Andrew Nusca at Fortune interviews Bill McDermott, CEO of SAP here. What’s striking is Bill talks incessantly about the “new SAP” : HANA, Ariba, Concur, SuccessFactors, Hybris, Fieldglass, Sybase. The stuff is not exactly new – most of the products are decades old, but they are new to SAP and Bill is clearly enamored with them. He looks forward to taking a piece of the network economy each represents. His CFO has been quoted as saying
“For me, the big charm comes in scaling the network. We can make money while we sleep and I like that model a lot.”
This is so different from what I heard from his customers as I interviewed them forSAP Nation. They mostly talked to me about the “old” SAP – their investments in BusinessSuite, Business Objects, Business One etc. Several told me they felt abandoned – as they mostly heard SAP talk about “new” products.
They told me they were finding it increasingly difficult to ignore benchmarks they were hearing from peers. Peers like Inteva which decommissioned SAP and went with a SaaS alternative and reduced its IT costs as percent of revenue by 60%. Peers like Embraer which went with third party maintenance and reduced costs and improved service levels. Peers who have moved to cloud infrastructures and dramatically reduced their hosting costs while improving the quality of their data centers. Peers who have moved to SaaS application support models and dramatically lowered the headcount of their previous offshore application management firms. Peers who are reporting SaaS upgrades in hours and painless compared to previous risky, month long projects. Peers who are reporting a new wave of cloud integrators.
Worse, these customers told me SAP does not even seem to be aware of all the benchmarks they want it to perform against. SAP keeps promising “simplification” if only customers adopted HANA as also their transaction processing backbone. With few benchmarks to support the position. “Trust us – we are your trusted advisor” is the response.
As Bill tells Andrew
“SAP will remain ever strong in the core. There are many customers that run very sophisticated global businesses on that core. They’ve invested heavily in it. ….That core is rock-solid. I call it Fort Knox”
I describe 12 “simplification strategies I heard from SAP customers in the book. I summarized “The customers profiled in the book are the “canaries in the coal-mine.” For every one of these risk-takers, many other customers continue with business as usual. When these customers finally get ready to optimize their environments, they will thank McNamara, Daru and other pioneers.”
SAP and its partners better start focusing on optimizing the “old economy” or customers will continue their own simplification efforts and move their bricks of gold out a small pile at a time from this Fort Knox.
(Cross-posted @ DealArchitect Full)