Summary
A fair and frank session on the economics, software, and business implications of the recent SAP antitrust investigation. We will explore how it started, why it matters, and what companies can do about pervasive ERP lock-in.
Full transcript
Conor Doherty: This is Supply Chain Breakdown, and today we will be breaking down the European Commission’s antitrust investigation into SAP. A light topic, obviously. You know who I am: I’m Conor, Communications Director here at Lokad. And to my left, you know who it is as always, Lokad’s founder, Joannes.
Now, before we get into the meat and potatoes, two quick pieces of housekeeping. Number one, as I already mentioned in the live chat, our usual producer, Alex, is on vacation. I hope he’s having a good time. So, I will be both interrogating Joannes on European law and manning the live chat. Get your questions in—you’re talking directly to me today.
And the second piece of housekeeping—as I said right at the start—compared to our usual topics, which I wouldn’t say are light by any means but are more discursive, today is a semi-serious discussion. It’s an open investigation, and for that reason I have, in fact, been told—not asked, I might add—to read the following legal disclaimer.
Max, hard cam one on me please. You’re on me? Okay, thank you. The opinions and arguments Joannes and Conor present today are awesome. So Joannes, question one: how exactly did we get here? What is SAP accused of having done?
Joannes Vermorel: Top of my head, there are in fact two sets of investigations—one in the US, one in the European Union—for very different things. In the US, this is essentially a dispute with Teradata over their columnar data storage. Teradata has been doing this—developed a columnar database about 20 years ago—and it turned out that this design also exists in SAP HANA, and there is a dispute on whether SAP would have actually used some IP that was a property of Teradata.
Here, my humble take: they went to court, there was a judgment, then there was an appeal, and it’s going through higher and higher courts. For the American side, I would say the take is like a fight between two dinosaurs, because the interesting thing is that they are arguing about technologies that are essentially fairly outdated nowadays. You’re arguing about whether a piece of something was stolen in terms of IP that was out of date even a decade ago. I don’t know how it will go, but it seems to be—I have very little opinion on that, except that what they are fighting over is, to my humble opinion, something that is semi-antiquated. We will see; justice will decide something, but I think the stakes are not super high for the world of enterprise software at large.
In the European Union, the question being asked—my understanding—is whether SAP is fostering anti-competitive behaviors when it comes to the aftermarket. For on-premises, it’s about the services for the maintenance of the SAP suite of products and whether they are actually blocking competitors from taking over. Obviously, this maintenance is a very lucrative segment of SAP, and now the question is whether they are anti-competitive on that, and that’s where my understanding of the situation—
Conor Doherty: Just for the sake of parity, I want to read from what is—again, this is freely available; I found this online—it’s a one-and-a-half-page press release. I’m only going to focus on the four practices which the European Commission takes exception to. Again, as you pointed out, this is for the maintenance and support services of SAP’s on-premises ERP software.
Very quickly, the four practices they object to—this is the European Commission’s own language. SAP requires customers to: one, seek maintenance and support services from SAP for all their SAP on-premises ERP software and choose the same type of maintenance and support under the same pricing conditions for all their SAP on-premises ERP software. This effectively prevents mixing and matching between different vendors.
Number two, SAP prevents customers from terminating maintenance and support services for unused software licenses, which may result in SAP’s customers paying for unwanted services.
Three, SAP systematically extends the duration of the initial term of on-premises ERP licenses during which termination of maintenance and support services is not possible.
And last, SAP charges reinstatement and back-maintenance fees to customers who subscribe to SAP’s maintenance and support after a period of absence. In other words, if you were a client ten years ago, you left, you returned, you pay what you would have paid during that time.
And Joannes, we’re a SaaS company. We sell software. SAP maintains—and for the record, I quote from Reuters—“our policies follow industry norms.” What do you think of that? Is that industry norms?
