAG board member Marco Lenck told the conference, cautioning technology providers that they shouldn’t force cloud-only products on the market.”

Perhaps. But something unmentioned in this quotation is that S/4HANA Cloud is still not a viable application. How can S/4HANA still not be a viable application if SAP claims 2,100 customers are live? That is easy, most of those go-lives are not real, which we covered in the only independent study into S/4HANA implementations. DSAG is the most confrontational SAP user group, but they have to censor themselves from pointing out obvious things if it makes SAP look bad.

The entire scenario would not include the use of the term “force feed,” except for the fact that SAP’s cloud applications lag to such a degree that customers feel they are having things jammed down their throats. This has been going on at Oracle for a while also, where licenses for cloud products are forced on companies that eventually become shelfware. This force-feeding is because the sales incentives are completely out of synch with there SAP’s cloud product maturity is.

“Many users are concerned that cloud services won’t cover all their business processes,” he said.”

They should be concerned, S/4HANA Cloud won’t cover all of their business processes. S/4HANA Cloud has a small functionality footprint, this is why most of S/4HANA Cloud’s customers are SAP consulting firms.

What Is Being Discussed: S/4HANA or S/4HANA Cloud?

This next quote is a doozey. Reuters allows SAP to quote a number, without pushing back at all on the number, and it does not seem to realize that the topic was just switched.

“S/4HANA, launched in 2015, typically takes between seven and nine months to get up and running. Some 2,100 customers are running the suite live, but a further 34,000 could potentially make the switch, SAP estimates.”

There are so many inaccuracies in this quote:

  • The 2,100 live customer number is inflated.
  • The 34,000 potential switching customers estimate is inflated and lacks any explanation.
  • S/4HANA takes far longer than seven and nine months to “get up and running.” For current ECC customers, it is the most expensive and time-consuming upgrade since SAP first introduced its ERP system.

But let’s focus on something else. First, S/4HANA is very different from S/4HANA Cloud. All of the numbers in the quote above are for S/4HANA Cloud and S/4HANA combined. But we estimate S/4HANA Cloud has only 150 live customers (that is according to SAP’s bar, which is very low for what constitutes a live customer).

Why is the topic of cloud switched to on-premises without any notification to the reader towards the end of the article?

Illumination on SAP’s Hat Trick

SAP is performing a hat-trick in this article, and most people won’t notice. So here is the behind the curtain view.

  1. The article begins discussing the cloud. The reader’s brain is quite naturally thinking that the article will be about SAP’s cloud products.
  2. SAP then points to SAP S/4HANA Cloud as a priority for SAP. Reuters is careful not to research how many live S/4HANA Cloud implementations there are (we estimate around 150 globally)
  3. Now is the switch. SAP then begins talking about S/4HANA on premises. However, S/4HANA Cloud and S/4HANA on premises are two different products. They have completely different scopes of functionality, customers they are recommended for (even SAP states that S/HANA Cloud cannot be used for current ECC customers but is for greenfield implementations), costs, implementation timelines, etc..

SAP continually does this to confuse customers what is being discussed. When SAP wants to tout some desirable aspect that S/4HANA on premises has, “S/4HANA” becomes S/4HANA on premises. When SAP wants to tout cloud, “S/4HANA” becomes S/4HANA Cloud. You never know what product is being discussed. The entire purpose of this is simple. It is to deceive readers and customers. SAP has a habit of pointing to confusion in the SAP community on a variety of topics. The primary reason for this confusing is caused by SAP itself as it misexplains topics in order to maximize sales advantage rather than communicate truthfully about its offerings.

The problem with this article is that it is undifferentiated from an ad take out by SAP. The whole orientation of the article is curious.

How Accurate is Uwe Grigoleit?

Uwe Grigoleit has been a consistent provider of inaccurate information on S/4HANA. Brightwork covered his quotations noting their inaccuracy in this article, and this article. If the statement is uttered by Uwe Grigoleit it is most likely not true.

Conclusion

This article receives a 3.5 out of 10 for accuracy. The accurate portions are where Reuters explains the position of German SAP customers. The inaccurate portions are where they allow SAP to control the article and do not fact check SAP’s false statements. Reuters then did not observe SAP’s pivot from S/4HANA Cloud to S/4HANA on premises. This allowed SAP to plant inaccurate information in the heads of readers and to use Reuters to do it. Reuters has set up a very easy job for itself. All that it did in this article was record what SAP said to them.

SAP pays most of the IT media entities. This gives these entities less of an incentive to fact check SAP and allows them to be used as a marketing outlet for SAP. We are new to analyzing Reuters and it seems to have one of the cleaner income streams. However, every statement on SAP must be fact-checked and nothing reprinted without the ability to validate the statement. Reuters did not do this in their article.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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References

https://www.reuters.com/article/us-sap-se-conference/sap-vows-to-ease-cloud-transition-german-customers-less-keen-idUSKCN1MR1VP

How Accurate Was Forrester’s Study on the ROI of SuccessFactors?

Executive Summary

  • Forrester was paid by SAP to produce a report that showed SuccessFactors had a high ROI.
  • Numerous errors in the report demonstrate that the study was rigged to provide SAP’s intended outcome.

Introduction

Forrester published a study named The Total Economic Impact™ Of SAP SuccessFactors HCM Suite Cost Savings And Business Benefits Enabled By SAP SuccessFactors HCM Solutions, September 2018. In this article, we will review the study for accuracy, eventually assigning an accuracy score

Forrester’s Quantified Financial Benefits

Forrester declares the following financial benefits from a sample of customers provided to Forrester by SAP.

