Executive Summary

• SAP and its consulting partners have shared inaccurate information about indirect access.
• How to get independent information on the topic of indirect access.

Introduction

Thanks for taking the quiz. We are virtually the only research entity that operates in the enterprise software space that takes no money from vendors or consulting firms. In this article, we describe the problem with the information available about indirect access.

Information Accuracy

SAP has provided a large amount of confusing and inaccurate information on indirect access. This has become increasingly apparent as time has passed. And this information is not contradicted. This is because just about every single entity in the SAP space, and that provides information about SAP is connected to SAP through a financial relationship.

As an example, let us review this article in Diginomica titled SAPPHIRENow 2017.

The Quotes

Make a case for customer empathy with the looming background of SAP litigation that has made “indirect access” a hot button and tech media circus.

I don’t agree with this statement because it does two things.

1. It externalizes the topic of indirect access. Indirect access, as brought by SAP, is unique in enterprise software. That is, SAP is the only software vendor that I have yet heard of that enforces indirect access in the way it does. In my view, indirect access, as applied by SAP, is invalid. And of course, when you try quite aggressively to control your customer’s behavior using shady legal tactics, it is going to be a hot button. SAP indirect access, in my view, fits within the definition of a tying agreement under US antitrust law. That is, it is counter to US antitrust law and should be investigated by the FTC. So yes, it is a hot button issue when a vendor does something like this. When SAP sues Diageo for connecting a non-SAP system in a way that is quite normal and wins a judgment for it, the issue is serious.
2. I object to the term media circus. As a media entity that receives money from SAP, naturally, Diginomica will reflect SAP’s interests. And it is not in SAP’s interests for customers to know about indirect access. SAP prefers that indirect access be hushed up, and for customers to contact them directly and to not use anyone else during the negotiation.

Present a compelling view of SAP’s innovation roadmap, and why customers should double down on SAP in digital ventures – most of which will draw heavily on the same data that comes up in “indirect access” discussions. That means rolling out an expanded SAP Leonardo as the IoT/AI/blockchain platform.

I don’t see what this comment has to do with anything stated earlier. Is Diginomica endorsing SAP’s innovation roadmap? Is Diginomica saying customers should double down on SAP in digital ventures?

Also, what is a digital venture, and how have I done so much analysis in IT without ever coming face to face with this term? In the following article, I explain my skepticism with SAP’s use of the term digital transformation.

McDermott wasted no time wading into the indirect access issue:

To reinforce, McDermott cited:

Three year published roadmaps across SAP products
Improvements in pricing/licensing transparency and simplifications
SAP’s cloud trust center

Diginomica is merely reporting what SAP is saying without analyzing any of it. That is called stenography. It’s not doing anything, such as performing an analysis. By doing this, Diginomica demonstrates a pattern of implicitly endorsing SAP’s statements. For example, Diginomica does not explain what I covered in an earlier article that SAP has the most opaque pricing in enterprise software and always has. Therefore when the most opaque pricing software vendor points out the importance of pricing transparency, bells should be going off in the reader’s head, but this should be brought to the attention of the reader by the author.

1. SAP Leonardo is officially SAP’s “next big thing.” Those who thought that Leonardo was a tentative IoT play must now rethink. SAP is banking on Leonardo, to the point that S/4HANA Cloud was a side dish in the day one keynotes. As my partner-in-video-crime Den Howlett wrote in SAPPHIRENow 2017 – the opening keynote assessment:

Again this is implied support for the concept presented by SAP that Leonardo will be successful. But is it likely to? What is Diginomica’s view?

On positioning, I liked that SAP reminded attendees the company has a storied history in bringing radical change to the world through its R/3 systems and that what is coming down the pipe in the shape of Leonardo is another example of how SAP leads the world in radical change.

This seems an idiotic thing to write. I like ice cream. There is a focus on what is liked, and not on what is true. A lot of things sound good, but they turn out to not be accurate.

