SAP to buy LeanIX to advance process optimization with AI

SAP has agreed to buy German enterprise architecture management specialist LeanIX, hoping its early adoption of AI will help with the massive task of migrating customers still using SAP’s legacy software on premises to the more modern S/4HANA in the cloud.

LeanIX has around 1,000 customers for its EAM SaaS offering, its CEO André Christ said in a conference call to discuss the deal, and the US is one of its biggest markets with the 30% of its customers there accounting for 50% of its revenue.

Christ also said generative AI is key to the company’s growth. “We’ve been the first EAM vendor introducing an AI assistant to implement use cases managing the enterprise architecture,” he said, adding the company isn’t only using generative AI itself, but also helping its customers introduce it into their IT infrastructure and processes.

The data-driven view of the complexities of those processes, and of the infrastructure they run on that LeanIX provides, is becoming more central to IT departments’ work, he said.

“We believe enterprise architects are no longer living in an ivory tower,” said Christ. “They are, more and more, given a seat at the table” to help drive business transformations.

That ability to view and transform business processes is also becoming more central to SAP’s strategy as it pushes its customers to move their ERP systems to S/4HANA in the cloud.

Back in 2020, SAP said it will support S/4HANA through at least 2040, but will only support its legacy ECC6 and Business Suite 7 applications until the end of 2027. But three years on, only 12% of SAP customers have completed their transition to S/4HANA, according to a recent survey of international enterprises conducted by LeanIX. That leaves a lot of work for SAP, its customers, and their systems integrators to do in the four years before it turns off mainstream support for the old software.

SAP has made a number of moves since then to help enterprises make the move. In January 2021, it acquired process mining company Signavio to help enterprises identify their existing processes and recommend improvements to help with their S/4HANA migration. And in February 2021 it launched Rise with SAP, an all-in-one offering combining licensing, maintenance and cloud hosting of SAP’s core ERP applications that CEO Christian Klein described as digital transformation as a service.

Just months after the Signavio acquisition, Gartner analyst Paul Sanders told CIO.com that SAP “should have had this five years ago, when they launched S/4HANA, because this is the hardest thing for companies to understand and change.”

Demand for the process mining software is still strong in 2023. “Signavio is one of our key growth areas,” SAP’s chief strategy officer Sebastian Steinhaeuser said in the same conference call. “LeanIX has been a partner to SAP Signavio for quite some time. SAP and LeanIX have more than 500 joint customers, including some very large household names.”

While ownership of LeanIX will give SAP more control over the software’s capabilities, the company won’t be abandoning its non-SAP customers when the deal closes later this year, Christ said.

Rouven Morato, GM at SAP Signavio, jumped in to point out that when SAP acquired it, only 25% of Signavio customers used SAP. “It’s important for us to continue to support non-SAP landscapes, because we want to provide customers a holistic view of the enterprise architecture,” he said.

Steinhaeuser said the company would take the same approach to SAP- and non-SAP customers with LeanIX. “SAP over the last years has significantly pivoted toward an open ecosystem strategy as well, so we will fully support both,” he said.