Sapphire Now 2018 - SAP CEO Bill McDermott on politics: 'It's messy out there'

You wouldn't have thought that technology has a lot to do with politics, but tech leaders these days are having to deal with political issues more and more.

Whether it's the potential impact of AI on society, questions around data privacy, or diversity and globalization, politicians are putting the tech industry under scrutiny.

While some tech leaders are reluctant to put their heads above the parapet, SAP CEO Bill McDermott is keen to weigh in with his views, as diginomica found when Jon Reed and I caught up with him during Sapphire Now this week.

It's only two weeks since he was last in Paris, France, at a meeting of tech leaders hosted by President Macron. One of the big focus areas at that meeting was concern that people will get left behind in the shift to digital — a topic he also touched on during his opening keynote at Sapphire.

While governments want their countries to benefit from the upside of digital innovation — he quotes a McKinsey projection that AI will contribute $16 trillion to the global economy by 2030, while also cutting business costs by $4 trillion annually — they also worry about the inevitable disruption along the way.

They see what's happening with AI and automation and they see that cognitive work, work where human judgment empathy is at play, those jobs have been increasing, and obviously digital jobs are going to increase. But all the jobs that are more manual where computers can do it better, they're very worried about those jobs going away ...

If you're a public sector official, you probably are pushing for digital, because you have to have a competitive country. At the same time you're probably pushing for business — and all the private sector help you can get — to essentially retool, reskill [and] massively online computer train society to compete better in jobs that will be needed, not in jobs that will no longer be needed.

Reskilling for AI

In Tuesday's keynote, he had outlined a response that's based on using AI to augment human capabilities rather than seeing them as in opposition to each other:

As leaders, we all face two burdens of responsibility.

First, we need to learn the lessons of the financial crisis. Too many people were left behind. We need to reskill and upskill our workforces with more public and private partnerships, university alliances, and massive open online courses.

Second, we cannot let anxiety detract from opportunity. The new wave of growth in this economy will be at the intersection of speed of the machine and judgement of the human.

Globalization and responses such as trade protection were a second area of concern that surfaced at the Paris meeting, he says:

What do you do in this big, large world of ours? Some people want to make it smaller and some people want to make it a lot bigger. How do you deal with things like free trade, fair trade, tariff-related scenarios and so forth?

Bringing GDPR to the US

On that note, I asked whether he agreed with others in the tech industry that the US should follow Europe's lead on GDPR and adopt similar data privacy laws. He's absolutely in agreement, he says:

I do. I really do. I think that the EU will be a leader in this because one of the reasons that — this is just my opinion — one of the reasons that people resist change is you don't want it unless you have to deal with. But once you already have to deal with it in the EU countries anyway, you say to yourself, well, you know, why not go all the way?

Because it's real hard to distinguish from one theater to another, the privacy and the different policies and the different trades and the different clouds. So you get to the point where it's almost easier just to say, let's try to adopt the standards here. Because cloud companies do well with standards. They do really badly with, it's different here and you have to have a separate cloud for the other thing. That gets real sloppy.

SAP has an advantage there because of its European heritage, he says, but recent developments with consumer brands have helped move the topic to the top of the agenda with customers:

What I'm hearing is there's a lack of trust. I see companies like Facebook and others coming to these meetings now. They never came to these meetings before and they're front and center saying, you know, 'I got the memo.' So they're worried.

Keeping a clear head

This is just one of many political issues that have repercussions for the tech industry and business in general. Citing global uncertainty in areas as diverse as trade tariffs, security, privacy and even the upcoming US talks with North Korea, McDermott concludes that it's important to keep a clear head and look for the upside:

It's really messy out there and the thing that I believe that you have to do in a mess, is stay cool and do what you do best. What we do best is, we can tailor the software solution to accommodate the circumstances, whether they are world circumstances, regional circumstances, region-specific circumstances or market segment circumstances. We know how to do that and we are geared up to do just that.

I'll give an example. Take the steel and the aluminum [tariffs]. Don't think for a minute we're not right now dealing with steel and aluminum ideas and [talking to] manufacturing companies with the digital boardroom on how you might deal with navigating through this tariff monster. And that's new software sales ...

You'll see a lot of companies look at that digital boardroom and say, 'How do I apply the risk management techniques to my supply chains? How do I work around that on my supply chains, on the way I build my products, on the way I sell my products, on the way I buy products from my suppliers?' So I suspect that SAP will be very busy managing through all of that.