SAP AND CLOUD COMPUTING IN 2012 AND BEYOND Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

The report presents a case about SAP, which was founded in June 1972. It provides enterprise software and software related services to wide range of customers around the world. The company became successful in providing Enterprise Resource Planning (ERP) and other enterprise service modules to improve the business processes and help companies to achieve strategic success in the long run.

In 2004, the technology industry started to focus on new models of enterprise software; i.e. software-as-a-service (SaaS) but the management of SAP believed that the market of enterprise software would remain on-premise. However, the management went wrong and faced some downturns in their operations, so the management decided to adopt new enterprise models so as to provide services to their customers based on latest technology and to retain their market share as well.

In 2012, after several failed attempts at establishing cloud computing solution for its Enterprise Resource Planning (ERP) suite, SAP announced two major acquisitions; Success Factor, a major SaaSQ provider in human resource software and Ariba, a major SaaS provider of supply chain software. Further, in the same year, Lars Dalgaard, CEO of recently acquired SuccessFacor start-up was appointed as a head on SAP’s Cloud business, he was the in charge of entire SAP SaaS strategy.

The objective of the report is to highlight the issues, which resulted significant changes in the progress of the company, sector or industry. Further, the report also highlights issues faced by the organization in integrating their operations that raised many questions regarding the management; ie, whether the SuccessFactor and cloud business would be considered as a separate operating unit or would be integrated with the operations of the existing business.

The questions raised were very critical to the organization because it directly links with the operational activities of the organization and any wrong decision could significantly threaten the operations of the company, which might result them in losing their market share, so the organization shall took decisions, which would be in the strategic benefit of the organization.

Summary of issues

The acquisition of SuccessFactor brings integration challenges for the company. One of the most important challenges faced by the company is that, how the SuccessFactor shall be presented to the users because SAP has many technology platforms and the major concern is that whether it should be presented inside the SAP portal or leverage to other SAP components.

The management of SAP was also concerned about the realization of the strategic mission because the realization of comprehensive cloud strategy was more than just ‘ending software’ and creating deployment software. Further, the management was also concerned about the development of real cloud services platform that SAP and every other vendor would have to deal with.

SaaS were applications that provided functionality that would have been impossible to build or afford on-premises, which resulted a big drawback for SAP or any other traditional on-premises because the cloud could not be compared to pure on-demand pioneers. Further, one of the most important challenge faced by the company was that whether the SuccessFactor would be considered as a separate unit and cloud business would be run on their own or either or either it should be integrated with the operations of the enterprise.

Another major challenge faced by the organization is the management of cultural clashes between both the organizations. Some commentators believe that SAP is a bureaucratic and slow moving organization and there were the higher possibilities that the culture of Sap might clashes with the culture of SuccessFactor. Further, SAP is a massive company with sales and consulting organization that expects big margins by selling and implementing on-premise software’s; whereas cloud’s margins are low and managing such cultural clashes will take years, which will defer the long term returns of the organization.

Recommendations

SAP can evaluate the compatibility of the SuccessFacor application and consider where it can be integrated with SAP enterprise resources because aligning the operations will benefit the organizations in providing better competitive services to the customers, which will ultimately increase the profits of the organization and enable them to achieve strategic success in the long run. Further, if the applications are not compatible with the each other then the organization shall consider to alter the applications but the organization considers that the cost of alteration may not exceed the benefits, which are expected to be gained from it.

If SAP considers to integrate its operations with Success Factor then the organization shall consider to manage the cultural clashes accordingly because cultural clashes can lead to the failure of both the organizations. Cultural clashes can be managed by aligning the long term objectives of both the organization and adopting a win-win approach where all the executives work together to achieve common mission of the organization, hence, which will result in highest net profit margin.

SuccessFactor will not be considered as ......................

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