SAP's Simplicity Push Is Not So Simple

The Company

SAP AG

Headquarters: Walldorf, Germany

Employees: 67,700

2013 Revenue: $23.15 billion

CEO: Bill McDermott

What They Do: SAP is best known for its on-premise ERP applications, which businesses around the world use to run their operations. During the past few years, SAP has been focusing its software development efforts on Hana, an in-memory computing platform, and investing heavily in software as a service.

The Pitch

SAP has long grappled with the side effects of its software being perceived as both sophisticated enough to meet the specific needs of almost any company but also complex, expensive and unwieldy.

Under CEO Bill McDermott, SAP is pledging to make both its software and its customer-interaction processes simpler. At the Sapphire conference in June, McDermott unveiled Simple Finance, one of a planned series of Hana-powered ERP applications that use the Hana in-memory computing platform and other technologies to slim down the code base and make the user interface more appealing and productive.

Hana is attached to everything we have, McDermott said in a recent interview.

Like rival Oracle, SAP is in a transition period as its customers, who traditionally bought perpetual licenses for on-premise deployments, look to adopt cloud-based software that is sold by subscription.

The Catch

SAP may need to fine-tune its pledge for more simplicity, says independent analyst Jon Reed. SAP used to sell so much software based on its completeness of functionality, Reed says. But a products sheer depth of features is declining in importance as enterprise software buyers adopt newer, more specialized cloud applications. Nevertheless, SAP customers still want the company to cater to their specific industry needs.

The more crucial task for SAP is to make doing business with it easier, and that work is far from done, Reed says. SAP at Sapphire put out simplicity as a leadership mantra: Were going to lead you to a simple future, he says. Its a challenge for SAP to live up to. When I hear customers tell me how simple and easy it is to deal with SAP, Ill get on board.

SAPs message of simplicity is a good story for customers, says Marco Lenck, chairman of DSAG, a German SAP user group. This is the right direction for customers, but it takes investment in terms of time, knowledge and money to get there.

One CIO of an SAP shop agrees. Simple is really hard, says David Wascom, CIO of Summit Electric Supply and a board member of the Americas SAP Users Group, because all the steps that have to take place in your business dont go away.

The Score

Wascom says that he is seeing some signs of improvement lately from SAP, but hes hoping for more. One of the biggest challenges I have as a business executive is not how to get SAP to give me some particular piece of functionality, he says. The challenge is managing the risk of my SAP investment. To that end, SAP should improve customers visibility into its product road maps, Wascom says.

While committed to SAP technology, Wascom offered cautionary advice to any fellow CIOs who are considering the companys products.

The big message is that SAP, among the platforms Ive looked at, is the most powerful and most flexible to meet whatever your business needs are, he says. But with great power comes great complexity. Its not like installing Microsoft Word.

SAP would benefit from having simplicity ombudspeople who would guide customers through difficult software migrations and improve the entire customer experience, says independent analyst China Martens.

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