Joannes Vermorel: I think—my own take—is that it is sheer insanity. The technical term would be “batshit insane,” something like that. Nevertheless, I think if you find fools to sign those terms, this should be legal. Insanity should not be made illegal. If a large corporation wants to sign this sort of contract with another large corporation—adults in the room—yes, it is completely insane, but…
SAP says it’s standard practice. I wish Lokad would be able to negotiate these sorts of terms with our clients. To this audience: we are nowhere near this level of abuse. I would like to say—just to give you the sort of vibe of what at Lokad we negotiate—it’s more like: if we say that you can cancel at any point of time, does that mean that if you consume seven days of a month, do you have to pay for the whole month or only seven days out of 30? That’s the sort of terms that we’re negotiating here. That’s what Lokad considers standard practice. Should we consider that if you start a month you have to pay the whole month? That’s the scale of negotiation.
Here you’re saying that if clients come back after several years they would have to pay reinstatement fees, the difference for many years where they haven’t been using the software. This is wild—this is wild. But again, my take is: I’m all for free enterprise, and my humble take is that this is not per se anti-competitive. The fact that it’s wild and very insane—literally not sane for anybody, non compos mentis—yes; but I believe the role of the European Union is not to establish reasonable practices or best practices here.
Conor Doherty: You’re basically saying “caveat emptor,” buy or beware; a fool and his money will be separated.
Joannes Vermorel: Exactly. And again, we have to take into account that we are not talking— in French you would say—about orphans and widows, very fragile people. We are talking about litigations where it was the VOICE user group that included names like Siemens, Adidas, Volkswagen. All those companies are multi-billion-euro companies that have their own legal departments with many lawyers.
So my humble take is that if, with a small army of lawyers, you end up negotiating a wildly insane contract with a partner, it’s on you. It’s really on you. And I think the idea that you will use the European Union to whine and say to the legislature, “Please do something, we signed very, very crappy contracts and we would like to have some relief coming from you,” it’s not a good precedent.
So my take is that what SAP is doing is very insane. I would not say it’s normal practice, but I do not see any reason why it should be made illegal.
Conor Doherty: Okay. Well then another way to put this is: what do you think the European Commission is effectively trying to accomplish with this? Because it sounds like, to you, this is almost an interference with the free market.
Joannes Vermorel: I think here there is a misunderstanding on how you get to better free markets. The problem is that many bureaucratic institutions—and the European Union is one of them—think that if you just pile up bureaucratic rules, you will get… Anytime you have a bureaucracy, the only thing they can think of is adding legislation, because that’s what public bureaucracies do: they produce legislation. So whenever they see this sort of situation, they think, “What sort of rules are missing from the market?”
My take is: none. On the contrary, the more legislation you produce, the less free-market competition you get. An example would be GDPR, which is an extremely complex set of regulations—maddeningly complex. We’re talking about something like 800 pages for the core documents and thousands and thousands of pages of supplementary materials if you want to have the right interpretation. For me, these extremely thick, complex regulations are exactly the sort of fertile ground that fosters anti-competitive situations, just because small companies do not have the resources to deal with this insanity.
So I think the intent is genuine: they want a more open, more vibrant market in Europe for enterprise software—fine with the intent. The execution is: they will establish a bad precedent where, if it goes through, it means that every single large company will have to think twice and have extra layers of lawyers, because when they sign a contract with another company, it means the European Union can interfere with this contract—even if, frankly, it was just a very good contract for one of the companies. Why should the European Union be taking sides on these things?
Second, for smaller companies, it will mean we’ll end up with a whole other layer of complex documents that will further regulate what is allowed and not allowed. If we think of the end-game consumer, the citizen in Europe, I do not see any real situation where it would be a net benefit for the average citizen in Europe.
