Process mining pioneer Celonis is suing SAP, claiming unfair business practices over third-party access to data.
In a 61-page complaint filed on March 13 in the U.S. District Court for the Northern District of California, Celonis alleges that SAP has engaged in anticompetitive conduct that excludes third-party vendors from accessing data in SAP ERP systems.
Access to SAP data is critical for Celonis, as its process mining applications analyze an organization's IT landscape and business processes to show how the processes work in reality. Customers can use this information to understand where processes have gaps, break down or are inefficient, enabling them to fix or improve the processes.
SAP and Celonis are longtime technology and business partners. Celonis was founded in 2011 by Alexander Rinke, Bastian Nominacher and Martin Klenk out of the Technical University of Munich. The following year, Celonis became part of the SAP Startup Focus program, which invested in startups that primarily focused on SAP technology.
SAP ERPs, including ERP Central Component (ECC) and S/4HANA, were among the first systems upon which Celonis focused, but the company expanded its process mining applications to include most major ERPs and CRMs, such as Oracle, Microsoft and Salesforce. Celonis' process mining competitors include Signavio, a Berlin-based startup founded in 2009 out of the Hasso Plattner Institute, a computer science research university in Potsdam, Germany, founded by SAP co-founder Hasso Plattner.
Celonis customers have made its process mining software an integral part of SAP projects, like migrations from legacy ERP systems to S/4HANA. For example, Hager Group, a German electrical equipment and services provider, reported substantial cost and time savings by using Celonis for its migration from SAP ECC 6.0 to S/4HANA.
However, when SAP acquired Signavio in 2021, it embedded Signavio's process mining capabilities into the Rise with SAP offering for moving from legacy SAP systems to S/4HANA Cloud.
Celonis alleges that SAP is using the control over its ERP ecosystem to lock out other process mining vendors and third parties that need to access data from that ecosystem. SAP is not doing this by offering a superior product, but by making it "de facto impossible" for customers to work with non-SAP process mining applications, Celonis said in the complaint.
According to the complaint: "SAP is leveraging its control over its ERP ecosystem and the impending forced migration of customers to SAP's S/4HANA cloud-based ERP solution to prevent SAP customers from sharing their own data with third-party providers, including Celonis, without paying prohibitively expensive fees."
Celonis and SAP had enjoyed a mutually beneficial relationship, Celonis alleges, but SAP has broken promises that it made when it acquired Signavio that it would not favor its own product by charging fees for third-party access to data. Instead, SAP has attempted to coerce customers into using Signavio by threatening to impose high fees for data extraction if they use another vendor, offering Signavio at a lower cost, and making false and misleading statements about the risks of using non-SAP applications like Celonis.
In a statement to Informa TechTarget, SAP said it is aware of the filed lawsuit and is currently reviewing the claims. The company does not comment on ongoing legal matters.
Celonis also told Informa TechTarget that it does not comment on active litigation.
A legal battle in the coming data wars
The legal skirmishing over data is nothing new, and the companies involved would be better serving their customers if they settled, according to analysts.
Both SAP and Oracle have in the past tried to restrict third-party vendors from taking data out of their systems, according to Holger Mueller, principal analyst and vice president at Constellation Research.
The verdict in this case is going to be critical for the data war that precedes the AI war.
Holger MuellerPrincipal analyst and vice president, Constellation Research
However, the difference now is that data has become even more critical in the AI era, he said. The critical aspect will be how the third party can access the data, for example, with minimal compute cost or with a continuous running IT cost.
"If it's minimal, customers pay for the cost as part of their SaaS license; if it's continuous, then it's more problematic," Mueller said. "Does the SaaS vendor have to take the hit on the cost, or will customers have to pay for it? The verdict in this case is going to be critical for the data war that precedes the AI war."
There will likely be more "data war" skirmishes both in and out of court, as the importance of enterprise data for AI puts pressure on vendor business models, agreed Jon Reed, co-founder of Diginomica, an enterprise industry analysis firm.
However, customers definitely want open access to data, so vendors are ultimately going to have to bend here and allow third parties to access data in some form, he said.
"[SAP] customers find value in process mining and automation when moving to S/4HANA, so it's in SAP's best interest to have a strong partnership with all such vendors, including Celonis," Reed said.
In general, enterprise vendors don't want to be seen as adding friction to data access, so SAP should want to avoid this perception, regardless of what it thinks about the legitimacy of the lawsuit, he added.
"The lawsuit is new, so a lot remains to be seen, but SAP and Celonis really need to settle this one and move on to support customers in these transformations," Reed said.
Jim O'Donnell is a senior news writer for Informa TechTarget who covers ERP and other enterprise applications.
