Q&A: SAP co-CEO Jim Hagemann Snabe on SAP strategy

Jim Hagemann Snabe was appointed co-chief executive at enterprise software maker SAP in February. Computer Weekly quizzed him at the recent UK SAP user group conference

Jim Hagemann Snabe and Bill McDermott were appointed co-chief executives at enterprise software maker SAP in February 2010.

Three months later, the pair detailed various aspects of SAP's strategy on the 100th day of their joint leadership of the company at SAP's annual Sapphire customer and partner conference that took place simultaneously in Frankfurt, Germany, and Orlando, Florida, in the US.

Topping SAP's agenda, they said, was real-time processing, mobility and sustainability.

In November, Snabe attended the UK & Ireland SAP User Group Conference 2010 in Manchester for the first time, and Computer Weekly quizzed him on the progress SAP has made in implementing its new strategy and integrating recent acquisitions.

Q: How is SAP's new strategy going and what have been the biggest successes and challenges?

Snabe: On the one side it is an interesting innovation path that we are on, but it is also a transformational one from the company's point of view. Transformation is always hard work. I don't believe in quick miracles.

What are the good things we have seen? First of all, we have seen very positive feedback from customers and employees. The excitement is about the fact that SAP can become an innovator again. A lot of broken trust from the past is being rebuilt, and that is probably what encourages me the most. And secondly, it is about progressing some of the key deliverables because that is the proof in the pudding. It is one thing to have ideas and the strategy, but strategies only come true through execution, so as a board, we defined eight game-changers, which I would define as the key deliverables in the near future that make us take a huge step forward in the strategy of on-demand, on-device, orchestration and in-memory computing. We have seen progress on that.

First of all, we have delivered ByDesign. It was a hard birth, but what came out at the end was a beautiful child. But is almost a grown-up child because it had 100 customers involved, and I am very proud of the infrastructure that we know have on-demand. So we figured out that we can use the same infrastructure for two different purposes: a suite purpose and a line-of-business purpose, which are very different, and you can only do that if the platform is technologically modern.

The second, is HANA, [hi-performance analytical appliance] which is the most immediate breakthrough that we have in technology. It is astonishing what we can show in terms of price performance compared with traditional disk-based analytical systems. We will go to the market at the end of November, working with approximately 50 customers, getting feedback from that, and hopefully declaring victory at Sapphire in May on this new type of technology, which is pretty fast.

In parallel, we are doing a lot of the mobile apps - so if you look at the three pillars - we said there are three new technologies: on-demand, on-device and in-memory computing. ByDesign for on-demand, mobile with Sybase for on-device, and HANA for in-memory computing. In all three, within one year, we have a significant step forward. Obviously the Sybase one was partially acquired, but there was a lot of effort required in the background to get the Sybase platform more SAP-aware, which we believe is the benefit. So these are concrete examples where [the strategy] is progressing really well.

The challenges are mainly of a cultural dimension, such as how to speed up innovation, while at the same time increasing demand and quality. This is a funny combination, because these normally run counter to each other. But, I think they actually need to go hand-in-hand. The good news is that it is exciting. If you are an engineer, you want to build something many people use, but there are a lot of assumptions you need to challenge, such as it must be on-premise, it must have a specific kind of user interface and if it is on-device, that it must be a special case. But what if it is the normal case? This means a lot of assumptions are being challenged, and that is probably the biggest obstacle to overcome.

Q: How are things going with integration with SAP of products from the acquisition of BusinessObjects and Sybase?

Snabe: Our biggest differentiation is consistency between the pieces. When we bought BusinessObjects, it was among the leading analytics tools in the market, but it was also a bunch of acquired pieces. On top of that, the data constructs of BusinessObjects did not match of the data construct of SAP. We have done a massive overhaul and we now have a consistent data-collection layer which matches the SAP data structure and we have consistency in the tools. We brought the tools together on one platform. So that is a big step forward and I believe with the coming release people will really see that the divide between analytics and transactional has minimised.

Sybase is a similar thing. It took longer than expected on BusinessObjects, but Sybase will be done in six months. Which means the Sybase tools can consume the SAP processes and data out of the box. Of course you can do it today, but it is manual work like all other mobile end platforms. But what we will do is make it SAP-aware, which means it knows the objects, the processes inside SAP, and then we want to build an SDK (software development kit) to provide a development environment for developers to build very rapidly. This is important because we believe there will be thousands of mobile experiences, therefore we need to minimise the efforts per experience. How long does it take? We believe a mobile experience can be done is a couple of weeks with a couple of people. That is the thinking you have to have. Therefore you need a very simple consumption. So you will see the integration of Sybase going even faster.