“The composite Organization experienced the risk-adjusted present value (PV) quantified benefits of the following services totaling $11,005,505 over a three-year period (see the Financial Analysis section for more details):

Employee Central and Payroll: $1,189,136.

Recruiting and Onboarding: $2,921,945.

Performance, Goals, and Compensation: $6,194,531.

Learning, Succession, and Development: $702,893.”

Costs

Forrester declares the following costs from a sample of customers provided to Forrester by SAP.

“The Organization experienced the following costs totaling $5,906,920 with a risk-adjusted present value of $5,186,681 (see the Financial Analysis section for more details):

Internal labor to plan and deploy SAP SuccessFactors: $60,000.

Incremental hardware, database and operating system license, and maintenance: $0.* The Organization incurred none of these costs with the SAP SuccessFactors cloud solution.

SAP SuccessFactors (or partner) fees for professional services implementation assistance: $265,000.

SAP SuccessFactors subscription fees: $3,751,600.

SAP Preferred Success fees: $750,320.”

How Many Customers Were Used for the Sample?

Forrester stated the following with respect to the sample that it used in the study:

“For this study, Forrester conducted interviews with six SAP SuccessFactors HCM customers. Interviewed customers are described as follows (each requesting anonymity)”

However, when one reviewed the list, there were not six entities listed, there were seven. A company each in the following industries:

  1. Manufacturing
  2. Retail
  3. Local Government
  4. Insurance
  5. Transportation
  6. Mining
  7. Outsourcing Provider.

There is no other interpretation than Forrester miscounted the companies that were in the study. While that seems like a major error, it is in fact only a 14% error, but it just seems worse than it is because it is so obvious. As we will see, that is a high point in terms of accuracy for the study.

Sample Selection Bias

The second thing we noticed was the very obvious selection bias of the sample used by Forrester.

One of the foundational quality checks in research is determining if the sample is reflective of the population. Anyone who has taken statistics would know that this subject alone makes up a large component of the course. Before any descriptive statistics are used on a sample, the first question must be answered as to representativeness. It is like a chain, the first links in the chain have to be unbroken for the pulling on the rest of the chain to work.

Getting 30 Samples?

The rule of thumb (called the Central Limit Theorem) is that one requires 30 samples or that are randomly selected from a population to be relatively confident that the sample is reflective. This is a rule of thumb memorable to most people that have studied statistics, and the following limitations apply.

  1. This is the minimum sample size, not the optimum sample size. As explained by Christopher Rout “It’s not that “30 in a sample group should be enough” for a study. It’s that you need at least 30 before you can reasonably expect an analysis based upon the normal distribution (i.e. z test) to be valid. That is it represents a threshold above which the sample size is no longer considered “small 
  2. Many researchers consider 30 the minimum number of samples to conduct a test. When we performed our research into S/4HANA Implementations we had more than 30 samples. However, in many cases, this many samples are not available. But in this case as the SuccessFactors team had access to so many customers, one has to wonder why such a small number of samples was used. SuccessFactors is not like some SAP products where it is difficult to find pleased customers. But the budget available to perform the study cannot be underemphasized. Neither Forrester or SAP have any research orientation. SAP is trying to get marketing collateral at the lowest possible cost, and Forrester wants to make some money. This would have played a role in why so few customers were selected.
  3. The confidence interval is a statistical measurement for how likely it is that a sample is representative of the population from which it is drawn. The confidence interval is a measure of probability.

However, we are getting ahead of ourselves, because statistics can only be applied if the sample is random. If the sample is cherry-picked, then no statistics of any type can be applied. When cherry picked, the probability is 100% that the sample is not representative of the population.

This is sort of the amusing thing about statistics. One can take many courses in statistics, but for most of life and analysis, just the basic statistics are necessary to understand because in most cases people are not even applying basic statistical standards when evaluating information.

Now let us address why this sample is so biased.

What Customers Was SAP Likely to Provide to Forrester?

Right off the bat, as each of these companies was provided to Forrester from SAP to interview, a question of selection bias immediately comes to mind. The first question is “why these six companies?” versus the what must be over a thousand customers that SuccessFactors has.

  • Most likely SAP would have provided the six most successful implementations that were convenient for SAP to find and with which they had an excellent relationship.

This is not a random sample; this is an exceptional sample of SAP Success Factors customers. This means that companies that attempted a Success Factors implementation and failed were excluded. Average Success Factor implementations were excluded.

Yet this is nowhere in the disclosure on the first page. Under disclosures, it does say the following:

“The study was commissioned by SAP SuccessFactors and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.”

There are no other applications included in the study, so it is difficult to see what this paragraph means.

Further, it states.

“Forrester makes no assumptions as to the potential ROI that other organizations will receive.”

Well if the ROI estimate in the study is not usable by those that read the study, what was the point of publishing the study? Moreover, the disclosure is right, because the sample has been intensively cherry picked, the ROI is not usable — and that is if the math were right, which will be explained later in the article, it isn’t. And finally, when SAP publicized the study, they contradict Forrester’s disclosure. They clearly gave readers the impression that the study is reflective of a..

“a typical organization”

Now let us review how Forrester calculated (or represented the calculations from customers) the financial benefits of the SuccessFactors implementation.

The Financial Benefits Estimates

The estimates of financial benefits are broken into the following categories.

