DSAG, the SAP user group for German speaking Europe, shared results of a recent survey involving more than 500 decision-makers from IT and various business units. Reading it I was struck by similarities and differences between how the US and European (with the DSAG base as a large proxy) markets view cloud computing and digital transformation opportunities
a) Cloud Computing
The DSAG survey says “the more than 3,300 DSAG member companies didn’t consider the other cloud solutions any more relevant for digital transformation. One of the DSAG’s missions is to critically assess the extent to which platforms such as Ariba, SuccessFactors and Concur can truly be integrated into existing IT environments and where their actual benefit lies for SAP users.” It is far different in the US market. “Ring fence with clouds” have been a dominant coping strategy in a number of SAP, Oracle, Infor and other on-premise customers for several years now. They explain the massive growth runs seen by Amazon, Salesforce, Workday, ServiceNow and other cloud vendors. SAP’s cloud acquisitions and customers in the US have also kept its own financial results respectable the last few years.
b) Digital Transformation
DSAG says “70 percent of respondents gave S/4HANA a high to very high degree of relevance for digital transformation, while more than half saw the Business Suite as another option for future digital projects.”. In the US, digital pioneers and increasingly the second wave are NOT relying on their ERP vendors, especially if they are in non-manufacturing industries. The reality is most of the large ERP vendors have not kept up industry specific transaction engines related to billing, merchandising, patient records and many others. You cannot do impactful digital transformation with just back-office functionality. Even when it comes to the back office, their AP system assumes you are still mostly paying by checks, not by corporate cards and digital methods. These vendors have also not pioneered much when it comes to next-gen customer facing areas, product engineering for contemporary smart products and services and next-gen business models. They are also stuck in older user based licensing models in a world where millions of sensors and machines are increasingly driving business processes. Even in Europe when you look at technology that Daimler and Bosch are embedding to make their vehicles and appliances smart, they are relying on a very different ecosystem of tech vendors. They are more likely to rely on a Foxconnthan an Accenture for that digital evolution.
DSAG says “The verdict on SAP Leonardo is quite clear. 82 percent see this new solution for the Internet of Things (IoT) and Artificial Intelligence sector as playing a very small role in their digital strategy, which might be partially due to the solution only recently having been launched.” I think that applies to US market as well. When it comes to IoT, automation like AI, wearables and robotics, US customers are not waiting for their ERP and IT infrastructure vendors. They are adopting technology from smaller vendors like Uptake and Kiva (part of Amazon). And like GE, European companies like Siemens and ABB are investing heavily in their own “platforms”.
Vive La Difference, I say. Somehow, though I see a much more fragmented global IT and OT market in the future.
(Cross-posted @ Deal Architect)