Today was earnings call day for SAP regarding its Q3 FY2015 results. Since we already know how they performed, I only had a couple of earnings related questions for Bill McDermott, CEO SAP. I'll return to those in a later story.
I was more interested in using the call to find out how the company is making the internal transition to cope with the demands of structural changes in its own core, back office markets, the shift to subscription and service models, plus the new set of requirements for meeting the needs of customers who are themselves waking up to market disruptions.
Solving for any of these is a tough ask for a company that has enjoyed almost unprecedented, long term growth and prosperity. For many inside SAP, the need for a refresh doesn't compute when weighed against that success. It has been an ongoing problem for at least the last 10 years. It is a problem that has become arguably acute in the last five years.
We see that most notably in attrition among SAP leadership and in the ecosystem where some extremely talented people have walked away to others things. I can think of at least thirty people I've known and who I respect as technologists who have gone the way of other things in the last five years.
And it's hard to avoid the Silicon Valley perception that SAP is 'old skool' when compared to the flashier Facebook's of this world. Speaking personally, those who think that way are idiots. SAP, along with other enterprise class vendors, are solving some of the most difficult problems on the planet. That's way different to making up stuff that helps post kitty pics and sells adverts.
I suggested to McDermott that success breeds a form of ossification that is difficult to cure, but that there might be an answer in nurturing youth. Recently, I have been hearing very good things from Germany about how SAP is working with young people and finding success in discovering a fresh talent pool while also learning new ideas. That is a surprise and that was my focus for the fifteen minutes I had with McDermott earlier today.
McDermott largely agreed and then went on to explain some of the personal programs he has put in place:
One of the things worth mentioning is the university alliances. We’ve provided them with tech and know how so they can train the next generation. The other thing is we have a vocational program. There are 1,000 people in the program today I want to double that the next year. It is about building a bridge between the university and the world of work. It is a cross-functional initiative to help young people start a sustainable career. Look, I don’t have any objection to investing in young people even if they don’t end up at SAP. I remember when I was a kid and how my career progressed. I wanted to get trained and learn. If I can give everyone a chance, then that's surely a good thing?
The universities alliance has been in place a long time. SAP counts 2,400 universities in that program and says it has touched more than a million students.
I applaud McDermott for doing something that has long been missing in the world of work --- investment in training that matters and that prepares young folk for a reality that is often far removed from the classroom. What other programs are in place?
We have this 'impact program' where we take 25 post-grad MBA and put then in the office of CEO. We get them working on strategic programs. I want to see this expand into the graduate academy. We can then expose this to all the board areas. Then we have this idea of a 'social sabbatical.' We know that young people want a purpose and not just a paycheck. We take young people to work with entrepreneurs. We learned that’s a good way for them to learn about the world while doing something about which their passionate. We don't insist but it ends up that 90% of them come to work with us.
But --- isn't there always?
In talking to colleagues, there is a sense that SAP as a company, is a tad schizophrenic about education. I, along with others have long campaigned for the idea of practice based assessments rather than the coursework and multi-choice certification that SAP has traditionally employed.
It could be that McDermott's initiatives represent the 'tip of the spear' for change in education and encouraging youth at SAP. If McDermott can finally kill off the idea that education has to be a profit center and make it part of the cost of doing business, then that will help change the culture and purpose of SAP's education teams.
None of this is easy. It's very, very hard. But as I have said on many occasions in the past, SAP should never be written off. It has many good things going for it.
In my next piece, I will be talking about how change is playing out in the context of the new 'digital core' as Steve Lucas described it at the keynote yesterday.
Endnote: I doubt that financial analysts care, but it might be an idea to have education and succession as a talking point on earnings calls. That's how you get the future you need.
Disclosure: SAP is a premier partner at time of writing.