Conor Doherty: I want to come back—sorry, I asked you what you think the European Commission is trying to accomplish. I want to read to you a short quote which is, again, a one-and-a-half-page European Commission press release from the 25th of September. I quote verbatim, and then I will ask my question. This is from Teresa Ribera, Executive Vice President for Clean, Just and Competitive Transition:
“Thousands of companies across Europe use SAP software to run their businesses as well as its related maintenance and support services. We are concerned that SAP may have restricted competition in this crucial aftermarket by making it harder for rivals to compete, leaving European customers with fewer choices and higher costs. This is why we want to have a closer look at SAP’s potentially distortive business practices to make sure that companies that rely on SAP software can freely choose the maintenance and support services that best fit their business needs.”
Now, your position there is that multi-billion-dollar companies do have choices; they’re just making trade-off decisions.
Joannes Vermorel: Yes. And again, you should not be counting on a legislative body to save you from your very bad decisions. It’s a bad precedent. Would this decision help those businesses? Kind of. But it’s important that bad decisions be sanctioned—that’s the way the market works. You have to think there are also thousands of companies who made the right choice, which is to not use SAP. Why should those companies who made the right choice—who went for competitors—suddenly be deprived of their superior management execution?
You should not be picking winners and losers, and if companies made exceedingly bad management decisions that are costly to them, it is part of the market mechanism to ultimately have better companies. If companies go bankrupt because of that, I would say yes, it is the markets at work acting as filters—markets are filters for badly managed companies. It is important that companies bear the full price of their mistakes.
If there are hundreds of companies that go belly-up due to those crazy maintenance fees, at least it will be a lesson, and maybe this lesson will be remembered, as opposed to having a legislator mitigate the problem and, in my view, make it last longer. Assume the European Union does that, and then companies who signed crazy contracts with SAP start doing it again with another vendor. They start thinking, “We are signing an absolutely insane contract with another vendor, but guess what? The European Union, ten years from now, will most likely jump in and bail us out.” No—this is really the wrong attitude.
As a business—again, SAP is not dealing with small businesses; typically, SAP businesses are nearly all above half a billion. We’re talking about businesses that have the means to have extensive IT expertise and extensive legal support. We’re talking about companies that have no excuse for saying, “I didn’t know; I had no clue what was in those contracts.”
This is not like your grandma who clicks “I accept” on the 100-page agreement of Microsoft when they start Windows. This is not the situation. As a vendor of enterprise software, I can assure you that contracts are read to the very last line. We have discussions line by line. Typically, when we go into an agreement, we literally go line by line—there is an agreement or no agreement; sometimes a phrase needs to be rephrased, etc. At Lokad, we are doing that even with companies that are much smaller than the clients of SAP. It is unthinkable that those much larger companies would blindly sign contracts with this vendor.
Conor Doherty: See, this is the thing—and that’s a perfect transition. You’ve talked about blindly signing—I wouldn’t say that’s likely. What is more likely is, in a Thomas Sowell trade-off decision, people decide, “It’s worth the risk.” Now that’s one perspective. Another perspective is the very common refrain that “If we leave SAP, that’s going to be prohibitively expensive; essentially, we are locked in.” The phrase “ERP lock-in”—we talked about it a few weeks ago. Does that sway you at all—the idea that multi-billion-dollar companies are effectively trapped in their decisions, which often date back quite a bit?
Joannes Vermorel: Yes—no. Again, we have to look at the specifics. SAP is dealing, 99% of the time, with systems of record. Systems of record have been commoditized more than a decade ago. If you want to re-implement the thing from scratch, the cost—when I say “commoditized,” I mean it: every piece is open source, and the assembling is very straightforward. Those CRUD apps—create, read, update, delete—etc. It has been commoditized more than a decade ago.
Now, with LLMs and vibe coding—people are still discussing whether you can do very fancy things with LLMs—but I can assure you there is no problem whatsoever to do CRUD apps, which are the simplest sort of apps. It just works. At Lokad, we have plenty of clients under SAP, and we have no problem gaining access to all the relevant data that we need for supply chain optimization purposes.
