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SAPPHIRENow 2020 - CEO Klein's inaccessible keynote focuses on resilience, profitability and sustainability

Den Howlett Profile picture for user gonzodaddy June 15, 2020
'Service unavailable' for the CEO's keynote marred an otherwise interesting vision SAP has set for itself.

sapphire now 2020 virtual klein
Virtual Christian Klein keynote (screenshot from YouTube)

There can be no sugar coating this but SAP's efforts to stream the CEO's pre-recorded keynote and that of Adaire Fox-Martin on its own property got off to a catastrophic non-start. I along with many others reported 'Service unavailable' when attempting to access the content. For its part, SAP scrambled to provide video links on Twitter (via Periscope) and LinkedIn but by then the reputational damage was done. 

I have no direct insight into what happened other than to assume that SAP chose the wrong platform for which to deliver to the outside world. Unsurprisingly, the proliferation of scathing remarks on Twitter was hard to avoid. At one point it looked like #SAPPHIRENOTNOW might end up a trending hashtag. I summed it up by Tweeting:

sapphirenow 2020 dead
(screenshot from the author's Tweetstream)

Snarky comments aside, I felt sorry for CEO Christian Klein. The sustained outage for what is the most important event of the company's year with no immediately obvious Plan B is a hideous embarrassment. At least they managed to bury some of the snarkiest Tweets in the #SAPPHIRENOW stream. I know from the interactions we had prior to the event that Klein wanted to ensure he tapped into the pulse of the whole SAP ecosystem. Did he succeed? Partially, but then there's a lot more to follow. 

An OTT production 

There can be no doubt that SAP's marketing department went into production overdrive taking the notion of 'virtual' quite literally. I know they had help from TV producers and other professionals at least in the scripting and design and that in the search for perfection, some scenes were reshot many times. Overall, the recording had an overproduced feel with too many repeated exhortations prior to Klein's appearance. In his segment, I thought I was watching a version of the Matrix Reimagined. My colleague Jon Reed said much the same thing in an email:

Keep in mind I don't put too much stock in keynote reviews one way or the other. But my first impression was that it was very overpolished and overdone. I would have preferred a much shorter, more informal vibe with the focus on Christian. He tends to do well in such formats. 

Three themes

On the other hand. Klein successfully tapped into both a current and future audience by framing his keynote across three dimensions: resilience, profitability and sustainability, a refrain that was oft-repeated during the session. He more or less pulled this off but it was unbalanced in approach.

Sustainability has been an SAP top of mind topic for many years with former CEO Jim Snabe making it his own during his tenure as co-CEO. Now it's Klein's turn. Over the years I've asked myself whether it makes sense for a company like SAP to fill this role as cheerleader for sustainability and especially climate change. The problem has always been one of making sustainability a topic that companies can see through the lens of profitability. That's Klein's premise which he cleverly wrapped up by referencing his seven-week-old daughter in a passage that will resonate with some but not all:

The current situations has shown us we can quickly try and change if we want to. Let's seize this moment of change to build resilient, profitable, but also more sustainable enterprises. Do you feel this responsibility? I definitely feel it. We are all businesswomen and men. And we care about our business success. But at the same time, we are members of our communities. And we are responsible for what kind of Earth we will leave to our future generations. We have a unique opportunity. For seven weeks now, I have another great reason to care. Her name is Emma, I can tell you I can hardly wait for another sleepless night. I want nothing more than to see her and my three-year-old son Max grow up in a healthy environment without limitations caused by us. The good thing is, we are in the driver's seat. And this is not only about the next generation. This is also about our customers and employees who choose companies, which are all about sustainability. Today, and in the future, companies are not only measured based on their financial performance but on their contribution to society. 

A lofty ambition but one that left some perplexed. While there can be no doubting Klein's sincerity, some consider his ambition to be ill-timed. I'm on the fence. While it is important to look forward, it is essential to recognize the difficulty millions of people face today and that was missing from this keynote. 

Adding to the ire I saw expressed in social channels, was the canned presentation by Lutz Meschke, CFO of Porsche talking about the company's digitalization journey which, while interesting, acted as a backdrop for Klein to launch into an imaginary car buying future that combines complex build to order with data coming from social and market trends that optimize sustainable choices. In any other year than 2020 that would be a compelling message but when many are in survival mode?

I would have been more impressed to hear from the government bodies for which SAP and Deutsche Telekom are providing Track and Trace apps. On the upside, it allowed Klein to showcase SAP's vision for end to end processes combined with data as the backbone for decision making alongside the notion of a digital twin which in this case serves as a virtual representation of the car and which is maintained as a digital artefact through its lifecycle. Again, a neat demonstration with plenty of technology on display but is that enough? Certainly having a CFO talking tech is unusual but also hints at the profitability theme. 

On resilience, Vinnie Mirchandani captured the mood among those I saw in the social channels:

Given the turbulent times we live in, Christian could have hit it out of the park if he had focused mostly on resiliency, re-imagining broken supply chains and business continuity. He could have presented on heroics and acrobatics in his customer base as they massively scaled volumes up or down, as they delivered innovative new products or services in weeks, as they pivoted their business model or customer channels.

In Jon Reed's email to me, he summed it up this way:

 I would have liked to hear much more on how SAP is helping companies re-open safely, perhaps with some of its own customers that are doing just that. However, I do like SAP keeping the climate change impact issue going as it does still matter. And the profitability AND sustainability message is a good long term message for SAP to be putting out there. 

The investor experience

At this point, I'd like to contrast the virtual Klein with the live Klein I heard during the investor call later in the day. Klein was joined by Luka Mucic, Thomas Saueressig, and Adaire Fox-Martin. 

From the get-go, Klein, talked about the problems of the pandemic and gave examples I wanted to hear, referencing, in particular, the deal between SAP and Honeywell for Real Estate that indirectly plays to the issue of a safe return to the workplace. He also talked in more depth about integration saying that:

...we have now delivered 50% of the suite integration policies and by the year end, we will have 90% of all the integration qualities, which a modern cloud ERP has to deliver.

To complete the technical picture, Saueressig added:

SAP S/4HANA in the cloud has more than 300 APIs, which we export, which means 80% of all business objects are available for integration for extensibility.

Fox-Martin chimed in with the customer perspective:

Certainly, many customers in the past have differentiated their business from others by the degree of customization that they have invested in, in previous versions of SAP. And this is, of course, a consideration as we migrate the customer, particularly existing customers to the S/4HANA environment. I think the agility of the platform, the agility of the environments that Thomas and his team have created, has meant that many of these customization software in the past necessary are no longer necessary for customers in the next generation of ERP, which is represented by S/4HANA. And that, of course, helps our business case inordinately, because the total cost of ownership of managing that environment comes down significantly for the customer.

On the industries, Klein said that he doesn't expect SAP to support all 25 for all processes but instead will cherry-pick and seek strong partnerships for others. He wasn't specific about the industries SAP will not support but it is obvious that top of mind for SAP support are retail, oil, gas, and energy utilities, telco, pharma/healthcare, government (in selected geos) and manufacturing, particularly automotive. 

My take

SAP's competitors will poke fun at the company for the technical problems it seemed powerless to overcome for the keynote. We can only presume that engineers are working flat out to ensure that tomorrow is 'another day' and one where it is easier to focus on the content. Failing that, a Plan B must surely be available. 

There is a lot more to come with Q&As scheduled, further presentations from the board, and a final Q&A at the end of the week. I hope the main elements of the remaining keynotes are more 'natural' than what we saw in the CEO's keynote.

Only then will we be in a position to assess how well SAP has met today's ecosystem of customers and partners' wishlist

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