Exclusive: three questions to SAP answered. A new dawn?

SAP-mcdermott

Bill McDermott – co-CEO SAP

In my earlier story about the departure of Vishal Sikka from SAP, I posed three questions for the company. SAP returned to Jon Reed, John Appleby and myself with an offer to answer those questions. In a short, 30 minute call with Bill McDermott, co-CEO earlier today, I refined those questions to focus upon product. Why?

Like others, I’ve read much of the speculation around Sikka’s leaving. The peanut gallery will have its fun but quite frankly it is irrelevant to what matters most to customers and the SAP ecosystem of employees, partners, developers, SIs and so on. They want to know about the now and the future.

For the sake of transparency, I’m setting out an abridged version of my pre-call notes that were passed on to the Office of the CEO interspersed with the answers provided. These questions are a synthesis of questions put to me across many channels and for which I don’t have answers but plenty of opinion. They don’t cover every piece of the puzzle, that would take much longer and will no doubt be fleshed out in the days and weeks ahead. They reflect the topics I have been told are most important to people who are invested in SAP.

Please note the answers are not a full direct transcript of our conversation.

Top of mind

Question: The shift back to Walldorf as a development power center. What does this mean given there are large and important units in India, Korea, China, Israel alongside Palo Alto?

Answer: There will be no change, we are a global company and remain one.

Question: If as seems the case, we’re now looking at a shift to apps, then again, what does this mean? Can SAP for example commit to some solid announcements (which don’t have to be talked about now) that demonstrate it will delight customers at SAPPHIRE?

Answer: SAP is a 50/50 company, technology and applications. We’ve said that the real excitement is for applications that can re-imagine what it means to run your business on HANA. I think you’ll see that we’ll have a riveting session on the networked economy. We have a once in a lifetime opportunity, whether it’s smart car, machine to machine…and all the implications that has on creating frictionless commerce that can be a total game changer. There are some early innovators that will surprise and I hope we will showcase these and there will be an honest appraisal to show how we break through the innovator’s dilemma.

Question: HANA and HANA cloud/platform. There is a strong view that despite any other development shifts, HANA remains a work in progress and that for long term cloud and applications, that work cannot be sidelined or substantially de-emphasized without significant impact. What’s the story there?

Answer:  Quite the contrary. You’ll see us strengthening the teams. Bernd Leukert (who now heads global development) put the suite on HANA so this guy understands the power of HANA better than anyone else.

Passion?

The conversation then shifted to questions about who will now be the ‘face’ of SAP, the person who will pick up the passion that was previously in the hands of Sikka and which was presented most to customers from a technical perspective.

On this point, McDermott then reeled off a series of people who have been promoted or who are being given specific responsibilities. These include people already mentioned in press releases such as Bernd Leukert, Franz Faerber, Bjorn Georke and Helen Arnold. McDermott expressed praise and strong support for each of these people. We expect to hear more executive voices going forward.

“I think we want to to start bringing the team forward. In this transition I will get more deeply involved in development than ever before. Let’s let the leaders step up and be known and let the company loose a bit,” he said.

Cloud?

There is something of a disconnect in the minds of customers over cloud as it relates to the Business Suite. This needs more explanation but McDermott clearly signaled that while there are challenges, there are opportunities.

“In the core, how we’re trying to bring a more beautiful experience to customers and does that align to pricing points [for cloud?] Will we be brave and step up to those things? We will be brave. In our transition, every asset will run on HANA in the cloud. You can take that and cash that check. SAP’s core has to go into HANA cloud but we will provide choice.”

He then went on to pick up on one of SAP’s strongest themes – integration. For competitors: “The wall always came down to the integration challenge.” He then went on to imply that presenting a coherent, working and attractive cloud based full ERP suite is where he wants to position the Business Suite.

Perception and reality?

There was one final question hanging in the air that we could not let pass.

Some of the press we’ve seen in recent times has left a sour taste. From this perch, it seems aimed at creating a perception of division inside the company. We asked McDermott whether he believes there is a problem. “I think the problem was with me…When we moved from the co-CEO to the sole CEO structure there was concern that this is about an American. I will be a better friend to Germany. I’ll hold a supervisory board meeting at the house [in Germany] the first opportunity I can.”

The German press has tended to write these statements off as little more than PR stunts but then McDermott made what I believe to be the most important statement of the conversation.