Leonardo now spans a range of IoT/AI/ML tools and vertical apps, and is “delivered on the SAP Cloud Platform.” See also: SAP sends Leonardo digital innovation system into full swing, by ZDNet’s Asha McClean. Den posted his Leonardo views after meeting with Hasso Plattner and video debating with Holger Mueller in SAPPHIRENow 2017 – how to parse SAP Leonardo.

This is more of Diginomica serving as a marketing arm for SAP.

2. SAP takes concrete steps on the indirect access issue, but big questions remain.

No, it didn’t. See my article on the indirect access announcement.

On the specific issue of indirect access, McDermott announced three licensing clarifications:

Procure-to-pay and order-to-cash scenarios will now be based on orders.
Static read access to third party systems will not be charged for.

As Chris Kanaracus wrote in SAP Makes A Concession on ‘Indirect Access’ Fees: What It Means for Customers, this leaves open other questions, specifically the ramifications of moving third party data back into SAP systems. UpperEdge, which is in the enterprise contract advisory business, issued a checklist of concerns/predictions in SAP’s SAPPHIRE 2017 Indirect Use Update: Show of Empathy or Lip Service?:

And after reading that article, Diginomica’s view is that SAP took concrete steps, but questions remain? That is not how I would interpret UpperEdge’s article.

The key question to be answered this week will be whether SAP’s message is a genuine show of empathy or purely lip service.

McDermott’s announcements were clearly intended to prove SAP’s empathy talk is not lip service. But whether SAP went far enough will be a point of debate – and a critical issue for customers. We’ll revisit.

Only if you are taking money from SAP, or otherwise making money from SAP would it be a point of debate. If you fully understand indirect access and analyze the announcement by SAP, it is challenging to see what the argument would be that SAP changed anything of substance on indirect access. Certainly, Deloitte and ASUG will think it was substantial. Still, those are not independent entities, so no one should care that a company that rides the SAP money train thinks of SAP’s indirect access announcement.

3. SAP Cloud Platform (SCP) goes primetime, runs on AWS and on Cloud Foundry GA

This was a big event for SCP, from its ties to Leonardo to the “multi-cloud” announcements our Dick Hirsch (pretty much) predicted ahead of time, including the SCP-on-AWS news. (for context, see Hirsch’s, SAP Cloud Platform: the multi-cloud (almost) realized – a SapphireNow 2017 tech preview).

I have analyzed the multicloud announcement and have concluded the exact opposite. Once again, Diginomica is presenting SAP’s announcement with zero critical thinking and eating it up hook line and sinker. Multicloud will not change anything for the reasons explained in this How to Best Understand SAP’s Multicloud Announcement.

One keynote announcement that flew under the radar but matters to developers was the announcement of SCP on Cloud Foundry GA. In SAP Cloud Platform – The next level, SAP’s Matthias Steiner commented on the import of a GA his team has been working towards since 2014:

Given that Cloud Foundry has become the de-facto standard in enterprise PaaS, it was a no-brainer.

“GA” doesn’t mean that SCP on Cloud Foundry is complete. In a subsequent meeting with CTO Björn Goerke, he acknowledged that the move would be a lengthy process of adding tools and capabilities. For that reason, no firm timeframe for a complete move is set.

Important update: some readers of this piece got the mistaken impression that SAP is moving SCP to Cloud Foundry and this replaces SCP as is. SAP assure me this is not the case, nor is it what I would advise.

My view is that SCP should be defined by two different goals:

This is exceptionally confusingly written.

SAP Cloud Platform has not been a success for SAP, and Diginomica is covering it as if it is something vital. By stating, “Given that Cloud Foundry has become the de-facto standard,” Diginomica is merely jumping from topic to topic without explaining anything. And at the end of all of these paragraphs, we learn there is no firm timeframe for a complete move. A complete move to what? What is Diginomica talking about?