  • Employee Central And Payroll Benefits: Calculation Table is based upon an internal staff cost of $90,000 fully loaded.
  • Recruiting And Onboarding Benefits: Calculation Table is based upon an hourly cost of internal recruiting staff of $40 per hour.
  • Recruiting And Onboarding Benefits: Calculation Table is based upon an hourly cost of internal recruiting staff of $40 per hour.
  • Performance, Goals, And Compensation Benefits: Calculation Table is based upon an hourly cost of internal recruiting staff of $40 per hour and the cost of managers at $55 per hour.
  • Learning, Succession, And Development Benefits: Calculation Table is based upon a fully loaded cost of internal labor of $90,000 per year.

The savings in the study came from the reduction in labor costs.

These aren’t estimates; they are what the companies said happened. If this is true, then each of these companies would have had to have eliminated HR positions. One commentary might be that the positions were not eliminated, but they were merely “reallocated to other parts of the company.” Companies sometimes write things like this as they don’t like it having it pointed out that cost savings often result in resources being fired. But what if all of the HR employees can’t be fired? Well, that would impact the ROI.

The Implementation Costs

The implementation average for the seven sample companies is stated as $265,000 for consulting and $60,000 for internal resources over a three year period.

The problem here is there is no way this is true.

Jarret Pazahanick, a SAP and SuccessFactors consultant who has done 50 SAP and SuccessFactors implementations estimated that both the internal cost and the consulting cost would have been “5-10-15X.” This is modified to be 5x for the internal resources, and between 12x to 15x for the consulting resources. Jarret’s estimate is far higher in credibility than any estimate from SAP because Jarret is not being paid by SAP and is not trying to sell SuccessFactors, but works as an independent consultant. I face the same issue. As a long time SAP consultant, my estimates are always longer and more expensive than those produced by people with a vested interest in selling software. When I made these estimates, salespeople who had never worked on an SAP project would tell me they were confident my estimates were too long, and that they would interfere with the sale.

Jarret went on to state the following in a LinkedIn comment.

“It is SO beyond the realm of what a real implementation of SuccessFactors really take it is mind boggling. The backchannels are already start to buzz of upset partners and customers wondering why their implementations and quotes are so much more that what SuccessFactors provided Forrester as what the cost would be to get that great ROI (Obviously all made up).”

If the middle figure is taken from Jarret’s estimate, we end up 5x for the internal resources, and let us take a midpoint of between 12x and 15x for the consulting resources. This is 13.5x. 13x of 265,000 is $3,577,500 for consulting. 5x of 60,000 is 300,000.

If we redo the ROI using these estimates, we end up with the following.

The Overall ROI

Now we can contrast this with Forrester’s analysis of the ROI.

“Based on Forrester’s experience, the six-month payback period and 112% ROI numbers are strong when compared to other enterprise cloud implementations. In addition, the interviewed customers that migrated from SAP HCM on-premises software to the SAP SuccessFactors cloud solution had better benefit results.”

So we calculate 31.34% ROI. Even that would be a very high ROI for any IT implementation. However, the sample is cherry-picked so that ROI is meaningless. Furthermore, there are several problematic features of the benefits estimation.

  • There is no independent verification being performed by Forrester. Forrester asked the customers themselves to perform the estimates.
  • Customers have a bias to estimate their benefits higher and their costs lower as those that are queried were often part of the software selection. Therefore the responses they provide are a way of congratulating themselves on their decision-making skills.
  • Customers in my experience don’t typically know these things. This is because they are more focused on keeping fewer employees capable of performing any type of research or estimation. Now, there is nothing to stop companies from hiring these skills. However, they usually don’t as they don’t see them as pertinent for their objectives.

Therefore, even among the cherry-picked sample, the estimates are most likely extremely unreliable. As we just analyzed, the estimates of the internal and external costs are off by order of magnitude of somewhere around 10x, and the costs are the easiest areas to estimate! This is because you have receipts for what you paid for something. The problem is that Forrester received the consulting costs from SuccessFactors, and would not themselves know the cost of a SuccessFactors implementation.

Benefits are far more tricky to estimate. This is why at Brightwork Research & Analysis, we have online TCO calculators. Unlike Forrester, no one paid for these calculators to be produced, so they show a far higher TCO than any of the vendors would like to see published.

However, we did not attempt to estimate the ROI of the 53 different applications we estimated. By way of example, review our analysis of the problems faced with calculating lost sales and forecast error costs to gain an appreciation for the difficulty of estimating benefits from software implementations.

Curious Questions

Secondly, how did all seven companies end up measuring the benefits in the exact same way (that is with labor savings)? The answer is that there is no way they did. This means that the companies reported back on a survey to Forrester. That is Forrester setup the construct of the cost savings, and the cherry-picked customers responded to the survey. This increases the “fishiness” of the study because it means that even less thought was put into the estimates. For example, did every one of the customers agree with the benefit calculation approach? That would be odd if that were the case.

Conclusion

The study is interesting in that it illuminates Forrester’s process. However, the output of the study is not useful for anything for those seeking to evaluate if SuccessFactors is a good investment. SAP paid Forrester to produce a study showing that SF has a very high ROI. And Forrester produced the study that said what SAP wanted it to say. Observe how SAP marketing explained the study.

“SAP SE (NYSE: SAP) today announced the results of Forrester Consulting’s “Total Economic Impact™ of SAP SuccessFactors HCM Suite” study,* which found that a typical organization** that invests in the SAP SuccessFactors HCM Suite could realize potentially $11 million in total quantified benefits over a three-year period.”

Is that what the study found? No.

