SAP CEO Christian Klein is trying out a major sales gambit in his attempt to get more customers onboard the software giant's signature cloud platform.
A new offer unveiled on Wednesday called "RISE with SAP" bundles together several products, including the flagship S/4 HANA platform, under one contract with a flat cost, a promotion that the company is hoping will encourage more users to more quickly switch from the on-premise services that dominated the company's product line until the last few years.
The offering, and the promotional blitz behind it, are a culmination of sorts of Klein's work over the past several months to remake SAP. While it signals progress in his vision to become a core tech provider — one that links data from all a company's operations on a single — it's also a big gambit, particularly if Klein can't address key concerns from customers, many of whom might be looking to shrink their IT spend on SAP's products.
To incentivize the pivot, SAP is promising a "highly automated" migration with "near-zero downtimes," effectively a move to try to standardize an often arduous and costly transformation that may have prevented new and existing customers from pursuing such an upgrade. And in a nod to the open partner ecosystem Klein is pushing, those who take advantage can use SAP's cloud, one of several of the major providers (Microsoft Azure, AWS, Google Cloud or Alibaba Cloud) or a private network.
Embedded in the packaged system are also numerous "business process intelligence" tools, such as robotic process automation, that help organizations, among other applications, pinpoint tasks that can be done solely by machines. SAP purchased Signavio, a provider of software that helps businesses manage workflows, to help further amplify these offerings, per a Wednesday announcement.
"We are bundling everything companies need to holistically transform their business, with a fast time to value regardless of their starting point," Klein told reporters.
Since COVID-19 hit, investments in the type of technology that SAP offers, the bulk of which center around the core enterprise resource planning system, fell in priority for many enterprises. Existing customers are also putting off upgrading, instead choosing to elongate use of their current platforms, many of which run via on-site data centers. The convergence of both led Klein to issue a stark warning in October that SAP's recovery would last until 2025 at the earliest. The stock price has yet to fully recover after dropping roughly 23% following that proclamation.
Wednesday's announcement shows that he's hoping to accelerate that timeline by quickly juicing the company's number of overall cloud customers. Under such a system, expensive, long-term contracts are traded for monthly subscription payments. While that might mean lower upfront costs for some clients, industry experts say they may end up paying more over the long term, especially if customers add on other services, which is one reason why the strategy is so attractive for vendors. SAP, for example, previously estimated that cloud revenue could exceed traditional sales and reach roughly $26 billion by 2025.
When asked, on average, how much more clients would end up paying under this promotion, Klein said the offering "has a lot of value in it." A spokesperson declined to say how SAP was factoring this offer into its overall financial outlook.
And for clients that held off on the cloud until now, the offer provides a seemingly viable rationale to move, with one consolidated contract likely covering the bulk of their needs, including service and deployment costs.
"It will take a great deal of work to move these large customized enterprises off of their legacy applications," IDC Program Vice President Mickey North Rizza told Protocol. "SAP customers have been given a pathway towards the intelligent enterprise using modern software."
The offering ran as a pilot project since July, with 130 customers currently signed up. As of Wednesday, it's now available for new and existing customers.
"The machine internally is already ready," said Klein.
