Innovate to create recovery and fuel growth, says SAP CEO

IT departments can create economic recovery by innovating now and ploughing back savings from business efficiency into investment...

IT departments can create economic recovery by innovating now and ploughing back savings from business efficiency into investment that will fuel growth.

That was the message from Henning Kagermann, chairman chief executive officer of SAP in his keynote address to the annual Sapphire user conference in Orlando yesterday (17 June).

Kagermann told delegates that businesses could no longer sit back and wait for an economic upturn if they want to survive. Instead, he said, they must adapt to uncertainty, and that meant investing in technology that could adapt to the changing demands of the enterprise and reduce the total cost of ownerhsip.

The SAP CEO also warned that the current drive for application and server consolidation is of limited value.

"Be careful, consolidation is not an objective in itself," he said . "It adds no business value. It is just clearing up the mess IT has created in the past."

Many organisations have bought enterprise application integration tools, said Kagermann, but, he added, they risk creating another layer of complexity on top of existing complexity.

Calling on the industry to get rid of the cycles of consolidation, Kagermann said the challenge for the industry was to change its cost structure from its exisitng form where 60% of the IT budget goes on operations, 30% on consolidation and 10% on innovation, to one where 40% went on consolidation, 20% on operations and 40% on innovation.

Simplicity is also key, according to Kagermann. "Many businesses believed that if they implement an over-sophisticated, tailor made ERP systems they can beat the opposition," he said. "That is wrong."

Drug company Novartis was one of the new SAP customers announced at the event but Kagermann said the Novartis chief executive officer had  "paid twice", first to build a complex best of breed IT environment, "now he is paying again to consolidate".

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