SAP must make things easier for clients

Nuremberg — Business software group SAP should be more responsive in meeting the needs of its customers as they make the transition to the digital era, the user community in its home market Germany said on Tuesday.

SAP, the world's leading provider of enterprise applications ranging from finance to supply-chain logistics, is pushing to offer more cloud-based services via subscription as it winds down its old licence-based model.

Yet customers in Germany, which accounts for 15% of total sales, say SAP is not providing enough guidance on how to execute their digital strategy, while upgrading to its premium cloud-based database, S/4HANA, remains challenging.

“SAP must provide an out-of-the-box solution without customers having to do their own development work,” Marco Lenck, head of the German-speaking SAP User Group (DSAG), told its annual congress in Nuremberg.

Presenting the results of a survey of DSAG members, Lenck said only a quarter felt well-informed by SAP about digital strategy; 45% partly so; while 30% lacked confidence in SAP's guidance.

The feedback comes after SAP CEO Bill McDermott called time on a series of acquisitions that, critics said, left Europe's most valuable technology company saddled with a collection of apps rather than a genuinely integrated proposition.

McDermott announced a restructuring in January to reduce 4,400 jobs, and in April launched an efficiency drive to expand operating margins by five percentage points to the end of 2023.

That announcement, which coincided with the disclosure of an investment by activist investor Elliott, boosted SAP's shares to a record high.

Yet weaker second-quarter results raised new doubts that the strategy overhaul was on track, and SAP shares are trading 14% below their July peak.

The DSAG said the company needed to offer better integration, unified data standards, broader and more stable functionality and more scalable solutions.

Installations of the S/4HANA database were going slowly, it added, while SAP's C/4HANA marketing suite was less popular than rival brands and needed to be better integrated.

“We need a business model for scalable performance and costs,” said Lenck. “That's what distinguishes cloud solutions. That's what the market offers. And that's what we expect from SAP.” 

Reuters