SAP announced today it plans to fundamentally change the relationship between software vendors and their customers. Historically, enterprise software vendors have, for better or worse, relied on IT services providers to implement applications often with mixed results. SAP is now saying it will take direct control over entire digital business transformation projects, including the contracting and managing of IT services providers, as part of a subscription organizations pay for on an annual basis per project.
Announced at an online “RISE with SAP: The Introduction” event, the initiative will lead to a significant reduction in the level of friction organizations experience today when launching a digital business transformation initiative, says Sven Denecken, COO for S/4HANA and head of product success at SAP. “It’s a concierge service under a single contract,” says Denecken. “It’s business transformation as a service.”
SAP is in a position to deliver on this premise because it has embedded instances of best practice for a wide range of business processes with its SAP S/4 enterprise resource planning (ERP) application suite. Those processes give organizations a means to replace legacy business processes based on custom software that is difficult to maintain and update, says Denecken. RISE with SAP is being offered as a subscription because each digital business process will be continually updated and supported by SAP and its IT services partners.
At the same time, SAP makes its S/4 suite of applications available as a cloud service that it maintains on behalf of customers. Those applications are always current with the latest release versus on-premises IT environments that are often two or more release cycles behind. The cost of supporting those older releases ultimately eats into the bottom line of SAP.
That long-term approach also ultimately makes it simpler for SAP to apply both advanced analytics along with machine and deep learning algorithms and robotic process automation (RPA) capabilities embedded in its applications and databases against the data it collects to further automate business processes. Collectively, SAP describes those technologies along with a portfolio of low-code tools it provides for making extensions to its applications as crucial enablers for building an intelligent enterprise.
Of course, organizations that embrace RISE with SAP will be more dependent on business processes defined by SAP. Most of those processes are not of a nature that would create differentiated value for an organization so continuing to rely instead on a legacy process enabled by custom code could be costing organizations more trouble than it's worth.
It’s too early to say how RISE with SAP will be received. In theory, it should reduce the number of vendors any IT organization needs to engage. However, many organizations rely on a wide range of application software that they need third-party services providers to integrate. After all, not all those integrators are likely to be as excited about taking a back seat to SAP if they perceive they already own the relationship with the customer.