“I am only interested in having the best people for the job. It doesn’t matter where they were born or where they live. On the business end, we’ve had more of a breakthrough in Europe in understanding the global nature of SAP. Over the years I’ve learned that successful CEOs have a deep rooted respect for culture. What I hope to bring to this is a bi-lateral communication so the leaders can feel empowered to figure what has to be done to move forward. This could waken up a lot of people. What I see is a deep desire to work with authentic leaders and I have a desire to bring young people to the fore.”

Verdict

After the call, Appleby, Reed and myself held a post mortem. The view we came to is that this was a different Bill McDermott to one we have seen in the past. The conversation can best be characterized as sober and thoughtful.

Continuing concerns will need working through. This is perhaps best reflected in comments I received from Philip Adams, the UK and Ireland SAP User Group chair who said in email:

“It’s a shame to see Vishal leaving SAP, especially with Jim Hagemann Snabe soon to step down as Co-CEO. From a customer point of view, both of them have done a great deal to deliver both innovation and customer value. SAP is clearly going through a management transition and we look forward to working with Robert Enslin and Berd Leukert as they settle into their new roles. We also hope that the new executive team, along with the supervisory board will continue to keep balance of focus between innovation, customer value and sales.”

This would have been a difficult call for any CEO faced with the sudden departure of a senior board member. McDermott dealt with our questions directly and without veering off into sales speak.

We came away from the meeting impressed with McDermott’s candor. But as everyone knows, the key is in execution. The fact he held up so many other people as leaders and spokespeople upon whom he will rely speaks to a different way of working that should be welcomed by all. It was well beyond the rhetoric one normally expects and should serve to demonstrate not just the bench strength but an across the board and renewed commitment.

We already know that customers with HANA projects have concerns and there will be considerable pressure to find the right people to fill in the appointment book. If McDermott’s team deliver then this will be a temporary issue.

If we have interpreted this correctly then perhaps for the first time in a while, there is the making of a succession plan that recognizes merit rather than having to respond to sudden jolts.

The next real test comes at SAPPHIRE where we will hear more about the company’s fresh interpretation of a vision that started what seems a lifetime ago.

Den Howlett
Following 20+ years in finance and IT related roles, Den Howlett became a freelance writer/analyst/commenter specialising in enterprise IT. He has been calling the vendors to account ever since.
Den Howlett

@dahowlett

Disruptor, enterprise applications drama critic, BS cleaner, buyer champion and foodie trying to suck less every day.
Den Howlett
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  • lyx says:

    The answer to the 3 questions is quite diplomatic, people knew these will be the answer from SAP if we throw those question to them and can only be answered in this way. What people is not the essential, we will see what they will act

  • vmirchan says:

    Think you forgot to mention SAP customers have spent over $ trillion in last 5 years on ECC while SAP tries to sell them more overpriced products like HANA 

    New dawn would be to reduce that cost to something less than GDP of most countries.

  • naveenketha says:

    hreiter oswaldxxl dahowlett applebyj jonerp just hope the same happen again but it’s a big loss to #sap

  • dahowlett says:

    @ABridgwater Derek_duPreezMifght have something to do with the content we provide rather than speculation around press releases and rumors ;)

  • oswaldxxl says:

    jonerp BillRMcDermott dahowlett applebyj the Jets needed Broadway Joe to make the team work. #pandering #shameless

  • oswaldxxl says:

    hreiter dahowlett applebyj jonerp that was before my SAP time.

  • dahowlett says:

    hreiter – fair enough…

  • hreiter says:

    dahowlett don’t believe it is

  • jonerp says:

    .oswaldxxl (cont) re: SAP team/youth – if BillRMcDermott adheres to merit-based approach he advocated, could be win dahowlett applebyj

  • jonerp says:

    .oswaldxxl IMO @BillRMDermott recognized Sikka’s loss as architect on call.Team approach could be impactful (cont) dahowlett applebyj

  • dahowlett says:

    hreiter This is different…

  • hreiter says:

    oswaldxxl dahowlett applebyj jonerp remember big uproar after Shai left but SAP emerged stronger with Vishal & hope this will repeat

  • ABridgwater says:

    Derek_duPreez interesting… SAP loving you guys, all power to ya

  • applebyj says:

    lukemarson dahowlett jonerp BillRMcDermott Thanks – and to Den for being the wordsmith.

  • dahowlett says:

    lukemarson To be clear – we had limited time so wont have covered everything. Suggest those with qus stop speculating and go to source. ;)