Will the promise of AI to lead to a Pivot on SAP RISE mandate?

The desire for Wall Street capital is influencing SAP product strategy, will the promise of AI encourage SAP to move away from the SAP RISE mandate.

The business case for S/4HANA, coupled with widespread confusion for SAP RISE among customers, and perhaps global macro conditions, has resulted in a sluggish adoption of the latest bundle offering from SAP. Can AI technology reinvigorate SAP's momentum and product strategy?

I have spent the majority of my career in SAP, starting in the early days in BASIS and infrastructure. Over the years, I have witnessed both successful and unsuccessful solutions emerge around the SAP platform. To name a few, there was a plan for Java to replace ABAP, and they even ventured into building SAP cloud data centers. They did succeed in the mainstream adoption of their own in-memory database, SAP HANA.

Looking at the hits and misses, a common element emerges: these were changes driven by technology. The motivation behind these changes was rooted in the belief that customers would benefit from adopting the technology, making the effort worthwhile. The idea I assume is that by giving customers a technological advantage through the SAP software platform, SAP would establish a reputation for innovation and being at the forefront of technology, while also maintaining its position as the world's best ERP software solution.

Fast forward to today, where running S/4HANA and utilising the latest business solutions from SAP requires running on SAP RISE. Christian Klein made clear that this bundled cloud offering is the solution for all customers and eliminated the option for on-premise customers to participate in future innovations.

SAP RISE - A Far From Ideal Platform

It’s not the first time SAP have told us we must do something, but something is missing in SAP RISE that other mandates had. Namely, the underlying technological advantage driving the mandate. While the technology value may not be that clear, it is certainly reasonable to think of the advantage SAP get with their ‘Cloud Company’ agenda. Ok, you can choose your cloud partner and that’s very nice (thank you SAP) but underneath the SAP RISE label is a lowest common denominator, template driven and obfuscated cloud architecture. This is so it can run in a common pattern across all of the major cloud players, largely negating the native optionality and capability that you get when choosing and designing directly. Furthermore, SAP RISE is rather inflexible and bad for budgets (and carbon emissions *) with its ‘always on’ approach to server provisioning. Its design is lacking automated HA. Speaking with many SAP RISE customers and you hear about slow process to change, procure and deploy additional systems and expensive to change on the go. You have very little privilege or optionality on what is a very wide spread of technology potential. Not very ‘cloud’ by any measure, not from an infrastructure view at least. Furthermore, the impact of its ‘my way or the highway’ approach to design is limiting to enterprise wide strategies such as Disaster Recovery and security constructs. Not to forget that people naturally want options that align to their strategy. Many working with a limited budget want the cheapest and easiest option whereas others want the best option available and the commercial SLA is not good enough, automated HA is a fundamental. Some want to run an N-1 strategy and keep change minimal and some want an N+1 and move ahead of the pack. Simply taking these options away and deploying on cloud infrastructure does not make a cloud ‘product’.

That’s a reasonable laundry list of issues and I do need to be clear, these shortcomings may not impact everyone and for many SAP RISE will be the right choice. But positing that SAP RISE is the right solution for every single customer is big a leap. S/4HANA was not designed to be a cloud native solution and the footprint, breadth and criticality of the ERP is not naturally aligned to be treated as such.

Will Wall Streets Love of AI See Things Change?

Now to my hopes for SAP around AI and the possibility that Wall Street can wag the dog in the right direction.

When Microsoft announced its AI co-pilot for Office 365 their shares shot to an all time high, and with good reason. Microsoft has the dominant footprint in the realm of end user productivity tools and the promise of productivity improvements on a very real AI capability is compelling. SAP recently announced Joule and while it’s a very new offering and no doubt delivered in a rush to ‘get in the AI game’, it’s clear that SAP see the same potential for enterprise and will invest their effort and energy bringing new AI capabilities to bare.

Being a mission critical product that it is, SAP have a massively envious position across their customer base where their solution is entrenched and pivotal tool to a companies daily operations. Their extensive knowledge in diverse global business processes, combined with insights gained through long standing customer relationships at the core of the worlds best companies is simply unmatched.

Shortcomings Aside, SAP RISE is a Hurdle

SAP RISE as a pre-requisite for any new product innovation, let alone AI, simply creates an unnecessary hurdle with a far more complex business case. Migrating to S/4HANA (on my own terms) with the compelling motivation to adopt native SAP AI solutions in my own time and pace is vastly more attractive and straightforward than the unpack of how a complete change to the operating model with SAP RISE is going to impact the company.

SAP have the luxury and advantage to leverage the collective knowledge of their long-standing and embedded customer deployments as a base for its AI learning and no shortage of partners ready to invest in building solutions around the SAP core.

If SAP allows customers the choices they desire to make and leverages their customer incumbency in a healthy way for the purpose of innovation and delivering business advantage I believe a faster alignment on business case approvals will follow. Provide a roadmap showing AI productivity benefits built into already proven modules on S/4 and you are adding quick check marks to the executive agenda further propelling the business case.

The strategy is familiar, producing a unified and integrated software solution that delivers incremental business over is lifecycle with capabilities essential for customers to operate in the modern business-scape. Sounds an awful lot like what made SAP the dominating ERP it is today.

Wall Street Will Still Love You

As we have seen, if they do revoke the restriction for SAP RISE it would not the first time SAP has changed direction on a mandated technology, ultimately leading to a better outcome for the customer. There is a lot to prove out, but the opportunity is there for SAP. The advent of AI brings the window of time for SAP to pivot their stance and re-invigorate themselves by reconsidering the impact of forcing SAP RISE and shifting their goal from cloud company, to that of an Enterprise AI company. Possibly, the worlds leading Enterprise AI company?

* More to come on the environmental impact of SAP and Cloud Vendors in a later post.