Also, are seven companies selected by SAP reflective of a typical SF implementation? That is as close as one can come to saying that the study was reflective of what a typical company should expect, which is the opposite of what the disclaimer on the Forrester study states. SAP has a history of misrepresenting the findings of a study they pay to have performed. SAP has no consideration for the reputation of the entities they buy research from. Their perspective is the same as the one they apply to customers, which is to extract the most from every possible transaction.

Also, notice the endorsement from the President of SuccessFactors.

“In our view, Forrester’s holistic study shows that SAP SuccessFactors solutions can drive not only better employee experiences but also significant cost savings,” said SAP SuccessFactors President Greg Tomb. “We are proud to be helping businesses better understand and serve their employees while simultaneously streamlining business processes and reaping significant cost benefits.”

Greg, from his history at Accenture and at SuccessFactors, would have known immediately upon reading the study that it was erroneous, but he says nothing but positive things.

Something else sort of incredible is that Forrester declares in the disclosure that they retained “full editorial control.” This seems to imply that SAP had no control over the content produced. Let us say for the sake of argument that the study was performed and the result was that SuccessFactors had a negative ROI. Would that study have been published? If a study can only find a positive outcome, then it is not a study. It is a marketing document. SAP could have produced the same “study” themselves, but they knew no one would buy the conclusions. So they hired Forrester to rig a study for them.

There is no way out of this, a report like that can’t get released in error. There are a bunch of different people working on it. And they can’t say “it got messed up when sent to the printer.” If you need “quality assurance” what is going on over there. I perform that type of research. And while I have typos, you don’t end up with a crazy number like that, because you would see it and correct it.

But what is funny is that while they manufactured the numbers to get the high ROI, the consequence is the implementation cost was ridiculous. So now partners are like

“Hey we are charging way way more than that, and our clients are going to come back on us!”

That is what happens when you are dishonest and backward engineer numbers. SAP is probably not happy either. SAP wants a rigged analysis, but they want one that looks credible. Forrester did this with their HANA analysis years ago which we covered in the article How Accurate Was Forrester on HANA TCO?. But it went under the radar.

Accuracy Rating

The study receives a 1 out of 10 for accuracy. This is not research; it is a backward engineering study to support a conclusion that was agreed to by Forrester and SAP.

Our observation is that it is impossible to take money from vendors and produce a good outcome. Vendors sometimes reach out to Brightwork Research & Analysis do some type of report. I have yet to meet a vendor who cared about research. What the want is a report that shows them as “The Best!” That is why Brightwork Research & Analysis does not take income from vendors to produce content. It always ends up with the same thing, which is an inaccurate outcome and marketing masquerading as research.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

SAP Contact Form

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References

*https://news.sap.com/2018/10/organizations-save-millions-sap-successfactors-solutions/

https://en.wikipedia.org/wiki/Confidence_interval

https://www.researchgate.net/post/What_is_the_rationale_behind_the_magic_number_30_in_statistics

http://sphweb.bumc.bu.edu/otlt/MPH-Modules/BS/BS704_Probability/BS704_Probability12.html

Does SAP’s Hasso Plattner Have a Real PhD?

Executive Summary

  • Hasso Plattner is frequently introduced as Dr. Hasso Plattner.
  • Is Hasso Plattner’s degree anything but honorary?

Introduction

In a previous article, I questioned whether Hasso Plattner behaved as a Ph.D. The reason being that he is so often divorced from reality. He also does not communicate in a style that is consistent with other Ph.D.’s I know, and I proposed that people who have Ph.D.’s who don’t care what is true, should be required to give those Ph.D.’s back. Since that time someone reached out to me to explain that he did not think Hasso had a real Ph.D.

Searching for Hasso’s P.h.D.

Since I began working in SAP, it had always been generally accepted that Hasso Plattner was  Ph.D. In reference after reference, Hasso is repeatedly referred to as “Dr. Hasso Plattner.” In fact, I was once told to add “Dr.” to Hasso Plattner’s name because if Hasso Plattner had attained a Ph.D., then it was required that I add that to every possible reference. That is not true, but this demonstrates the degree to which the idea that Hasso must have a Ph.D.

However, when I went go and look for Hasso’s Ph.D. I could find no mention of it outside of this quote from Wikipedia.

“Since his retirement from SAP, Plattner has been particularly active as a benefactor in the field of technological research. Media reports have named him one of Germany’s most important private sponsors of scientific research. Plattner received his honorary doctorate in 2002 and his honorary professorship in 2004 from the University of Potsdam. Plattner had also received an honorary doctorate (1990) and an honorary professorship in Information Systems (1994) from the Saarland University, Saarbrücken. The same university named him an honorary senator in 1998.[12]”

So Hasso appears to have two honorary doctorates. Outside of these two honorary doctorates, Hasso does not appear in any other source to have his P.h.D listed. This is odd. I read many books and research papers from authors that have P.h.Ds and with each of these authors, it is a straightforward matter to find their P.h.Ds. That is the schools they attended, when they attended them and what the subject for which they attained their P.h.D. Yet, with Hasso, I can’t find this.

How Honorary P.h.D’s Work and Who Gets Them

Now lets us discuss the honorary P.h.D for a moment. Honorary P.h.Ds are given out like candy often for providing a commencement speech. The work involved in getting one is nothing, and they are usually given out to high-profile individuals. There is also an ethic involved with honorary P.h.Ds. That is, you are not supposed to pretend it is a real P.h.D. They are basically a joke P.h.D. Again, honorary P.h.D given for a commencement ceremony speech, real P.h.D can take 4 years to attain and only about 1 out of 140 people (in the US at least) to attain an undergraduate degree ever attain a P.h.D.

