The German Speaking SAP User Group (DSAG) said that SAP on-premises customers are being discriminated against because the software vendor is requiring that new innovations, notably generative AI, will be delivered on its cloud platform.
DSAG is holding its annual conference and users are trying to navigate digital transformation and AI as well as their own IT budgets.
Jens Hungershausen, DSAG Chairman of the Board, said in a letter that SAP is mistaken with its strategy to deliver innovation solely through the public cloud. SAP has been pushing customers through various programs like RISE with SAP to move to S/4HANA Cloud and a clean data core.
In the letter, DSAG noted:
"DSAG also believes that on-premises systems will remain highly relevant for some time to come, e.g. in industries with high process complexity or due to legal or data protection framework conditions or individual requirements. For example, the cloud offering in public administration must meet the sovereignty requirements set by the public administration for certain specialist processes and take into account the applicable legal framework conditions."
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This debate over on-premises vs. public cloud with DSAG and SAP is notable given that many vendors and enterprises are betting that on-premises AI infrastructure will gain in popularity due to costs, data proximity and various regulations. "The discrimination of on-premises customers when it comes to innovation, the perceived pressure to switch to the cloud and the increasing dependence on SAP are just a few examples," said Hungershausen.
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Holger Mueller, Constellation Research analyst, said the DSAG-SAP debate over the innovation delivery strategy will continue. "It’s clear that DSAG and SAP are at odds on innovation strategy, as to where innovation needs to be delivered," he said. "SAP is focused on public cloud, DSAG wants innovation on premieres and for private cloud. The core challenge remains that SAP needs to show value to get customers to upgrade to public cloud. And needs to do more."
Constellation Research analyst Ray Wang noted:
"Customers signed up for the promise of enterprise software where advancements and innovation would be delivered in exchange for the license of software and maintenance. When software companies break that promise, customers suffer. In the case of SAP’s on-premises customers, this promise continues to be broken and DSAG is correct that this type of discrimination should be addressed."
