SAP Has Twice as Many Cloud ERP Customers as Oracle SAP co-CEO Christian Klein

SAP Has Twice as Many Cloud ERP Customers as Oracle SAP      co-CEO Christian Klein

SAP is decisively outperforming rival Oracle in cloud ERP as business customers are demanding intelligent end-to-end cloud solutions fusing HCM, procurement, spend management and other formerly siloed processes, SAP co-CEO Christian Klein said in an exclusive Cloud Wars interview.

While KlSAP Has Twice as Many Cloud ERP Customers as Oracle SAP co-CEO Christian Kleinein’s perspectives on customer momentum in the red-hot cloud ERP marketplace are certainly intriguing, the even larger issue is how rapidly business leaders are demanding end-to-end solutions that obliterate operational silos and make all data accessible.

Because that’s the only viable approach in today’s age of digital business.

In the first of a 2-part series on the unique perspectives of SAP co-CEOs Klein and Jennifer Morgan, I’m briefly setting aside our ongoing coverage of the COVID-19 crisis to offer some insights into what will be happening in the business world as that crisis eventually eases.

Tomorrow, we’ll explore some recent comments made by co-CEO Morgan in a recent appearance on Jim Cramer’s Mad Money show.

“ERP is not just a back-end solution.”

In a recent phone conversation, Klein said the shifting mindsets of CEOs that was starting to take place even before the coronavirus outbreak has only accelerated since then.

“I talk to many CEOs and they are saying that now it is even more important to transform into an intelligent enterprise. And many companies are realizing that these days when you talk about ERP, it is much more than ‘back office’,” Klein said.

“With the crisis, CEOs are saying, ‘Can you help us double down on our supply-chain project? How can I transform my supply chain with SAP to have the end-to-end transparency? How can you infuse AI so that my supply chain is better at predicting demand and ensuring that its aligned with the supplies I have in procurement, in inventory, and in production?’

“And they also ask, ‘Can you also help me make my procurement processes more intelligent to detect—and not only in this crisis—if a supplier is not going to be able to meet a deadline to deliver the necessary parts for production’?” Klein said.

“So this crisis has given us an opportunity to show that ERP is not just a back-end solution.”

Preparing for economic recovery

Let me quickly interject a comment about the subject matter of this article and the perspective Klein is offering. Klein and all of SAP, as well as our team here at Cloud Wars, share the concerns of everyone on Earth about the deadly serious nature of the COVID-19 crisis.

SAP co-CEOs Klein and Morgan have spoken early and often about the crisis and its widespread impact, typified by their letter outlined on Cloud Wars in As COVID-19 Rages, Microsoft & SAP CEOs Share Messages of Gratitude, Empathy, Hope.

And here at Cloud Wars, for the past 3 weeks I’ve devoted extensive coverage to the ways in which the world’s leading tech companies are responding to the pandemic.

But we all know that behind this nightmare, businesses are desperately struggling to find, as Klein described, new and better ways of operating during this crisis. Ways that can be optimized for the global economic recovery afterward. And as the crisis progresses, I will be weaving in analyses of current comments from CEOs, such as this conversation with Klein, to help us all be better informed when recovery arrives.

In today’s chaotic times as well as when the recovery takes hold, business executives will be looking to make rapid decisions backed by the most complete, timely and wide-ranging data. Klein is confident that SAP’s aggressive moves to integrate its various LOB solutions within S/4HANA Cloud will make that possible.

Making the move to the cloud simpler

“When you buy SAP for HR and S/4HANA, you expect them to work right out of the box without needing any custom integration, and we’ve doubled down on that,” Klein said.

“With Success Factors we’ve already made the necessary progress. Ariba [buyer-seller network] will follow, then Concur will come along this year and also the CPQ solutions for ‘cash-to-quote.’ And then Call id us will be tightly integrated as well with S/4HANA Cloud.”

When those integrations are complete, Klein is betting that customers won’t be the only beneficiaries.

“And then suddenly we will also see much more cross-sell opportunities,” he said.

“We still have a lot of HCM on-premises customers where HCM was embedded in our on-premises ERP system. And now they have a real shot at migrating to S/4 HANA Cloud because they get the same kind of integration but also in a modular way.”

That dynamic shines a very bright light on some things happening in the real world in real time:

  • business customers want single and deeply integrated views of their operations, sales, inventories, finances, and particularly of their customers and employees plus the experiences both are having; and
  • new and rapidly evolving marketplace realities trigger significant changes in traditional enterprise applications: what they are, what they include, how they work, what they deliver and how they work together.

