Executive interview: Juergen Mueller on SAP’s tech strategy

German software giant SAP is entering a new phase of growth fuelled by emerging technologies such as cloud computing, microservices and machine learning.

Its cloud business is doing well, making up one-third of its business globally last year, while enterprises are warming up to its next-generation S/4 Hana enterprise resource planning (ERP) software.

There is still more work to do in areas such as integrating products that SAP has acquired over the years and laying the foundation for future ERP software that could well be delivered as bundles of microservices.

In an exclusive interview with Computer Weekly, Juergen Mueller, SAP’s chief technology officer and member of its executive board, offers a glimpse into the company’s technology strategy, including its approach to microservices, product integration and the use of artificial intelligence (AI).

During the interview, Peter Moore, general manager for platform and technologies at SAP Asia-Pacific Japan, also weighed in on how SAP partners in the region are responding to the company’s integration efforts.

SAP has a very broad cloud portfolio – can you give me a sense of where the growth in the cloud is?

Mueller: I would divide that into two kinds of customers – those who are already using cloud-based solutions like Ariba, Concur and SuccessFactors, as well as ERP, much of which remains on-premise. We’re trying to get those customers on the Rise with SAP programme, which is driving our plan to triple our cloud revenues by 2025. There’s also analytics, integrated planning and the supply chain management aspects of ERP.

What is interesting with ERP is that we are picking up a lot of new customers. If you look at the ERP market, it’s still not penetrated very well in the cloud. In particular, many customers are making decisions on S/4 Hana, which is getting a lot of traction.

There is still some ongoing work involved to integrate different SAP applications as well. Could you provide an update on how that is going?

Mueller: We are very transparent about the progress of our integrations. The good thing is customers are going live with many SAP solutions now. One of our largest customers, Orica, wanted to go all-in with SAP three years ago, but discovered there is a lot of integration work to do. We invited their CIO to our internal developer conference, and she showed an architecture diagram of all the things that had to be done. Half a year ago, they went live with over 20 different SAP solutions and the integrations work fine. Today, SAP solutions are more integrated than ever before.

Integration is a continuous exercise across our huge portfolio. It will not go away for the next few years. Last year, we delivered over 350 integrations between SAP applications and we did a lot of technical work as well. These include integrations between business processes related to hiring contingent workers and a harmonised user interface for single sign-on.

As more of our products move from a rather monolithic architecture to bundles of microservices, there’s a bit of a religious discussion on how small a microservice should be

What does SAP’s progress in product integration mean for customers and partners, especially those that have built custom integrations?

Mueller: Let me start with our partners first. SAP has tens of thousands of partners, and probably 5% of them don’t like it because integration is a key part of their business. But 95% of our partners are happy because the work that they did, did not create value. We just didn’t have the integrations before, which was why custom integrations were needed in the first place, but we have now fixed that.

Moore: In Asia-Pacific, more partners are now offering solutions that cut across business functions and that is partly a result of our product integration being stronger than before. They are also upskilling on our business technology platform that underpins SAP applications, as well as cross-selling and up-selling solutions beyond ERP and human experience management. It’s a welcome improvement, and more partners are investing in their skills and resources.

On the customer side, they know they are migrating to the standard integrations. There’s some double effort involved, but they appreciate that we are doing it because they would have had to maintain their custom integrations.

So far, they like the way we handled integrations and from a quantitative perspective, our net promoter score for customer satisfaction went up 10 percentage points in the past 12 months, an increase we’ve never seen before. We looked into it and our integration work was one of the main drivers.

Several years ago, I met with an SAP executive who spoke about the possibility of offering business applications as microservices. Has there been any progress on that front and what is SAP’s current thinking around that model?

Mueller: I’m happy to give you an update on this. As more of our products move from a rather monolithic architecture to bundles of microservices, there’s a bit of a religious discussion on how small a microservice should be. That’s because ERP systems are different from Netflix, which was one of the first examples of the use of microservices.

As there are a lot of integration points in ERP that cut across business processes, a lot of state is involved. And so we need to be careful from an engineering perspective as we don’t assume that we can build an ERP system like you’re building a Netflix or Amazon.

But I can tell you that more of our products are going to be more like microservices and not monolithic any more. We are moving in that direction and the best example is our business technology platform that offers over 90 services, including data management, analytics, integrations, extensions, internet of things (IoT) and machine learning. These services consist of multiple smaller services.

As a preview of what will happen over time, new solutions will be built completely on the platform to leverage those services. Using those services in different applications will also facilitate workflow integration and speed up application development because we don’t have to build from scratch.

Underpinning all of that is our one domain model that enables SAP applications to synchronise business objects with common attributes and use common semantics. If you don’t have a single semantic model, it’s very hard to integrate. We had the one domain model at the time when we had one monolithic on-premise system, and my first decision when I was nominated to the SAP executive board was to bring it back.

You mentioned machine learning – I noticed that SAP used third-party AI services from hyperscale cloud providers at one time, while in other cases you develop your own machine learning models. Could you talk through the thinking around that?

Mueller: We use a lot of open-source tools, like TensorFlow and Jupyter Notebooks for creating models. We’re also taking an AI factory approach to address ethical concerns around the use of AI through version control of AI models and auditability. So, if an AI model proposes or makes a decision, you need to be able to understand the decision and know what sort of data went into the model to train it. Those kinds of capabilities are not available on the market, so we need to build them ourselves.

We also used to use a lot of ready-made machine learning services from hyperscalers, but for several reasons, they did not scale. And so, in areas where we have a keen interest, we’ve developed machine learning services on our own. We cater to over 250 different machine learning use cases, from helping a shoe manufacturer design its shoes to identifying data points in expense receipts.

We also use machine learning to recommend data fields that should be mapped when you integrate SAP with third-party systems. This is a very complex task, especially if you are mapping hundreds of fields, but now you will get a recommendation out of the box.