When people say “you’re locked in,” I say: in what way? You want to extract all the data? It’s relatively straightforward. We do it—Lokad does it. SAP’s old databases were based on Oracle; you can use Oracle SQL, it just works, you can extract whatever you want. In SAP now, you have a slightly different SQL flavor, but again it’s fairly straightforward—nothing fancy about it. If you want to start re-implementing, piecemeal, the features of SAP on the side, it is very, very doable.
People complain, “Oh, but if we re-implement half of SAP, we still have to pay the full price for SAP.” And I would say: yes, but that’s very badly negotiated terms—that is on you. I would only say it is just urgent to be at 100% transition so that you don’t have to pay SAP anymore. When people say “lock-in,” if you completely stop using SAP, you’re not forced to still pay SAP. You’re not completely locked in; you’re locked in as long as you still want to use some of the products. The solution is: don’t—move out completely.
Conor Doherty: I do want to push back on that a little bit, and I want to use the words of Meinolf Sellmann—he may be watching, I don’t know—but I want to make very clear, this is from a previous episode. He posed this question when we were talking about “Your ERP is Too Expensive.” He wasn’t commenting in the context of SAP, but the question is on a similar topic—ERP lock-in—and I quote: “Have you tried getting data out of an ERP? It is made deliberately difficult. Most ERPs don’t even expose an API. Some even contractually forbid that a client uses their own data stored in the ERP for any other purpose. They know that they built crap. That is why they lock you in.” That was from a different context but the same theme. That doesn’t resonate with you?
Joannes Vermorel: I would say: if you try to have terms that say you’re not allowed to extract data from a database that you host—good luck enforcing that. To the software vendors trying to do that in front of a court: this would not hold. Again, I’m not a lawyer—take that with a grain of salt; you read a disclaimer at the start—but I do not see that enforceable in any way.
Practically, SAP is not policing every single client to see if they have done any kind of data extraction, especially if it’s just to restart another system on the side. Then this comment: yes, there is a sizable amount of complexity. We’re talking about an ERP that has 10,000 tables. That’s going to be a sizable undertaking, absolutely. When I say ERPs were commoditized, we are still talking about multi-million initiatives to get the job done in a large company. It’s not going to be a small thing.
Conor Doherty: I want to push forward a little bit here because I don’t want to get lost in the structure of software. I do want to focus on how we can tease apart responsibility a little bit more. We reached out to SAP for comment—my arms weren’t long enough; they didn’t respond—but they’re not here to defend themselves, and we don’t have a client in the studio, so we are going to speculate here. I don’t want to victim-blame, but I do want to discuss: if we take all the variables that contribute to a problem, how much of them might be on the part of SAP, and how much are squarely within a client’s control? Because, again, at some point somebody opened the door to the henhouse—somebody signed a contract. Why do people sign these contracts? What is it that they’re trying to accomplish when they make these potentially mental commitments?
Joannes Vermorel: How do you treat the situation when your wife ends up spending all your salary on LABUBU? That is just insane. Look at LABUBU—it’s an overpriced gadget; people are crazy about it. Is it the fault of the company operating that to sell overpriced gadgets? No—it’s really on the buyers’ front.
My take is that there is a lack of accountability that is very strong within the market for those extremely unwise IT decisions. The problem is that if the companies who are currently whining about SAP were just doing the right thing—fire all the people who have ever been complicit in this decision, on a grand scale—it would kind of solve the problem. If you do not sanction—quite brutally and quite visibly—the people who are making massive mistakes… We’re talking about costs that run—people would say “It’s just software”—but if we’re talking about overheads in the hundreds of millions of euros, it’s not very different from burning a warehouse. Burning a warehouse would cost you dozens of millions, and here it’s a different sort of cost. Yes, there is no risk—burning a warehouse has risks of injuring or killing; with software, it’s just money—but we’re talking about amounts of money that are absolutely enormous. This is very real.
My approach would be: for the companies doing those bad choices, they need to look inward and say, “Why did we do those bad choices, and why are we still doing it?” You said very rightly that those choices have been made sometimes 30 years ago, but it was a bad choice repeated over and over. Why is that? Because there is no accountability; nobody gets fired for that. They should.