Moreover, this story gets better. This is because Hasso did not stop at pretending to have a P.h.D. He also decided to start an institute at the university close to his personal residence, the University of Potsdam.

However, how can a person who has never completed a P.h.D program start up a pseudo-mini-university? Its all a bit ridiculous. This is explained in the following quotation from Wikipedia.

“Also in 1998, Plattner founded the Hasso Plattner Institute[3] for software systems engineering based at the University of Potsdam, and in Palo Alto, California, its sole source of funding being the non-profit Hasso Plattner Foundation for Software Systems Engineering. Plattner has pledged €50 million of his personal fortune over a period of 20 years. Since its foundation, Plattner’s commitment to the HPI has quadrupled to over €200 million. He not only fully finances the HPI, but is also actively involved as a director and lecturer in Enterprise Platforms and Integration Concepts.[13]”

Again, the University of Potsdam also conferred upon him one of his honorary degrees. Obviously, the University of Potsdam benefits from having the Hasso Plattner Institute on their campus. Was this one of the motivating factors in conferring an honorary P.h.D. to Hasso Plattner?

A Fictitious Backstory from a Fictitious P.h.D?

The Hasso Plattner Institute is the location of yet another made up story by both Hasso and SAP where they created a deliberately false backstory to make it appear that Hasso and his P.h.D. candidates created a “whole new database,” which I previously covered in Did Hasso Plattner and His Ph.D. Students Invent HANA?

One of the major problems with HANA has been that it was designed in great part by Hasso Plattner, who was never qualified to design a database. This constant overestimation of knowledge is consistent with faking academic credentials.

Later he donated money to Stanford and they created the Hasso Plattner Institute of Design. SAP has used this to promote Fiori, repeatedly leveraging the Stanford name. Yet after the institute being created, and all the discussion around Design Thinking (which I covered in the article Does Design Thinking Improve SAP’s Implementation Speed?), the output of Fiori is underwhelming.

Falsified Academic Authority

Hasso, and SAP used his honorary degrees to communicate false authority for over a decade and a half. Neither Hasso nor SAP ever let on that Hasso’s degrees were honorary. I have been reading and analyzing Hasso Plattner’s writing and quotations for years, and find that he constantly lies and constantly pivots between topics which demonstrates an unstructured mind. This is the last person who would make a good P.h.D candidate. My analysis of Hasso Plattner’s writings is that he works backward from what he wants to be true, and makes up a story to fit the conclusion. That is sales, not academic thinking. I know whenever I read his material or watch his presentations that I can’t trust that any of it is true.

Ding Ding Ding

We award Hasso Plattner the Golden Pinocchio Award for claiming to have a real P.h.D when in fact he only holds honorary P.h.D.s. 

Conclusion

This honorary P.h.D issue is another case of both Hasso and SAP using deception to trick customers into thinking that there is some great mind behind SAP. And the trick worked. It worked on me. I never thought to actually look up Hasso Plattner’s educational credentials. Naively, I never thought that someone, particularly someone so well known would falsify his or her P.h.D by converting an honorary P.h.D to a real P.h.D.

If anyone can find Hasso Plattner’s academic doctoral credentials, send them to me the link to review. But as I said, it is very odd that they would not be easily found.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

SAP Contact Form

  • Want More Infomation on SAP?

    Our unbiased experts can deliver accurate research and honest advice on SAP.

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References

https://en.wikipedia.org/wiki/Hasso_Plattner#Education_and_research

The Importance of Knowing Your Place in the SAP Hierarchy

Executive Summary

  • SAP has created a hierarchy, which those in the SAP ecosystem are compelled to follow.
  • This ensures that information provided by SAP is unquestioned.

Introduction

The unrelenting nature of hierarchy is exceptionally well explored in the following quotation in a book I recently rediscovered.

“Social ladders exist precisely to keep you where you are. Thanks to them, everyone knows his place. Hens, for example, have a pecking order. The No. 1 hen can easily be spotted: she’s the only one no other hen pecks. But she does peck the others. Nos. 2, 3 and 4, and so on, down the line. A hen halfway down the hierarchy. No. 50 say, gets pecked by Nos. 1 to 49 and herself pecks Nos. 51 to 100. At least, it could work this way. But if a hen were really to peck all the other hends below here, she’d have no time to lay her eggs. A No. 1 hen that pecks all the other hends in the coop would soon be too tired to stay at the top. In reality, hen No. 1 only pecks those directly below her, and then No. 35 just worries about her immediate neighbors. Thanks to the ladder, you only need to worry about the rungs within reach; ladders exist precisely so that you can take small steps, not big ones. Such a system guarantees the stability of the group. Biologically speaking, the rungs of the hierarchy aren’t meant as steps upwards for the ambitious individual, but for the welfare of the whole group. Everyone should be happy, and is, except for the lowest rung. Because that’s the good part about this system: almost everyone, however many bosses he has above him, is himself the boss over others below him. Even if you’re only No. 95, you still have a higher status that Nos. 96, 97, 98, 99 and 100 – a status worth keeping — which is why Mr. Smith meekly accepts his boss’s harsh words. A ruler doesn’t need to divide in order to rule, the subjected divide themselves.” – The Way of All Flesh

Hierarchy in Technology

What can be surprising is that while information technology often seems like a relatively evolved space from the outside, the reality from inside often looks much different.

