SAP is preparing its next incarnation
A short review of the company's development steps gives a glimpse into the expected future.
SAP started as a single-industry (manufacturing)/ single-country enterprise application vendor over 40 years ago. It passed stages of a vendor serving enterprises in multi-industry/multi-country and multi-continent environments. The Business Suite became richer functionality-wise – remember the domino effect of CRM and SCM – and got modernized technology-wise so that SAP has become a vendor finally supporting multi-national and also global companies within a single backbone system, also including analytics on mobile devices.
Traditional thinking would suggest to add more functionality to its core products and also grow in markets with company sizes not traditionally in the absolute core focus of SAP, i.e., the mid-market and low-end market. Of course, SAP does not leave this market segment untouched. But this market is more diverse, competition is more intensive and margins are lower.
In parallel, SAP prepares the next big thing by intensifying its efforts to network its customers with a business network allowing SAP to grow with the trade volume delivered via this business network. Of course, Arriba plays an instrumental role in this game plan, but also SuccessFactors, Concur, Fieldglass and the telecom backbone business powered by Sybase play a significant role.
The business network elements have reached a critical mass; SAP has started to weave them together and SAP executives started to discuss them, preparing their customers to take the next step.
PAC, as part of the CXP group, also expects SAP's next acquisition target to support the vision of a more complete business network. On the surface, the acquisition will look like an acquisition supporting SAP's Cloud offerings (cf. my blog post "What comes after HANA?") but the real motivation is the extension of the business network.
Bottom line: SAP is reaching a plateau for its development with HANA and S/4HANA. New revenue growth requires an innovative and disruptive path, integrating the legacy of the enterprise suite products. The business network is an ideal and consequent next step to a continuously growing income stream based on the value of goods and services traded using SAP enterprise products. The business network will allow companies of every size and potentially with any enterprise software to participate. Shareholders should have their fun!