At SAPinsider Vegas 2024, a buzzing enthusiasm could be found in the environs of the Bellagio around all things digital transformation and modernization in the SAP ecosystem. With insight and education being the main goal of the conference, there was no time on the ground for hype and empty promises.Helping to debunk the latest news and updates in the technology world at large, and to examine what steps Insiders should take to prepare themselves amidst global uncertainties, Rizal Ahmed sat down for an interview with Peter Pluim, president of sovereign cloud services at SAP.Rizal Ahmed (RA): Peter, you’ve got a big purview over cloud. How is SAP working on these trends? I’d love to know what you are doing to support customers as they prepare for migration.Peter Pluim (PP): I think the most important thing is that we need to get customers ready to consume innovation. I’ll be the first to admit - and even though I’m not on the sales side of the house - we get a lot of money from all of you! But if you’re stuck with a lot of legacy, technical debt, it’s harder and harder to consume the innovation that we develop with 35,000 developers yearly. That was also, by the way, one of the premises of RISE - to help customers get to the point where you don’t need to worry about the operation side of things and you can focus on driving the value. There is a lot of talk about AI; it is going to be critical.Some of the data I’ve seen is that the economic benefit of AI is going to be more than the six generations of innovation we’ve had over the last 200 years starting with the steam engine. But you don’t need to worry about the back end: Yes, ChatGPT is fun, but it’s an engine. Ultimately, what we’re building (apart from the fact that we want to help you get the innovations from everything we deliver in the new versions, etc) is integrating Business AI into the applications. So it’s just a button, a copilot that you can ask questions: What are my ten most profitable products in this market over the last six years? Now you need somebody to delve into that, to detail out exactly what you want, get that report and go into Analytics Cloud. Ultimately, the aim is that you can simply ask the Co- Pilot those questions.RA: If you think about technology, what drives tech and where we get the first use cases out of it - it is from the customer. Now, with all this technology, such as your example of ChatGPT, the ability to enable and drive that from the business side out, or on the consumer side out, is a great one.PP: Because that’s where AI comes in. So, if you have all that data right now, you’re in the hands of data analytics, data research people, experts. If you have large language models, train them, and create your own foundational models based on that data, anybody in your company can access that by asking the right questions. Then you won’t need to do that deep search anymore or have the right query or connect the right dots. That’s what the foundation model is for.RA: In all the conversations I’ve had with CIOs, data is integration, with getting your data house in order, so to speak. Because if the house is not in order, you’re just going to get bad results on your transformation project. I would love to get your perspective on what you’re seeing from customers, that you guys are working very closely on.PP: Well, if I look at the enormous set of SAP customers out there, I think the biggest challenge, the north star, is very clear: the integration point into BTP from which you can starburst into anything. Get rid of batch jobs, endless data replication and only having actuals at the end of the month. What is the biggest advantage of that? I just want to mention Chris [Christopher Conrad], the CIO of Levi’s, who does S/4 upgrades. Take a guess, how long does it take? Less than an hour. What every customer is challenged with is “How do we get rid of 30 years of carrying custom code customizations and technical legacy to get to that north star adventure?” You need to realize, McKinsey did a study, that 38 percent of all custom objects in SAP in the world are not even used. They are there because somebody who left asked a long time ago for a specific process and it was coded. And to be fair, up to about four years ago we didn’t have an answer to that at SAP. Yes, we wanted you to use standard processes. If you didn’t, you had to ship a whole bunch of ABAP programmers who then modified the system which led to the legacy cycle of “upgrades are painful”. But with the advent of the business technology platform, we actually have an answer. You can go to ABAP side by side with Java, low code and SAP build, and then of course we retrofitted AI on that.AI, at least from an SAP perspective, is truly almost an outside-in audience to what I’ve seen. Philipp Herzig, chief AI officer at SAP, is going to deliver updates this year and you will not care anymore about the “best of suite” integration. If you can ask one simple question in our copilot, you can get products, customer interaction, your procurement portfolio and even your HR policies all linked together in that question.Yes, you might have one feature less or one feature more in the other one, but you won’t care, because it’s all about the insane productivity that will drive in the end. Because it’s not just an IT change if you do it right. It is transforming processes of culture, organization and technology. For every successful transformation I’ve seen or even the one that’s ongoing: If it’s not carried and covered top-down, you’re not going to succeed.RA: There have been some interesting studies on why transformation fails and it’s usually a change management, a leadership buy-in or a scope creep kind of obstacle, isn’t it? PARA PP: Chris, as I said (I’m quoting him because we had a lot of discussions with him), the CIO of Levi’s, said it was 80 percent discipline and 20 percent technology. We recently analyzed a very large company that had about 6,000 apps that they developed in ECC. A lot of people don’t realize that migrating ECC to S/4 is like going from Windows 3.1 to Windows 11, if you want to compare it, or iPhone 1 to iPhone 15.The capabilities that S/4 carries invalidate the need for 78 percent of those applications that they were maintaining with hundreds of people who were updating and integrating them. And that is also a value you should not underestimate because the number of hidden applications is unbelievable. You need to create that “Aha! moment for the people who don’t get it.Here at SAPinsider Vegas, there’s a very clear demand from everybody: you want to explore new business models, you want to go to new markets. I can tell you that the more tech debt you have, the harder it is to do that. Ultimately, it’s just my observation but I think we’re very slowly, under the radar this time, going into a much more difficult economic situation than we’ve had over the last four or five years, even taking the pandemic into account. If you’re not resilient as an organization, it’s going to be a challenge.RA: So, what are your final thoughts and practical takeaways for the audience? You know, we’re here, getting educated, they’ve got two days left. What’s the advice you can give to SAPinsiders; what do they need to go out and do and learn over the next few days?PP: First and foremost, I think we need to realize we’re truly at an inflection point. And to quote [Dr Alexander] Stein, technology is not the problem anymore. I mean, if you look at where we are today, and I honestly believe this: You can get rid of technical debt in such a way today that you almost never create it anymore, if you do it right. You need to be bold and you need to act now because in this case, progress of other companies will eat your company for breakfast - to quote Stein again. But the point is you need to move.Second, you need to move up the value chain as an organization. Move up the value chain, resources are scarce. Skilled resources are even scarcer. So don’t be afraid of technology as an organization and make sure your organization has resources and just move up the value chain. Worry about the outcome and the service that you get.And then, last but not least, educate people on how to get there. This is not going to be a three-month project. I think for most organizations mid to large, it is anywhere between one and six years to get there. But also build in milestones that you can celebrate because it’s going to be a slog to get there. A hard slog. And so, build in critical milestones so you can go out and say: “Yes, we did this” and you can show something for it. Because otherwise the permafrost of middle management will kill you, trust me!This interview is a special edit taken from a panel event as conducted at SAPinsider Vegas.
⇨ Peter Pluim, president of sovereign cloud services at SAP explains how eliminating technical debt is crucial for leveraging new technologies effectively.
⇨ SAP emphasizes integrating AI for seamless innovation and operational efficiency.
⇨ Continuous education and clear milestones are vital for successful digital transformation.
SAPinsider sits down with Peter Pluim, SAP’s president of sovereign cloud services to discuss the new cloud order.
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