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Amid turmoil, questions loom for SAP at Sapphire

Chris Kanaracus | May 15, 2014
You could look at SAP's recent flurry of eye-opening news -- high-profile executive departures, reorganizations and most recently, a layoff announcement -- as a negative thing, given they come just weeks before the company's big Sapphire conference in Orlando.

Wang echoed the thought. "He's got to talk about the new talent that's been hidden in the ranks and how they are being surfaced after the layoffs," he said.

At least one user group head expressed confidence in the personnel changes SAP is making.

Sikka's departure from SAP was "really surprising," said Marco Lenck, chairman of DSAG (German-speaking SAP User Group), which represents customers in Germany, Austria and Switzerland. "We worked closely together with him. I really regret he is leaving SAP."

On the other hand, with Leukert SAP has appointed a "very, very experienced person" to replace Sikka, Lenck said. Leukert not only knows how to develop application software, he understands deeply how many different types of customers use SAP in their businesses, he added.

Overall, the executive board changes are good ones, according to Leukert. "We feel comfortable they'll represent our needs as a user group."

Product watch: "In downsizing personnel, is SAP also likely to sunset some products — if so, clear indications are needed as soon as possible," said independent enterprise software analyst China Martens, via email.

It will also be interesting to see whether product lines that have stood in the shadow of Hana, such as SAP's mobility assets, will figure more broadly in its road map messages at Sapphire.

It's expected that Leukert's leadership will bring about a bigger focus on new applications that are powered by Hana, versus talk of Hana's performance and position as a platform. While SAP has publicly assured that Hana remains a huge part of its future, Sapphire could reveal how much those plans are about to change.

Different constituencies: "I think in general, the questions customers need answered at Sapphire vary somewhat depending on the size of the company," Martens said.

Global enterprises that engage in "co-innovation" with SAP tend to have relationships with C-level executives at the company, she said. "They will require reassurance about who their corporate champion is — if that individual is no longer with SAP. They need to know they still do have influence over SAP regarding technology direction, specific (often industry-focused) functionality, and pricing negotiations."

Smaller and midsized companies "urgently require SAP to talk directly to them about strategy, road maps, and pricing," Martens said. "These are the firms that are at most at risk of migrating away."

Don't forget the core: SAP has been focusing the bulk of its marketing efforts around cloud-based software of late, both concerning applications and how Hana will be moved into the technical picture.

Sapphire will undoubtedly place plenty of emphasis on the latest and greatest.

But while SAP customers are starting to use more cloud products, the vendor's "bread-and-butter" remains its on-premises ERP business, which provides "the backbone" of many enterprises, Lenck said. It's important for SAP to make sure its cloud products can be combined with on-premises software in an effective manner, he added.

There's indeed a division among SAP customers over moving to the cloud, Martens said. Sapphire could be a time for SAP to tell them about hybrid deployment models, cloud migration programs and pricing deals.


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