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SAP executives on what digital transformation means for CIOs

SAP Europe president Franck Cohen and CEO Bill McDermott discuss what digital transformation means for CIOs and the supplier’s partners

A wave of digital transformation threatens to sideline CIOs, according to SAP Europe president Franck Cohen. The CIOs that the supplier has spent decades building relationships with “may become obsolete” in the not too distant future, he said.

Cohen sees one-quarter of large enterprises in the European Union appointing chief digital officers (CDOs), with a spectrum of remits. Some are taking charge of digital transformation programmes from start to finish, others are setting the strategy for hand-off to a CIO.

Reflecting on the most recent Sapphire – SAP's annual customer and supplier jamboree in Florida – Cohen said: “It was truly international in that we had more than 1,000 customers coming from Europe.

“We were not talking about ‘Why Hana?’ but about what to do with Hana. It was about industry scenarios,” he said. Hana is SAP’s in-memory database platform and the cornerstone of the self-transformation the supplier has been undergoing for the past few years.

“And those [industry use cases] are around the concept of digital transformation – we see that with many of our customers. I think that there is a trend for digital, for the internet of things and so on. We see this evidenced in the financial and business press, not just the IT press," said Cohen.

“We see CIOs being challenged by their boards. What is the role of a CIO compared with a chief digital officer? It’s a good question. If the CIO does not embrace the transformation, he’ll just be keeping the lights on”.

Risk of CIO obsolescence

SAP has in the region of 1,500 “co-innovation” projects with customers with which it has strategic relations. Those programmes must have board-level sign-off, said Cohen, which means their CIO sponsors probably sit on their companies’ boards.

“Either the CIO becomes the one who develops the strategy for their companies, extending their role to being chief of the information systems or they will become obsolete,” he said.

According to Cohen, SAP cares about this possible obsolescence. "We have spent years developing relationships with CIOs, and we want them to continue to have a major say in IT spend and delivering IT solutions to the company," he said.

Read more about digital and the CIO

“We also have to educate own people how to talk with the CDO. They know how to talk to CIOs, they know what the CIOs expect of them. So that's a huge investment on our side.”

But how does Cohen see SAP’s partners changing their business practices as SAP shifts towards the cloud? And what does SAP want to see them do?

“The ecosystem has to adapt to the new reality. Cloud is a good example. The partners need to adopt new models with respect to cloud implementation services," he said. "No one wants to buy a cloud solution to implement over two years. No one wants to buy a cloud solution and then spend months and years blueprinting. The expectation is that everything will be easy with a cloud system.

“If we still have five or six times ratio between software and services, that won't happen. That will slow down cloud adoption. So we are pushing very hard for our partners to adopt a new model – where there is no more blueprinting. That is the way to have implementations in weeks not years,” Cohen added.

Run simple

Since Sapphire 2014, SAP’s mantra has been “run simple” – making things simple to use, imiplement, deploy and upgrade. 

“If you fail on the simple, you'll fail miserably” Cohen said. “We are struggling to convince all the partners to adopt this model to go much faster. I understand they are charging hours, but they have to reduce the lead time. And get the money back through the volume.

“It's an on-going process – some of them got the memo, others maybe not. The small partners are doing well," he added.

The other major change, said Cohen, is that its partners have to think about how to take advantage of new technologies such as mobile, cloud, real-time, big data and the networked economy.

"That can be difficult because it means new skills that they may not have," he said. “A good example for the larger SIs [systems integrators] is it is much easier to continue to sell consulting hours on SAP financials than it is the newer technologies where they have to educate and certify their people. So the investment is much higher for them.

"So to make that easier we need to rethink, as SAP, the certification, " added Cohen. "We could charge less for certifying on the newer technologies, where we need more consultants to do the job, for instance.”

Re-imagine through the eyes of the customer

In a briefing with European journalists at Sapphire itself, CEO Bill McDermott gave a global SAP perspective on how the supplier wants its ecosystem to shape up in relation to its own shift to the Hana database platform and cloud delivery.

“I would like them to re-imagine life through the eyes of the customer. The customer wants to transform the way they do things for their customer. If our objective is to help our customers serve their customers better, then things like knowing Hana inside and out, understanding the nucleus of S/4, and cloud provisioning at a much lower cost and with much faster cycle times, become critical," he said.

"So I want the partners to be better educated and on the side of the customer. What you give up on the size of the relationship you make up in volume. So I’d like them to do more things for more customers rather than a few things for one”.

Is that a political and diplomatic challenge, did Cohen think? “Well, it is and it isn’t, because the world is going to move [in a digital direction] with or without any of us. The march to run simple has hit full stride and to pretend that it is not here is a way of acknowledging you are not in the game," he said.

“And I want them to win, I really do. We have two million people in our partner ecosystem now, we will have five million or more by 2020. I’ve also met startup companies that have built their future on Hana, and will put their unique and amazing solutions on the Hana cloud platform. We’re getting more into a software world than a world that’s based on hardware with services that cost too much,” Cohen concluded.    

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