Q: What is SAP doing to meet user demand for greater clarity on licensing and pricing?

Snabe: The problem is a logical one. On the one side, customers would like a very simple price list with as few items as possible, and on the other side they don't want to pay for stuff they don't use. So we need to find a balance between these two. We are constantly working on simplicity of the price list. Ideally, you have a main price concept which is the number of active users, and not what they use. And then the idea is if I produce more functionality, then maybe more people will use it instead of pricing every piece of functionality on its own. Now there are some functionalities that can't describe their value in number of users. In fact, the goal is that there are very few users like payroll. You basically need only one user. So there you need to find other ways of describing the value, so that a large company pays for the value associated with solving a large problem, and a small company pays only for the value associated with a small problem. In that case, it is the number of payroll slips [that counts] which is a reasonable simplification of the value creation.

But we will work on simplifying, and more importantly we will work on value discussions rather than price discussions only, because if we can articulate that you can save a hundred million in energy if you do energy management, then the price is less important.

Q: Why has SAP chosen recently to focus more on security?

Snabe: In the old world you had one system installed on your premises and you had control of the firewall. In the new world, you have some stuff on-premise, some stuff on-demand and a lot of stuff on-device. I believe that security across all these deployments becomes one of the key elements. As we are going into this world of multiple deployment options, we have increased our commitment not just our quality, but in particular to security. You will see us taking a lead in terms of driving security up in the business application space because it is necessary. And it fits in with our brand. SAP needs to stand for reliable, secure, scalable and all that - then we need to add the great user experience and simple, but not at the expense of quality and security. So it is a very deliberate act from my side and from the board's side to increase the focus on security. To test our software much more rigorously, invite hackers to help us find the holes so we can close them very rapidly. I believe security is the biggest challenge for the whole of mobile. If you really want to do business mobile, not consumer, security is the biggest challenge and opportunity [for those who succeed in getting it right]. Sybase was a big step in the right direction. They are running two billion text messages a day. They have years of mobile experience, so they know a lot about security and device management. That is another problem in mobility. You have a million devices out there. How do you manage that?

Q: What are SAP's ambitions for the SME?

Snabe: There is a lot of discussion about where SAP can grow. Even in the large enterprise space, even in Europe where many companies have SAP already, there are plenty of opportunities to grow. Most companies use our ERP and one or two more applications of the business suite, but we go far beyond that today, and with this new strategy we can go to on-device and on-demand, but SME is probably an unserved market today. While we do have a lot of experience with SME - out of 105,000 customers 80,000 are SMEs - we think there is an untapped potential through the on-demand opportunity to give them world-class best practices without forcing them to manage the complexity that large enterprises typically manage. ByDesign is a key element. It takes away the complexity without taking away the opportunity. Small companies have two desires: First they want to be the best suppliers to large companies - so integration across applications from ByDesign to Business Suite, for instance, is a huge opportunity for us - and second, all small companies want to be big companies, and they don't want to replace their infrastructure when they become big, and SAP can scale with them to infinity with the portfolio that we now have.

Q: What can we expect from SAP in 2011?

Snabe: First we will install HANA with an analytical focus, which means customers will be able to analyse large data sets in their transaction systems with very rapid response times. Then we will be building apps on top of that. For example, a trade promotion management focus, which is an app that requires a large volume of real-time data and fast response times because you want to assimilate various trade promotion plans. Today, if you look at some of the large consumer product companies, every time they do a new plan it take three hours to compile what the implications are, and we can do that, proven now, in three seconds. So now you can start simulating. That is a game-changer. That would be one example of an app that will come out in 2011 sitting on top of HANA, so HANA comes in and does analytics, but now that you have all of your data in main memory, why not use it for things you could not do in the past? For example: simulations of trade promotions, fraud detection in insurance and real-time risk management in a bank. So you will see a bunch of apps coming that sit on top of HANA, so again non-disruptive, just adding value. That combined with mobile apps coming in 2011 will be the ultimate proof of SAP's speed of innovation.

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