#SAPCEBIT
In their first public appearance after last month’s surprise announcement of its return to the two-in-a-box CEO, new SAP co-CEOs Bill McDermott and Jim Hagemann Snabe made a number of promises. Among their statements at CeBIT earlier this week:
- SAP will return to double-digit sales growth
- SAP is not longer reluctant to make acquisitions, even big acquisitions.
- There will be a new culture of “fun” and “trust” at SAP, where management will become “approachable.”
- In the interest of speed and leanness, SAP’s 12,000 engineers will be organized into small entrepreneurial teams of 10 or so people with more customer contact and more control over their own projects.
- SAP co-founder Hasso Plattner will simultaneously give the new co-CEOs more running room and be more involved as a technology advisor.
By logical extension, one might assume that SAP is also poised to stop a speeding bullet and leap tall buildings with a single bound.
I laughed aloud at the Financial Times coverage, wondering whether [a] a snide British editor was implying that the Germans have delusions of grandeur or [b] the new co-CEOs of SAP really do have delusions of grandeur.
So I replayed the co-CEOs describing their path at the press conference. There’s a lot to quibble about. Except the intention. And as you may remember from reading your Herman Hesse, that is the most important thing to get right.
Goal #1: Profitable Growth
Co-CEO Bill McDermott promised to return to double-digit growth — when the macroeconomic climate around the world allows it, that is. Meanwhile, he set expectations for full-year 2010 revenue from software and software related services at four to eight percent.
Do the mental arithmetic and you will see that a miracle must occur to achieve an overall growth figure in the double digits. McDermott did not elaborate, but there are a number of possibilities as to how the math might work. For example, maybe the BRIC countries, the Middle East, Africa and Turkey will all hit sales out of the park. And/or maybe SAP’s mid-market competitors will roll over before the comprehensive if belated fabulousness of its software as a service, Business by Design, opens up a million new accounts. And/or maybe the Business Objects business analytics acquisition will deliver the promised synergy with SAP’s business process software. And/or maybe SAP will acquire some large fast-growing companies.
These are a lot of maybes.
But then again, it sounds as though SAP will not be caught napping when the turnaround comes. And fortune does favor the well prepared.
Goal #2: Continuous and Efficient Innovation
The thought of a fun culture at SAP makes me want to break out into song, Someone’s dreaming, Lord, kumbaya…
The Kumbaya sentiment is powerful, but glosses over the discipline required to run a rapid development process? Is this an example of magickal management thinking? Hmmm… SAP began phasing in agile development practices last year, so the company has some firsthand knowledge of what is required to make this work.
Even so, one of Jim Snabe’s comments worried me: “This methodology is not new, but so far it was only used by small companies.” I beg to differ. Many large shops have found that that radical architectural simplification and ruthless discipline on interfaces are required for small teams to turn out changes quickly and in parallel. The prospect of 1,200 small teams mixed in with multiple large acquisitions sounds like either [a] a cat-herding matrix from hell or [b] a recipe for technical anarchy.
But management is trusting the development staff to rise to the occasion. The pride of German Engineering is at stake! And pride of workmanship is a powerful force.
Goal #3: Helping Customers Run Their Businesses Better
With all respect due to Herr Plattner and what the co-CEOs call his “brilliant mind in technology,” charting a wise course for SAP is not a technical problem but a business problem. Why? In the words of MIT Professor Michael Cusumano, there is a key distinction between enterprise software and other businesses. Software is a unique business because it becomes whatever function it is handling for a particular customer or company. In the enterprise, the software is the business process. Customers know this and buy accordingly.
Business decisions explain SAP’s rise to dominance. Remember how much sense it made in the 1990s to replace antiquated ERP systems with world class best practices in time for the Y2K deadline?
Now, CEOs want to businesses grow again. SAP customers need to run day-to-day operations more effectively to free up funds for investment in innovation leading to growth. SAP co-CEOs appear confident that the bottom-line business contribution of their “beautiful” software will be self evident to customers.
Yet when upgrading their business software in 2010 and beyond, SAP customers have a difficult business decision to make about the best combination of ownership models for IT infrastructure in general. The choice among cloud computing, in-house systems and outsourcing has put the lock-in issue back in the foreground for any thinking buyer. What are the appropriate standards to protect a customer’s freedom to reallocate IT infrastructure among these ownership models?
If SAP wants customers to fall in love them again, SAP will have activate some of its gray matter. Right now, there is little evidence that SAP is thinking about this at all.
But if SAP doesn’t recognize open procurement standards as a thought leadership opportunity, there is a self-correction mechanism. The new management system will make it easier for customers to enlighten the company.
So, What if Anything Is Wrong with SAP?
Just for fun, I searched on “What is Wrong with SAP?” Google returned 4,600,000 results. Clearly, SAP customers have plenty to quibble about.
But the new co-CEOs made one thing clear. Lack of ambition is NOT one of SAP’s shortcomings. Still burning in the heart of SAP is the desire to be great.
After one of the reporters implied that the strategy was a giant and undocumented assertion, Bill McDermott spoke as follows: “If you want to be trusted, you have to be the first to extend trust.” The company is doing this by putting its employees in closer touch with customers.
This statement made me realize what was so odd about the SAP co-CEOs’ coming-out party at CeBIT. Business leaders seldom channel Siddhartha! In a world accustomed to theological asides from government leaders, it is surprising to see anyone in a business suit speak with what Buddhists would call a right mind.
SAP’s new leaders appear to have a pure-minded belief in the circular nature of the business cycle, and are simply trusting in a Noble Path. For the sake of its customers’ happiness, I hope the Buddha was right about the power of positive thinking.
We are what we think.
All that we are arises with our thoughts.
With our thoughts we make the world.
Speak or act with an impure mind
And trouble will follow you
As the wheel follows the ox that draws the cart.
We are what we think.
All that we are arises with our thoughts.
With our thoughts we make the world.
Speak or act with a pure mind
And happiness will follow you
As your shadow, unbreakable.
–Dhammapada, The Teachings of the Buddha