So what ML-powered ERP solutions are and what they can do here in mid-2020 are wildly different than they were just 2 or 3 years ago. And that evolutionary gap is only increasing—and rapidly so.

“We are building the Intelligent Enterprise.”

From Klein’s perspective, those modern-day realities are driving a new math that supports his contention that right here and right now, SAP has about twice as many broadly defined cloud ERP customers as Oracle has.

“When you compare our current number of 2,300 cloud ERP customers against another vendor that is saying they have close to 7,000, you have to be careful. That’s not really always comparing apples to apples because we are building the Intelligent Enterprise,” Klein said.

“For example, our Success Factors ‘hire to retire’ solutions are now seamlessly integrated into S/4HANA Cloud.

“And I know for example that Oracle is counting HR into Fusion ERP and they are counting Procurement into that number as well.”

In turn, SAP will fully integrate its Ariba solutions into S/4HANA Cloud this quarter. That will give S/4HANA Cloud a complete “procure to pay” solution as standard. So by including Ariba customers for procurement and Success Factors customers for HCM into the aggregate count for S/4HANA Cloud customers, SAP becomes the category king, Klein says.

“So if we count in only these two solutions, which are definitely part of this broader ERP definition, then, without sharing the exact number, you can assume that we have almost twice as many ERP customers” as Oracle has, Klein said.

Letting customers pick and choose among modular solutions

For SAP’s customers, of course, the issue is not so much about ERP market-share battles as it is about optimizing business operations and opportunities for the digital economy.

“We don’t want to build again this monolith like we had in the on-premises days,” Klein said with a clear sense of urgency.

“We want to offer our solutions modularly where customers can pick and choose: you can start with HR, you can start with Finance, and over time you can expand your cloud ERP module by module. It’s extremely important that we give our customers this ability to go step by step into the cloud.”

That’s essential today as companies evaluate new applications but eagerly construct new business models requiring new processes, new skills, new types of operation, and modern cloud applications that can manage the real-time pace and demands of digital business.

“I had a conversation this morning with a big customer in Japan and we talked about something we’re seeing a lot in the digital age,” Klein told me. “In the past, this customer sold a lot of products but now he’s turning his business more and more into selling services by pay-as-you-go and by selling it consumption-based. And these new business models we can now fully cover today with S/4HANA because we are constantly embedding more and more AI into the processes to drive automation and to increase the intelligence to share, for example, supply chain with procurement.”

Thomas Saueressig: “SAP will co-innovate with partners.”

SAP executive board member Thomas Saueressig, who leads product engineering for the company and has global responsibility for all business applications, participated in the phone conversation I had with Klein. Afterwards, Saueressig offered some followup thoughts via email in response to questions I sent.

In particular, I asked Saueressig to expand on some of the ways that SAP is helping its customers around the world adapt to the rapidly changing demands from their customers and develop new business models to handle that new reality.

“In the digital age, the business models of many industries are changing,” Saueressig wrote. “Our customers want SAP to drive more vertical industry-specific processes in the Cloud seamlessly integrated with SAP’s core solutions.”

The first step to address that desire from customers is for SAP to “co-innovate with some of our largest customers in each industry.” Saueressig described this as the company’s “overarching guiding principle” for delivering optimal business outcomes.

“Take for example the manufacturing process in the automotive industry. SAP is the market leader in the centralized horizontal process for supply chain and manufacturing,” he wrote.

“Therefore we believe SAP has the right to win in centralized vertical processes such as Automotive Modular Assembly due to tight integration with the horizontal layer and data. On top of that, for the edge processes, the human-machine interface, and for device connectivity, SAP will co-innovate with partners to deliver an end-to-end comprehensive vertical solution.”

SAP and Qualtrics “help organizations listen, understand and act.”

In another emerging category for SAP, Saueressig also described the ways in which the combination of SAP’s core applications plus its relatively new Qualtrics experience-management (XM) solutions are giving businesses new insights no other tech vendor can match.

“It’s all about closing the experience gap for customers,” he wrote in his email reply. “Together, SAP and Qualtrics deliver a unique end-to-end experience and operational management system to help organizations listen, understand and act. For example, XM:

  • “makes it easier for organizations to listen with the data collected from customers, employees and other stakeholders
  • gives organizations powerful analytics to help them understand why things are happening and spot hidden trends;
  • allows experience data to combine with operational data to provide the context that allows organizations to make decisions and focus on the actions that will drive the biggest impact; and
  • allows organizations to make continuous improvements by embedding X-data directly into the operational systems and tools that employees already use. It democratizes the ability for every employee to collect, analyze, and take action on X-data.”