SAP Forum: Life after Lars

Lars Dalgaard was always going to be a hard act to follow, but someone's got to do it.

In reality of course a lot of people will be doing it - Lars had a fair few responsibilities to pick up after all - but Thomas Otter is the one picking up the slack on the cloud HCM front within SAP.

A former Gartner analyst and recognized HR expert with 21 years of experience in the IT industry, Otter's new role was among the various appointments announced by SAP when Dalgaard stepped down back in May. He's leading cloud HCM product development.

I met up with Otter at the SAP Forum last week and had a lengthy chat that covered off a variety of topics around life after Lars.

Here's a selection of the world views according to Otter.

Why join SAP from Gartner in the first place?

"I'd been at Gartner for five years and was asking myself if I wanted to do this for the rest of my life. A number of software vendors had started to pitch jobs to me. What made me take SuccessFactors seriously was that they had a very clear idea of what they wanted me to do and that was to build product.

"I'd spent the first part of my career building and implementing products; the second part criticising products.

"I had worked at SAP when it was a vibrant company back in the early 1990s and continued to work there as it became more mature and conservative. A more conservative SAP was not a place for me. The combination of SuccessFactors and SAP was intriguing."

Intriguing? Is that another word for challenging? 

"As an analyst you get to know what the customer perspective is. I had a good bird's eye view of what I was getting myself into - and I've not discovered any skeletons so far that I didn't expect to find.

"SuccessFactors on its own didn't have the scale to effectively go beyond talent management. It would have been a strain to do core HR.

"I've said many times that HR can go into two buckets - ice cream and broccoli. SuccessFactors were world champions in ice cream. They had done a good job at building a world class product in talent management, but they were naive about the broccoli, the core HR space.

"They embarked on the project naively and fairly quickly realised that. They regrouped and re-jigged what they were doing in core HR and that's been given priority within SAP.

"It is now a viable product, not a fledgling product any more. We can now take it from being viable to being market dominant."

So how do you define 21st century HCM systems?

"HR software needs to be easy to consume. You should be able to deploy it in the air and deploy it while you're running the current business.

"If you have working systems in place in Hungary, then don't rip it out. Deploy it around that and then replace Hungary when you're ready. So we need to look at how we create a co-existence model that scales.

"A second factor is globalisation and localisation. We can do that better than anyone else. We've been at it longer than anyone else. We get the cultural challenges.

We are not a US software vendor telling the rest of the world how to do things. We take into account best practices from around the world. There are good things everywhere and as we build software we should be taking advantage of the best things from around the world.

"Take mobile for example. African countries are much better at mobile than western ones. In parts of Africa, mobiles are the only devices that have electricity so you design differently for that than for someone who can go to a desktop.

"In France, it's very difficult to fire people so French companies do long-term succession planning better than anyone else. US succession planning is much more simplistic as it's based on a hiring and firing model.

"So there's best practice everywhere in HR and culturally we are well placed to do that."

How do you tackle HR personnel's resistance to using HCM systems to full effect?

"We have a relentless focus on usability. We don't always get it right but we do take it very, very seriously. It's relatively new phenomenon but SuccessFactors has brought an energy to SAP usability.

"Talent management applications have always been built with the need to convince people to use them. You needed to design talent management with enticement in mind.

"Time and again I hear from customers that they took us on faith and that we have delivered improvement. They can see a path towards what they want. You do learn not to promise too far out. I have a crisp idea of what we need to deliver in the next releases. That gives a speed and a determination."

And the cloud makes it easier to get those releases out there of course?

"The biggest learning I've had has been the shift that cloud has meant in software development. I'm not a cloud zealot but I have been amazed by the three month release cycle which means you can be so much more responsive to the customer.

"You can have a list of requirements as long as your arm, you can commute to delivering a chunk of that in three months and another chunk in another three months. You can do 80% over a year.

"With on premise you only have one chance to do a new release and then you only got feedback from customers years later after the company had implemented. Now you can have a four month customer feedback cycle and as such can be much more focused on delivering to meet customer requirements.

"The only downside is that if you release every three months you can get tunnel vision, focusing on three months ahead. So it is important to have long term vision."

You mention on premise and of course SAP has a healthy installed HCM customer base using that model. Does Employee Central compete with on premise SAP HR then?

"Employee Central is a both a replacement and a complementary offering. We can take the biggest companies to the cloud. Most of the time we don't compete, but sometimes we do.

"If there was some magical new company that had 200,000 employees then I would be competing with my on-premise colleagues to win the business. That's life. We need to get better at managing those conflicts when they do arise.

"We want to build the best HR systems in the world in the cloud. Because we are building today we like to think that what we are building will be better than what came before. We have learned to do things differently so in that sense it's competitive. If I look at the development roadmap, I can demand growth and focus that more mature products can't receive.

"That said, there are 14,000 on premise customers and many of those are happy to be on premise. So we have to co-exist. Why would anyone rip our perfectly good functionality?

"Customers might run SAP payroll on premise but put HR and talent into the cloud. You can have Employee Central as a slave above multiple on premise systems. Or you could deploy Employee Central in your subsidiaries and have SAP on premise at headquarters.

"Maybe you expand into China or Romania or you make an acquisition, so you go with the cloud for that and keep on premise elsewhere. We can make [cloud and on premise systems] talk to one another in a way that no-one else can and make them consistent.

"It becomes about a hybrid existence."

Is that a complicated proposition to communicate?

"Some of this is complicated. To make out that co-existence is easy…it's challenging.

"Something I'm trying to bring forward is that we need to be thinking about the menu, not the recipe. When you go to a restaurant you want the menu explained to you, you don't want the recipe explained. You don't lead on the recipe. You might ask for it later but you don't lead on it.

"SAP's engineering background has been recipe-centric when it should be menu-centric. SAP has always had a desire to go into detail too soon."

And life after Lars?

"It is sad to see Lars go. He built something very special. At the same time, there reasons for his going are less about SAP and more about a challenging and wrenching personal experience.

"That said, Lars was not a technical engineer. What we have with SuccessFactors now is that having engineering housed under [CTO] Vishal [Sikka] means that it ail be much more aligned with the rest of SAP.

"SuccessFactors will remain its own master, but it will be able to tap into SAP's resources with much less friction because it is all under one person."

I can't let you go without asking about the Oracle/Salesforce.com alliance announced last week. How far has Larry Ellison and Marc Benioff's new bromance changed the cloud apps landscape for SAP?

[Diplomatic pause]

"It's just great that two grown men have stopped bickering."

Verdict

Life after Lars?

Different. Inevitably.

But assuming SAP can manage its internal co-opetition between on premise and cloud, there's a pragmatic roadmap taking shape to build on and extend the success of SuccessFactors in the cloud.

Having all things cloud fall under Sikka is eminently sensible and gives a more unified sense to what is an ever expanding portfolio of diverse offerings.
Disclosure: at time of writing, Oracle, Salesforce.com and SuccessFactors are all Premium Partners of diginomica.