For me, when people tell me “There is vendor lock-in,” that is the easy option—the middle-manager bureaucratic answer: “Oh, I cannot; we struggle so much with this vendor, but you know what? We have vendor lock-in.” It turns out, imagine if you say: “Okay, accountability—all the people who are responsible for this mess are fired.” Harsh. Next generation of middle managers say, “You know what? We’re going to think twice. I think this vendor lock-in—there is an escape hatch; we can hack the situation.”
If you have a culture where nobody is ever sanctioned for dismal IT choices, then don’t be surprised, as a large company, if dismal IT choices are made over and over.
Conor Doherty: That’s certainly one solution. I’ll say an alternative solution—to be more productive, or more positive—is making better decisions at inception. Again, earlier you talked about systems of record—just for anyone who does not know, you’re referring to essentially a digital accountant, a digital ledger—
Joannes Vermorel: And again, I would say even contracts are negotiated. Nobody forces you to take the crazy contracts that SAP proposes. This is a judgment on those sorts of contracts, not on SAP products—which is a completely different discussion. Nothing prevents you, as a large company who wants to sign with SAP, from going through the contract line by line and removing all the terms that are just insane.
That’s it. You just have to negotiate line by line to remove all the insanity. If SAP proves to be completely unreasonable in their demands, then you will not sign a contract. It is fair—it is fair.
Conor Doherty: Yes. Yes. And an element of that, again, is the consumer’s overall awareness of what is a reasonable price to be paying for the product they’re negotiating or considering signing a contract for. For example, if they think that the going rate of a system of record—an ERP—is (I’m pulling a number) €10 million per year, and that represents, I don’t know, 50% of their IT budget, they might go, “Well, 50% is a lot, but that’s the going rate; therefore I factor that into my decision-making process.” I know for a fact that you don’t actually think that.
Joannes Vermorel: Yes. Again, the only thing you have to remember—it’s not very difficult—is that systems of record have been commoditized more than a decade ago. The cost, both for the hardware and the software of this entire class of products, has gone down by more than an order of magnitude compared to ten years ago. That’s just the cost.
What it costs to host—computing resources (CPU, bandwidth, memory, data storage)—all of that has gone down by a factor of 10 or more over the last decade. The cost to create the software and maintain it has also gone down, more like two orders of magnitude—at least 100 times cheaper. With LLMs, the verdict is still out, but maybe by a factor of 1,000 again—but just for CRUD apps, not fancy things; for things that are extremely basic and repetitive.
These are basic heuristics. As you sit at the table and look at the menu of options, if you’re seeing eye-watering sums for something very basic, one should be initially skeptical.
Conor Doherty: Sure. And a naysayer to that position would point out that you’re comparing the functionality of ERPs 20 years ago to today, whereas someone might say—not necessarily me; don’t get mad at me—that an ERP is much more capable now and is a critical part of the decision-making process in the supply chain.
Joannes Vermorel: It is not. That’s a subjective assessment, but I’ve been in this market of enterprise software for almost two decades. With our clients, I can see: some are using ancient systems, and I look at their capabilities and compare them to people who have very modern systems—they are pretty much the same.
We have clients with systems that have barely evolved since the late 80s and some who have brand-new ERPs—and it’s not fundamentally different. That’s the sad part. When it comes to this ERM perspective—enterprise resource management, where you want to track all your assets—it has been a while since it’s been complete. Yes, there is a bit of extra plumbing for e-commerce; that’s a specific channel, but typically the e-commerce would live with its own applicative silo, so it’s not a big deal.
There are evolutions, yes, and there are new decision-making modules that people… but the decision-making modules are not part of systems of record. That’s a grand illusion—people mix systems of record, reports, decision intelligence. Anything decision-related does not belong to a system of record. You need to segregate that. In any case, if you buy, for example, an ERM, you will not get any kind of decision-making capabilities. They might tell you it’s there, but it’s not—just like your email client: Outlook is not “communication intelligence”; it doesn’t tell you what to write. The ERP records the transactions; it is not there to make decisions.
