HFS Highlight: Can SAP RISE to the cloud/HANA/Business Transformation challenge?

Sometimes it is prudent to write research notes not right at the time when industry events are happening. When reading the announcement about RISE with SAP that is meant to be “bundling everything companies need to holistically transform their business with a fast time to value” and positioning it as Business Transformation as a Service, invariably all the discussions we at HFS have with our clients jumped to mind. And those are pointing pretty much to the opposite of having a holistic offering or even offering it as a service. Transformation is about culture, people, and processes. More than anything else it is a journey. Thus, the suspicion is that SAP’s marketing has gone in overdrive by positioning it as as-a-Service. As the announcement coincided with the acquisition of Signavio and Process Intelligence was called out as a central building block for that transformation offering, the timing of the announcement was even more surprising as acquisitions need time to be integrated. With that in mind let’s peel the onion back and assess what the challenges for SAP are and how the announcement fits into the broader transformation agenda. 

SAP’s transformation continues to stutter 

SAP’s challenges in moving its offerings to the cloud and the new world of HANA are well documented. In the most recent Q4, 2020 earnings call SAP stated that of its more than 400.000 customers 16.000 have moved to S/4 HANA. However, tellingly SAP gave in to customer demands and agreed to an extension of the ‘2025’ deadline for a maintenance cut–off for SAP ERP 6.0 and other key modules. Which is the strongest indicator for slow migrations. Because customers remain coy about the robustness of the new platform, the challenges for data migration, but also the long duration, risks, and consequently cost of the migration. More fundamentally though there is a bigger question mark on the relevance of what used to be ERP. We have been very vocal about the building blocks that are essential to accelerate the journey toward the OneOffice or the Intelligent Enterprise in SAP’s jargon. It is not about one platform but the integration and orchestration of disparate sets of process and automation capabilities If anything, organizations vary about vendor lock-in. This summarizes the context for RISE. In essence, it is an industrialized migration approach to assure that SAP’s installed base is not switching to competing approaches of accelerating their transformation journey. 

Peeking under the hood of RISE 

The latter becomes abundantly clear when looking at the details of the initiative. SAP’s marketing puts out the carrot of “one offer, one contract” to clients as they allegedly get everything they need to simplify their transformation journey in one bundle, without high upfront investments. Yet, as discussed it has gotten out the stick of cutting off maintenance for legacy versions as well. But back to the carrot, the allure is to manage their SLAs, operations, and issue management from SAP in a single contract. Undoubtedly, this brings up the issue of vendor lock-in yet again but also the relationship with SAP’s partner. While the answers to those questions would go beyond the scope of this report, let’ take a closer look at the constituent parts of RISE: 

• Business Process Intelligence: streamlining and automating tasks and get data on what is working and what broke across the process landscape. HFS has analyzed in detail the impact that the acquisition of Signavio will have on SAP and the broader market 
• Embedded tools and services: a set of preparational, analytical, and enabling tools and services to facilitate a seamless transition from the client’s current ERP environment 
• SAP Business Network Starter Pack: expanding transformation to broader ecosystems. For instance, seamless collaboration with suppliers, connecting with shippers and carriers or connecting and sharing asset usage information
• SAP S/4HANA Cloud: Next generation of SAP’s core offering. Includes Embedded AI, analytics, and intelligent process automation. For example, providing code analysis tools that allow customers to inspect their modifications to accelerate migrations. Leveraging In-memory database and simplified data model 
• Infrastructure as a service (IaaS): Modular deployment options for an SAP-hosted or Hyperscaler approach to deliver IaaS.  

On the earnings call SAP stated that they have started with 20 pilots of RISE, and we have heard from one of their partners that they have already signed the first contract. 

Is the RISE the new Leonardo? 

Much of the narrative of RISE provides a déjà vu experience. Because we have been here with Leonardo before. Leonardo was meant to be the magical glue and catalyst to nudge clients toward the promised land of SAP’s vision of the Intelligent Enterprise. It did morph from an initial IoT focus to a much broader but equally more obfuscated AI focus. But it fundamentally lacked a demonstration of outcomes and proof-points that were relevant to clients‘ process transformation. And HANA was already then the cornerstone to accelerate clients progressing toward the process nirvana. Within the context of the RISE announcement, Leonardo was conspicuously absent. Thus, as an industry we need the reference points that RISE is not yet another example of repackaging existing capabilities with marketing shamelessly overpromising outcomes. 

As a brand RISE can provide a catalyst to re-energize partner channel 

Beyond our raised eyebrows on their noisy marketing, the most notable point of the announcement were the strong endorsements by SAP‘s leading channel partner. The strong commitment to its partners and the resulting ecosystem is one of the biggest assets that SAP brings to its clients. By offering their partners new tools and assets to re-engage around HANA, underpinned by a refreshed branding, SAP might kick start sluggish migrations. One point that shouldn’t be underestimated is that deploying SAP is like pouring concrete into your house. You won’t move house anytime soon. While clients might not abandon SAP, they might not follow the cross and upsell dreams that Walldorf has in mind. And with that, we are full circle back to the criticism by investors on the slow progress toward the cloud. 

The Bottom Line: Business Transformation as a Service is just marketing fluff. Now SAP must demonstrate the benefits of RISE for clients moving toward the Intelligent Enterprise 

Even with the benefit of hindsight, the term Business Transformation as a Service is not getting any better. Yet, RISE provides SAP with the opportunity to re-engage with clients around HANA. Signavio like Contextor before won’t be a magical wand to convince clients to take the plunge with HANA. Thus far, SAP has failed to be perceived as a leading player in Intelligent Automation. To change that, you need more than marketing.