Openness and choice for non-SAP developers, and cloud provisioners. This includes the continued expansion of SAP’s API Business Hub (one S/4HANA Cloud customer told me he was looking for many more APIs, though he was pleased with the additional API access with each S/4HANA Cloud release).

If you are pushing the concept of openness, but not observing the fact that SAP creates the most closed systems, I have to question how much dedication you have to say what is true.

Beefing up SCP with enough business services and ease-of-extensions that SAP customers will choose SCP over other PaaS options. I heard good things about the extensibility of the S/4HANA Cloud on SCP from a couple of customers.

Why would you ever choose SCP over AWS and Azure?

SAP has had no success in the could outside of its acquired vendors that were in the cloud before they were purchased (and were purchased primarily because they were in the cloud) SAP is so far behind AWS and Azure they will never catch up. That is what the multicloud announcement was really about. It was about SAP putting a brave face on giving up a battle; it could not win against AWS and Azure.

Why would anyone assume that SAP would excel at PaaS when they have made almost all of their money as an on-premises vendor and fought against cloud up until just the past few years.

4. SAP finally consolidates its app stores. No, not the sexiest headline, but in the longer view, a coherent app store matters for SAP customers, partners, and startups. SAP is notorious for proliferating app stores, apologizing for the confusion, and adding more new apps stores. With the announcement of a new App Center and “unified portal”, SAP seems to have finally decided that “run simple” should apply to its apps store.

I can say that SAP’s customers don’t care about the SAP app store. It has very few users and is not a topic on any of the projects I work on or have visibility to. The statement finishes with using SAP’s now-defunct catchphrase, “Run Simple.” I have skewered Run Simple in a previous article titled Is SAP’s Run Simple for Real? Why is this discredited and dishonest term being used by Diginomica to serve as a basis for anything?

5. Business ByDesign is not only alive, but growing. You probably won’t hear a peep on ByDesign this week, but this so-called failure, shockingly impervious to its own rumored demise, is at 4,000 customers and counting, with SAP planning deeper ByDesign investments and the ByDesign leadership doing their out-of-spotlight thing. Executive Board Member and new cloud head Rob Enslin went so far as to say:

“SAP Business ByDesign is SAP’s lead offering for mid-market customers. Our customers often share how the solution enables them to run more effectively as they grow and thrive,” said Robert Enslin, president of the Cloud Business Group, SAP.

Once S/4HANA Cloud matures, there will finally be a viable way to think about the two products together, with S/4HANA Cloud serving large enterprise and ByDesign as a cloud ERP midmarket and subsidiary play. But you can expect confusion and misconceptions to continue until S/4HANA Cloud is totally focused on large enterprise (the two customers we filmed here were smaller, and could also have worked on ByDesign in my view). Update: if it plays out this way, it will be comparable to Oracle’s two tier cloud approach with NetSuite.
The wrap – surprises and open questions

As I wrap, there is a slew of fresh content to process, including more user group reactions to SAP’s licensing announcements, and a “five guys” shoot where we also assesses SAP’s innovation strategy.

Next up: I’m going to shift gears and write up some of the customer stories we encountered. Those will shed light on some key topics, such as early adopters of the S/4HANA Cloud, and mature S/4HANA customers who are starting to see benefits that impact beyond IT.

Robert Enslin is an entirely unreliable source of information. His previous inaccuracies are covered in the article SAP Misleads Analysts on Q1 2017 Call. If you are quoting Rob Enslin, you have either lost your mind, or you are not doing research… or you are taking money from SAP. And this is what Diginomica did. They were paid by SAP counting SAP as a “media partner” when this article was published.

• Inaccurate information about indirect access means poor decision making and being at the mercy of SAP, which can use indirect access to drive purchases of their customers.
• With our research focus and lack of concern for any relationship with SAP, we can tell the truth around indirect access.

We accumulate information from projects globally, and unlike a consulting company, we are not trying to promote indirect access so we can sell consulting services.

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References

https://diginomica.com/2017/05/17/sapphire-now-cross-check-inside-big-reported-news-stories/