Conor Doherty: Thank you. I’m aware—two messages have come through, and there’s a comment as well in the chat, so I’m going to transition to them in a moment. Before we move to those, it seemed like your overall feedback here was: the only way to unwind is just to swing the scythe. And any rosier solution?
Joannes Vermorel: If you’re not willing to announce to SAP that that is your intent, why should SAP relent? This is a negotiation. If you say, “My only recourse is to get the European Union to back me up,” why should SAP relent on anything?
If you want to be able to negotiate, you need to be in a position where you can say no—you can say no. Exactly. Unless you say to SAP, “Remove those insane clauses from your contract, or we walk out completely,” you do not have leverage. That is the starting point. Otherwise, you won’t even be able to negotiate anything.
You have to be true to your promise. The interesting thing is that when the cost of re-implementing the entire thing is a small fraction of the maintenance cost, this is not an abstract threat—it’s very concrete. SAP people are no fools. When they see that the client can actually re-implement the whole thing for a fraction of what they ask in maintenance fees, there will be a negotiation. But it has to be genuine; you can’t play poker—you need to have real cards in your hand so you can have trust and an actual negotiation. If you’re not absolutely convinced that you have an alternative, then you cannot negotiate. It has to be real, and you have to have the willingness to act on it if the negotiations fall through.
Conor Doherty: I’ll push on. Private DM—I’m reading this in real time: “Thanks for the ideas and insights. Let’s be practical: how many euros do we stop burning next year if mix-and-match, in terms of software vendors, becomes possible? If the numbers aren’t meaningful, then decoupling from a vendor just really isn’t an option.”
Joannes Vermorel: It’s a matter of negotiation, really. My take is that some contracts—SAP is not a monolith in terms of practices. At Lokad we have clients that seem to have negotiated very good deals with SAP, and some terrible deals. There is variability; it’s not a monolith in pricing.
My suggestion would be: look at the specifics. Also, consider economies of scale. Developing software is not very scale-sensitive in the sense of the amount of transactions. If you have a company over €10 billion of annual revenue, most likely your SAP fees are extravagant, thus the cost—comparatively—to re-implement the thing would be very cheap. If you’re one of those companies at, say, €200 million of annual revenue and you are on SAP, that might be very different.
Imagine re-implementing the whole thing for your purpose is €10 million. If we’re talking about a €10-billion-plus company, that is a non-issue. If you’re a €200-million turnover company, a €10-million flat fee to re-implement an alternative is going to be difficult. Your mileage may vary. My intuition: the larger the company, the bigger the opportunity to go for an alternative if you’re suffering from those terms.
Conor Doherty: The next question is from Manuel. We’ve touched on it before, so you can probably be a bit terser. If the company in question is already using an SAP ERP, they’re likely dependent on the services, and thus SAP has much more leverage or negotiating power. Just the asymmetry—
Joannes Vermorel: That’s why you need to have a real alternative. Again, basic line: ERP technologies have been commoditized a decade ago. Rolling out—in-house, potentially with some outsourced IT talent—an alternative solution is cheap and fast. That is something most companies can achieve within two years.
As you know, at this audience’s benefit, Lokad has just rolled out our own completely custom CRM—very complex B2B. We got some help from third-party IT talent; it was not just developed internally at Lokad. The budget was about €200,000: €100,000 for the external development team and €100,000 for the internal development effort over two years.
That gives you a vibe of what it means to develop a very complex CRM. It’s a little bit of money—but frankly, not that much. ERPs can be much more complex, agreed, but if we’re talking a few millions, you can have something.