“In Accidental Empires, his classic book on the rise of PCs, Robert X. Cringely described Microsoft’s software management style when Bill Gates was in charge as a system where “Each level, from Gates on down, screams at the next, goading and humiliating them.” Ah, yes, that’s the Microsoft I knew and hated.

The difference between the leaders at big proprietary software companies and Torvalds is that he says everything in the open for the whole world to see. The others do it in private conference rooms. I’ve heard people claim that Torvalds would be fired in their company. Nope. He’d be right where he is now: on top of his programming world.”

How Hierarchy is an Integral Component to SAP and its Ecosystem

I debate a lot of SAP consultants and have I have been doing it for years. Even though my article covers technical topics, who are the most aggressive SAP consultants who debate me? It is illuminating because it is not technical SAP resources. Instead, it is SAP project managers, often self-described “project advisors.” That the resources furthest away from the technology. Furthest away from what is real. And there is something else that they bring along with their arguments, which is a sense of shock and bewilderment that I would critique what SAP has to say.

And there is a good reason for this.

To a project manager, there is a specific hierarchy that is to be respected. They see themselves as at the top of one of these hierarchies (that is they can peck all the hens at least on their own project). They may not be that high in the SAP hierarchy, but they still want to protect their place in the hierarchy that they have. They also know their place in the hierarchy. If a senior member from SAP appears on their project, or they meet them at TechEd, they know it is their role to genuflect and to become as close to them as possible. Whether one works for Accenture, IBM, SAP, ASUG, or any other related entity, the only way to do well in one’s career is to respect the hierarchy. And this respect means repeating false information from on high. Information delivered from on high is true, information that questions the information from on high must be false. It is a simple mechanism that removes all thought. There is little choice given to people.

Media Entities Questioning the Orthodoxy?

The media entities, which are ostensibly supposed to not respect this hierarchy end up also supporting the hierarchy as money flows from SAP (and other powerful entities) to the media entities. The objective is to make the hierarchy so all-encompassing that a rigid top-down control is enforced throughout the ecosystem.

Big monied interests don’t like independent media, they either want to own it (Salesforce recently purchased Time Magazine, AWS owns the Washinton Post), or control it. Independent media threatens the creation of a self-reinforcing echo chamber. This disdain for independent information is clear when one studies the topic of “corporate communications” which is how hierarchies propagandize their own employees by feeding them a steady stream of biased information right to their inboxes.

This is a map of a location where all of the undisputed information comes from. Information from this location is unassailable and no one outside of the hierarchy is to question it. This is a map of Waldorf, which is SAP’s headquarters……Or is it? 

Life in the SAP Kingdom

In the SAP Kingdom, information (pure truth) flows from the mouths of the top of the hierarchy. The “excellent sources of information,” or the providers of the cannon are Bill McDermott, Hasso Plattner, the SAP website, and the role of those in the SAP ecosystem is to agree with the revealed wisdom. The SAP consulting partners have demonstrated they will repeat absolutely anything SAP says, no matter how false. And unless a person has a similar level in the hierarchy, they are not to question this wisdom.

When Bill McDermott says that HANA runs 100,000 times faster than any other technology, while absurd, the SAP consultant knows very well to avert their eyes. The ability to propose ridiculous things, and to not be criticized is the embodiment of abusive power. But why limit the analysis of how power is abused to the software industry, in the subject of the abuse of power there is such a rich tapestry of examples to choose from.

It is curious about reading the website of Saudi Arabia’s 2030 vision website. The writing is essentially similar to SAP’s website. Did they use the same PR firm? We don’t know.

Within Saudi Arabia, it is important that one repeats whatever King Salman Bin Abdulaziz Al-Saud and Mohammed Bin Salman say. But the SAP ecosystem is not so repressive as and controlling in thought and as unaccepting of contradictory viewpoints as the one of the most repressive regimes on the planet.

Of course not. First, the clothing is entirely different. Pictures here these men at the top of the hierarchy wear a thobe with a bisht and then a headdress. People in the SAP ecosystem normally wear slacks and a button-down shirt.

Also, while being “Custodian of the Two Holy Mosques” is pretty good, being the “Custodian of in-memory computing” is actually much better.

Conclusion

Hierarchies that cannot be questioned are a primary way that falsehoods are promulgated in societies. This hierarchy ensures that the most corrupt at the tippy top of the hierarchy are not held to account for their frequently false statements. This particularly true of any individual within the hierarchy (who risks losing their job and their position in the hierarchy) by observing the obvious fact that the emperor often has no clothes. But it extends to outward from the “official” hierarchy to entities associated with the first hierarchy.

The coercive ability and lack of accountability of any hierarchy can be tested by how willing those that are part of the hierarchy can question, and publicly question, obviously false statements from the top of the hierarchy.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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References

Bill Gates deserves to be at the top of the hierarchy…..or did he? Where did DOS come from? What happens if Gary Kildall had not taken that plane trip that day?  

https://www.amazon.com/Way-All-Flesh-Romance-Ruins/dp/0374286825

https://www.computerworld.com/article/3004387/it-management/how-bad-a-boss-is-linus-torvalds.html

Enterprise Software Risk Book

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Rethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model

Enterprise Software Risk

See our free project risk estimators that are available per application. The provide a method of risk analysis that is not available from other sources.

The Giant Margins for SAP and Oracle Support

Executive Summary

  • SAP and Oracle have giant support margins that they hide from customers.
  • This support margin is the secret to understanding the revenue model of these two vendors.

Introduction

The SAP and Oracle revenue model is highly based upon support. SAP and Oracle have extremely similar support strategies and revenues models.

