SAP called out by German user group for Rise U-turn

German SAP user group Deutschsprachige SAP-Anwendergruppe (DSAG) has expressed concerns over the software supplier’s latest news about product enhancements. The user group said SAP’s decision to make enhancements available to cloud customers only would have an immediate impact on existing on-premise customers.

According to a transcript of SAP’s second-quarter 2023 results, posted on the Seeking Alpha website, CEO Christian Klein unveiled how the company planned to build out the SAP Rise business. In the transcript, Klein described Rise as the company’s “signature offering”, which he claimed would help customers move to the cloud and transform their business processes at the same time.

During the prepared speech, Klein revealed how SAP would deliver innovation going forward: “SAP’s newest innovations and capabilities will only be delivered in SAP public cloud and SAP private cloud using Rise with SAP as the enabler. This is how we will deliver these innovations with speed, agility, quality and efficiency.”

Specifically, Klein said any new innovations from SAP would not be available for on-premise or hosted on-premise enterprise resource planning (ERP) customers on hyperscalers.

SAP’s rationale is that businesses that prefer to run their ERP on-premise, and those that use hyperscalers to run customised SAP offerings, have data models that are not aligned to Rise.

The German user group warned that companies running S/4Hana on-premise would also not be eligible for certain upgrades. DSAG board chairman Jens Hungershausen described the ERP company’s decision as a U-turn, calling it a major blow. “It amounts to a paradigm shift,” he added.

When questioned during the earnings call, Klein said there would be a 30% premium for customers wishing to use the artificial intelligence (AI) and sustainability “bolt-ons” to Rise. “We are not offering generative AI [artificial intelligence], sustainability, capabilities and differentiating capabilities in our line of business products on-prem,” he said.

Klein said there was the standard version of Rise, plus a premium offering that embeds generative AI capabilities for improved decision-making or to improve automation or transportation management.

“Those who have relied on S/4Hana on-premise so far will be left behind by SAP’s new strategy,” said Hungershausen. “Customers who have already invested in S/4Hana on-premise may now get the impression that they have wasted millions. That doesn’t build trust if SAP doesn’t show customers clear development paths for a smooth transition to the cloud and next-generation ERP without jeopardising the investments they’ve made.”

DSAG has called on SAP to provide a reliable statement covering the specific enhancements that will be made available to on-premise S/4Hana customers. The user group has asked SAP to provide clarity quickly and unambiguously.