The interesting thing: if it’s bespoke, over 95% of the complexity of a traditional ERP—something not bespoke—evaporates. When we look at a typical ERP used by an actual company, there are 10,000 tables in the ERP but only 500 that are actually used by the client. So many tables are dormant; they represent features never used, not even remotely relevant. Don’t think that rolling out your own ERM for your own purpose means 10,000 tables. For most companies I’ve seen doing that, it typically means something like 200 tables—even for a fairly complex company.
Conor Doherty: Follow-up comment—it’s a question but it’s a comment. Realistically, Joannes, is it really as simple as just exiting your ERP with SAP? I know of companies in the automotive industry that are pressured by major OEMs to use SAP, and ERP installations typically take several years. I think we’re still in the terrain of trade-offs, fundamentally.
Joannes Vermorel: Yes. You have to investigate: what exactly are they pressuring you with? If it’s about compatibility for electronic data interchange or something, you can have this compatibility without going for SAP. You really have to look at the specifics.
Again, due to the culture of never sanctioning—so, firing people for making the wrong choices—you have cultures where people will always find excuses. That’s why I say step one is to fire the people who made the dismal decisions. Until you do, you’ll have a culture that permeates your entire company where it’s completely acceptable to find excuses to never do the right thing. I like the phrase: you can either have results or excuses, but not both.
If you have a culture where having an excuse for not doing anything is rewarded—or at least not sanctioned—why would you expect anybody to stand up? Imagine you’re part of the IT department of this company—those choices have been dismal, but you’ve been promoted for it. You have zero personal accountability. The company overpays like crazy with insane terms—and still no sanction.
This is not just one person; you have all the people in the hierarchy who feel, “Why should I oppose this insanity? It’s only complications for me, because ultimately my salary doesn’t depend on how much profit the company makes.” If I just find excuses like “It’s our partners,” “We have vendor lock-in,” “It’s this or that,” then I have my free card; I’m blameless, and that’s it—I just maintain the status quo. For me, it’s good enough.
By the way, that’s something I discuss in this book on supply chain: in large companies operating supply chains, the incentives of participants are not aligned with the interest of the company. It’s very important to identify the incentives at play. Until you do, your company will suffer from adversarial behaviors where people favor solutions that are disadvantageous for the company, just because for them personally it is the correct move.
If we look at enterprise software, very frequently if you happen to be the IT director involved in a massive SAP project, you can typically land a very good job afterwards in a company that is part of the SAP ecosystem. That’s all the wrong incentives. There is no bribe—the bribes are so 19th century. The modern corporate world way is: you do something very nice for the vendor; I will make sure that you get, maybe a decade from now, a very good job somewhere in my system. No bribe moves around, but the incentives are there and very strong.
The only way to reliably fight that and make alternative solutions emerge is to be a little bit brutal when it comes to firing. It has to be public; it has to be advertised. Otherwise you’re missing the point. The point is not to remove the person; the point is to send a message across the board that there will be accountability. I know it doesn’t feel very inclusive, but unfortunately it’s the sort of thing you need to do if you want to avoid adversarial incentives damaging your company and start mending the process.
Conor Doherty: Potentially—yes, absolutely. Then the alternatives will naturally emerge; that will be just a matter of time. The problem we’re facing is a situation that is only rotting, rotting, rotting—to the point where they are now invoking the supreme authorities in Europe, which is European courts, to come to the rescue of those—let’s be clear—extremely large companies. If you’re multi-billion companies, do you need to be rescued by the European courts? That’s a political debate we’re not going to open now, anyway.
Joannes Vermorel: My take is that it’s probably not a top priority and certainly should not be part of the roadmap of those companies.
Conor Doherty: Joannes, thank you. I don’t have any more questions, and we’ve been going for almost an hour. Thank you very much for your insights as always, and thank you all for your questions and your private messages. As I say every single week, be sure to connect with Joannes and me on LinkedIn. If you have any supply chain questions that you want answers to, we’re always happy to connect and to talk. And with that, I’ll see you next week for the next episode of Breakdown. And get back to work.
