SAP doubles down on cloud-first innovation with executive reshuffle

SAP is reshuffling its executive board to place even more emphasis on serving its cloud customers.

Executive board member Thomas Saueressig, previously responsible for product engineering, will soon take on a new role as head of customer services and delivery, focused on maximizing potential for customers in the cloud, said Hasso Plattner, chairman of the company’s board of directors.

To prioritize innovation adoption in the cloud will annoy some of SAP’s most faithful customers. Many of them are increasingly unable to adopt SAP’s innovations because they’re simply not made available to them. That’s because, as SAP CEO Christian Klein told financial analysts in July 2023, only customers running its flagship S/4HANA ERP platform through the cloud-based subscription offering, Rise with SAP, will receive the company’s latest AI and carbon-accounting innovations.

Those running SAP’s older ERP software, ECC, or S/4HANA on premises or in hosted environments are out of luck — and that’s no small number. Last year, a UK & Ireland SAP User Group (UKISUG) survey found that only 21% of its members running S/4HANA were using the private- or public-cloud edition. The proportion was similar among members of DSAG, the German-speaking SAP User Group.

The user groups have criticized SAP’s cloud-only innovation policy, saying those paying to use the software in other environments deserve a fair return, too, and that the company should pay more attention to those running its software on premises.

No change in direction

From April 1, Saueressig’s replacement as head of SAP’s product engineering organization will be Muhammad Alam.

In a statement announcing the two appointments, Plattner gave no indication he wanted Alam to change the cloud-first direction set by Saueressig.

“He’s well-suited to continue driving the success of our product engineering teams,” he said of Alam.

Alam has only been with SAP since January 2022, when he was hired as chief product officer for Intelligent Spend, the company’s procurement, travel, and expense management tools, and for Business Network, its portfolio of products for managing relationships with trading partners.

Prior to that, Alam spent 17 years at Microsoft, first as an enterprise strategy consultant and later as a product leader for its ERP and CRM suite, Dynamics, working on its transformation into the software-as-a-service offering, Dynamics 365.

Support for adoption

Ritu Bhargava, president and chief product officer for SAP Industries & CX, says developing new features that customers want is one thing, but ensuring they’re adopted is another, and Saueressig’s new role will help with that.

“His focus is going to help us take the products and be that bridge between customer success and customer service, to really expand on the footprint of what we already have, with not just our customer base, but also our adoption base.”

Cloud accounted for 45% of SAP’s revenue in Q3 of 2023, up from 40% a year earlier. The company will announce its Q4 and full-year results on January 24.