September 17, 2019 / 8:34 AM / a month ago

SAP's German users demand more help with digital shift

NUREMBERG, Germany (Reuters) - Business software group SAP (SAPG.DE) should be more responsive in meeting the needs of its customers as they make the transition to the digital era, the user community in its home market Germany said on Tuesday.

A man walks past a SAP logo during the company's annual general meeting in Mannheim, Germany, May 15, 2019. REUTERS/Ralph Orlowski

SAP, the world’s leading provider of enterprise applications ranging from finance to supply-chain logistics, is pushing to offer more cloud-based services via subscription as it winds down its old licence-based model.

Yet customers in Germany, which accounts for 15% of total sales, say SAP is not providing enough guidance on how to execute their digital strategy, while upgrading to its premium cloud database, S/4HANA, remains challenging.

“SAP must provide an out-of-the-box solution without customers having to do their own development work,” Marco Lenck, head of the German-speaking SAP User Group (DSAG), told its annual congress in Nuremberg.

Presenting the results of a survey of DSAG members, Lenck said only a quarter felt well informed by SAP about digital strategy; 45% partly so; while 30% lacked confidence in SAP’s guidance.

Chief Operating Officer Christian Klein, responding in a keynote address, said SAP was working to make its concept of the joined-up ‘intelligent enterprise’ a reality for customers.

SAP will this year deliver an out-of-the-box version of S/4HANA integrated with human resources application SuccessFactors, as well as with the SAP Analytics Cloud and digital marketing tool Qualtrics.

Next year applications covering vendor management, marketing, sales performance management, procurement and travel management will be fully integrated.

EFFICIENCY DRIVE

The blunt customer feedback comes after SAP CEO Bill McDermott called time on a series of acquisitions that critics said left Europe’s most valuable technology company saddled with a collection of apps rather than a genuinely integrated proposition.

McDermott launched a restructuring in January to let go of 4,400 people, and followed up in April by announcing an efficiency drive to expand operating margins by 5 percentage points through 2023.

That announcement, which coincided with the disclosure of an investment by activist investor Elliott, boosted SAP’s shares to a record high.

Yet weaker second-quarter results raised fresh doubts that the strategy overhaul was on track, and SAP shares are trading 14% below their July peak.

The DSAG said the company needed to offer better integration; unified data standards; broader and more stable functionality; and more scalable solutions.

Installations of the S/4HANA database were going slowly, it added, while SAP’s C/4HANA marketing suite was clunky and less popular than rival brands.

“We need a business model for scalable performance and costs,” said DSAG’s Lenck. “That’s what distinguishes cloud solutions. That’s what the market offers. And that’s what we expect from SAP.”

Reporting by Douglas Busvine; Editing by Mark Potter and Emelia Sithole-Matarise

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