  • They both charge 22%+ per year for support and they both receive more than ½ of their revenues and the majority of their profits from support.
  • Both companies have roughly a 90% margin on their support.
  • Both companies have been removing value from their support and making the overall cost of support higher because more support services are pushed into premium packages.

Shhhhhh….Keep the Support Profit Margin a Secret

While SAP and Oracle report their support profit margin in their financials, they are very careful to not mention this support profit margin to customers. We performed a test and asked many of our readers who are both SAP and Oracle consultants or employees whether they would approve of the following text added to SAP and Oracle sales material.

“We Will Make a 90% Profit Margin on Your Support Contract.”

Curiously, no pro-SAP or pro-Oracle resources replied that they would endorse such an addition. More concerning is that many of these readers tout themselves as Oracle and SAP advisors, which implies they look out for their customers’ interests. Yet there seemed to be little appetite for informing customers regarding the support margin.

How Much of SAP’s and Oracle’s Profits are From Support?

Oracle’s numbers are pointed out by the following quote from Seeking Alpha.

“Oracle derives 52% of its revenues from maintenance. Those revenues have operating margins of 94%. The cloud accounts for 8% of revenues and has gross margins (gross not operating) of 48%.

By one calculation, Oracle’s support operating margins constitute more than 100% of the company’s operating profit.”

In fact, Oracle is so dependent upon its cloud revenues that Seeking Alpha declares the following:

“These revenues account for more than all of Oracle’s operating profits. (Maintenance revenues do not have sales and marketing costs, they are for the most part, automatically renewed, they do not have R&D costs and they have minimal G&A costs). Without the golden stream of maintenance revenues, there’s no stable, highly profitable and usually predictable Oracle. (emphasis added)”

Selling Software for Support Margins?

There is really no other way to say it, Oracle sells software to its customers to get support contracts and to overcharge customers on that support contract. (as does SAP). The secret to understanding SAP and Oracle’s model is found in the highly stable support profit stream.
Both rely heavily on outsourced support to very inexpensive and normally less experienced resources to India and other low-cost countries (many domestic support personnel have been long since fired or reassigned). And for both companies support is less and less helpful in supporting customers, particularly if premium support is not purchased. We have gone around and around with SAP on support tickets with beyond technical skills, the supporting individuals seem to lack English comprehension skills, leading to all manner of miscommunications.

Getting the Perpetual Run Around?

One of the most troubling things about SAP support is how issues are covered up, if they are embarrassing to SAP. As for Oracle’s support, if you need assistance on a Severity Two issue, you must ask to have your ticket escalated, or it will sit until the next ice age. Severity One? Escalate it. Moreover, if you don’t get back to support in short order, you will find your ticket closed. If you have a difficult problem watch support pass it around the globe by asking the same question and waiting for the answer, then letting it get picked up by the next shift. How about a problem with an engineered system? Well, the best move is to make some popcorn, sit on the phone with several support organizations and watch them play “pin the tail on the donkey.” What is often little discussed is how the configuration of SAP and Oracle support imposes unplanned costs on their customers. This topic is raised by 3rd party support provider Rimini Street.

“While support costs have continued to rise, the level of customer service you receive has steadily declined. When you contact vendor support about a problem, a junior-level tech might advise you to upgrade or implement a patch bundle that combines hundreds of other fixes. Before you know it, one small problem has morphed into a big project, with regression testing and downtime that costs a lot of money, time and resources. When you get back in touch with support, you’re unlikely to get access to experienced engineers unless you navigate a maze of escalations. Think about it: How long did you spend on the phone and how quickly was your issue resolved (if at all) the last time you called your software vendor’s support line?”

To be sure, Rimini Street is trying to sell 3rd party support, however, this quotation also conforms with our experiences on SAP and Oracle projects, as well as research in the area. Rimini Street highlights the many hours that SAP and Oracle customers engage in “call avoidance” and spend in researching issues before calling support and how this is a drain on IT departments.

“I used to spend hours researching case resolutions myself and was led around the world with vendor support depending on the time of day.” – City of Cuyahoga

Changing the Support Deal

We cover how Oracle and SAP have changed the “support deal” in the article How SAP and Oracle’s Stripped the Value from 22% Support. Essentially Oracle and SAP want support to be as close as possible to 100% profitable. In fact, most of SAP and Oracle’s profits come from support. Furthermore, according to Rimini Street only 1% of SAP support revenue is reinvested in enhancing existing software. ASUG, a user group, but also a marketing arm for SAP states that support should be used for acquisitions as we cover in ASUG’s Strange View of How SAP Support Fees Should be Used.

This is odd, because if SAP uses income from the support stream to make an acquisition, it means that customer is paying for SAP to buy applications that the customer most likely does not own. Therefore, how does this acquisition benefit the customer?

Throwing Away Money on Support

Customers have been throwing their money away on support, seeing it as an automated locked in cost. However, the 3rd party support firm Rimini Street has spent much time explaining to customers how they can cut their support in ½ by dropping Oracle and SAP support and using their third-party support. For a long time, customers of Oracle and SAP were more difficult to budge. However, as pointed out by Seeking Alpha, this is increasingly changing.

“Until now, the company did not face real challenges in its installed base. Applications had long lives and the databases that they ran on were considered part of the furniture. Renewals came automatically and since maintenance revenues are based on the total number of seats installed, the golden stream of revenues grew every year.”

But while there is some change, the margins in SAP and Oracle’s support indicates that there is still very little competition in the support space for these two vendors.

