SAP enhances its best-of-suite strategy with core apps running on HANA and improved industry approach

COVID-19 impacts highlight the value of SAP’s existing portfolio and road map

Before SAP CEO Christian Klein took the virtual stage for SAPPHIRE NOW 2020’s keynote, Chief Marketing Officer Alicia Tillman spoke with the company’s regional leaders for EMEA, APJ and the Americas. Across geographies, there was consistency in customer sentiment, particularly around the benefits of using technology to react quickly to changes in demand and supply chain challenges.

SAP’s president of Asia Pacific and Japan, Scott Russell, summarized many of the regional leaders’ key points by saying, “There’s one thing that I keep on hearing from our customers small, medium and large, whether you’re in the manufacturing sector, which is really strong in this region, or in other industries, is that ability to be flexible, agile and act with speed. And that’s the expectation of SAP: You need a digital platform … to give you the information you want in real time, so I can make better decisions and adapt to a situation, which for all of us is very unpredictable.”

The pandemic-induced, turbulent business environment has created a new lens for customers to look through and appreciate SAP’s portfolio, but at its core, SAP’s strategy has remained consistent in recent years. SAP has been building upon its Intelligent Enterprise vision, in which customers use wall-to-wall SAP products to integrate their IT environments and gain AI-enabled insights from their data. However, the pandemic did enable Klein to double down on SAP’s messaging about the value of IT modernization, stating, “We have all realized companies which use innovative technologies were more competitive before the crisis and are more resilient in the crisis. Those that enabled new digital business models drove automation and adapted their supply chains and were better prepared for the unexpected. This crisis shows us if your business is not resilient, you will be left with nothing.”

SAP (NYSE: SAP) held SAPPHIRE NOW 2020 Reimagined, with the “Reimagined” branding stemming from the event’s virtual delivery method. While this was a new delivery method for SAP’s annual event, the vendor’s messaging stayed largely the same, with a focus on SAP Business Suite 4 HANA (S/4HANA), S/4HANA Cloud, Qualtrics and emerging technologies — all part of SAP’s Intelligent Enterprise vision. In addition, SAP’s recent strategic shift toward industry-specific solutions in the back office added a new flavor to the vendor’s go-to-market strategy.

Twins born early in 2020

New year, new buys. And if your name is Accenture, it may be not too surprising to see twin acquisitions within the first week of 2020. In back-to-back announcements less than 24 hours apart, Accenture unveiled its plans to acquire Germany-based SAP shop maihiro and Symantec’s Cyber Security Services business. Maihiro will deepen Accenture’s SAP C/4HANA capabilities while Symantec’s cyber business buy will add a node (or six) to a well-established network of cyber managed services capabilities around the globe. Each acquisition is a natural extension of Accenture’s previous investments, including the company’s work with SAP around project Elevate and Accenture Security’s role as the connective tissue in the company’s innovation-led agenda. While some may consider the two buys mutually exclusive, we see enough overlap, considering the collaboration between Accenture Interactive and Accenture Technology when it comes to developing front-office, cloud-enabled and secured customer experience solutions, alleviating enterprise buyers’ pain points around managing first-party data.

We do not expect Accenture to slow its pursuit of acquisitions, considering the company’s announced intent to spend $1.6 billion in FY20. Many anticipate the next purchase will support a high-growth initiative such as Industry X.0 or will perhaps explore another agency buy similar to that of Droga5. Regardless, Accenture takes a well-rounded approach to developing its functional (e.g., technological) expertise, similar to how it ensures industry-vertical-aligned revenues and capabilities are well balanced and diversified. For example, each of the company’s five operating groups generates about one-fifth of total sales. With all the acquisitions Accenture makes, and has made for the past five to six years, the question of how best to integrate talent often arises. While some amount of turnover is inevitable for one reason or the other — often acquired talent from small firms cannot adapt to a larger organization and all the processes and policies that may come with it — these policies and processes reflect Accenture’s core command-and-control-style organization, helping the company execute its integration strategy quite successfully.

Will the next buy continue to support Accenture’s “in the new” agenda? Highly likely. Which area? Only Accenture knows. But, according to TBR’s Digital Transformation Insights research, cloud remains the most adopted technology among digital transformation buyers. Accenture recently launched two cloud solutions, myNav and Accenture Cloud Native Core Solution, suggesting the company is not finished building its portfolio and capabilities in the space.

TBR will continue to monitor and analyze Accenture’s acquisitions and overall go-to-market strategy, along with its financial performance across TBR’s professional services, cloud and telecom research portfolios.