Conclusion

Even though SAP and Oracle’s software is very expensive, they currently only make a profit on support. They aim for 100% profit but fall short — so in the high 80% and low 90%. They do not use that revenue to reinvest in very much in the way of software development, and they have shrunken costs enormously in order to maintain the profitability levels in support that they do have.

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  • Have Questions About SAP Indirect Access and Licensing?

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References

https://seekingalpha.com/article/3965635-oracle-might-eating-porridge

https://www.riministreet.com/Documents/Collateral/Rimini-Street-eBook-10-Telltale-Signs-Change-Database-Strategy.pdf

TCO Book

TCO3

Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making

Getting to the Detail of TCO

One aspect of making a software purchasing decision is to compare the Total Cost of Ownership, or TCO, of the applications under consideration: what will the software cost you over its lifespan? But most companies don’t understand what dollar amounts to include in the TCO analysis or where to source these figures, or, if using TCO studies produced by consulting and IT analyst firms, how the TCO amounts were calculated and how to compare TCO across applications.

The Mechanics of TCO

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • Understand why you need to look at TCO and not just ROI when making your purchasing decision.
  • Discover how an application, which at first glance may seem inexpensive when compared to its competition, could end up being more costly in the long run.
  • Gain an in-depth understanding of the cost, categories to include in an accurate and complete TCO analysis.
  • Learn why ERP systems are not a significant investment, based on their TCO.
  • Find out how to recognize and avoid superficial, incomplete or incorrect TCO analyses that could negatively impact your software purchase decision.
  • Appreciate the importance and cost-effectiveness of a TCO audit.
  • Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
Chapters
  • Chapter 1:  Introduction
  • Chapter 2:  The Basics of TCO
  • Chapter 3:  The State of Enterprise TCO
  • Chapter 4:  ERP: The Multi-Billion Dollar TCO Analysis Failure
  • Chapter 5:  The TCO Method Used by Software Decisions
  • Chapter 6:  Using TCO for Better Decision Making

How Much of Customers’ SAP Customer Code is Used?

Executive Summary

  • SAP constantly tells customers to get rid o their custom code and to use SAP standard functionality. This old point has been brought up again with S/4HANA.
  • How much of customers’ custom code is actually used by customers?

Introduction

SAP proposes that very few custom coded objects for SAP systems are actually used. SAP has proposed that for companies that plan to implement S/4HANA, that the custom code is evaluated for removal. This has been a long-term strategy by SAP to get customers to use standard functionality, the problem being, SAP is always sold with the amount of functionality that will meet the customers being overstated, which we covered in the article How to Understand the Overamapping of ERP to Functionality.This leads to the question of how much custom code in SAP systems is relied upon by customers.

SAP Nation 2.0 on the Percentage

The book from SAP Nation 2.0 provides an explanation of how much custom code is used.

“According to Panaya, a tool vendor, “Our data shows approximately 50 percent of customers use 60 percent or less of their custom code. Being able to easily identify which parts of that code can be safety cleaned from the system can help reduce the future cost of such upgrades.“”

That is no the level of code used by customers communicated by SAP, which attempts to make the percentage utilized seem far less.

Conclusion

The fact is, that SAP customers do not think the latest versions of ECC are worth the time and expense to upgrade. Furthermore, many customers that do upgrade, would not have if they had fully accounted for the costs. One cannot listen to either SAP or to SAP consulting companies for objective advice as to whether to upgrade, as both entities make money from the upgrade process.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

SAP Contact Form

  • Want More Infomation on SAP?

    Our unbiased experts can deliver accurate research and honest advice on SAP.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

*https://www.amazon.com/SAP-Nation-2-0-empire-disarray-ebook/dp/B013F5BKJQ

Enterprise Software Risk Book

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Rethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model

How Long Until SAP Customers Adopt ERP Upgrades?

Executive Summary

  • SAP likes customers to upgrade their ERP software as soon as possible as this maximizes SAP and their consulting partner’s revenues.
  • The actual update lag is quite surprising.

Introduction

In SAP upgrades are major expense items for a company. This is explained by Rimini Street in the following graphic.

This cost to upgrade is nearly always dramatically underestimated by IT departments. This is because the costs are hidden in the ERP budget.

The Cost and Effort of Upgrades

Cost is one reason that SAP ERP customers upgrade far less than is generally understood, and wait far longer to upgrade. Another reason is the overall disruption to IT, and to sometimes the business. The book SAP Nation 2.0 provides the following explanation for the lag in adoption of the latest version.

“Not all customers adopt every new SAP version. Even the most adopted EHP 4 research a peak adoption rate of approximately 35 percent, and three years after becoming generally available (GA). The time it takes a new version to reach peak adoption is approximately 18-24 months after GA. In addition, we can see that EHP 7 (the latest version, and the required version to support Business Suite on HANA as well as Fiori), has a steeper adoption rate and has the potential to become the most adopted version. Unlike Android or mobile applications, the expected upswing in ERP adoption is measured in years, not months.”

Conclusion

The fact is, that SAP customers do not think the latest versions of ECC are worth the time and expense to upgrade. Furthermore, many customers that do upgrade, would not have if they had fully accounted for the costs. One cannot listen to either SAP or to SAP consulting companies for objective advice as to whether to upgrade, as both entities make money from the upgrade process.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

SAP Contact Form

  • Want More Infomation on SAP?

    Our unbiased experts can deliver accurate research and honest advice on SAP.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

*https://www.amazon.com/SAP-Nation-2-0-empire-disarray-ebook/dp/B013F5BKJQ

Enterprise Software Risk Book

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Rethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model