SAP’s Co-CEO Answers Forrester’s Questions At Sapphire

Here at the European half of SAP’s global customer event, I had a chance to ask some questions of one of SAP’s co-CEOs, Jim Hagemann Snabe. Unfortunately I didn’t have time to ask for some advice to my country’s leaders on how to manage a two-party government, because it seems like he and Bill McDermott are very happy with their own coalition.

It's very encouraging that Hagemann Snabe, along with other SAP executives I’ve met here, acknowledge that SAP has made missteps over the last year or so, although they are still very confident that they know how to fix the company’s problems. There’s a thin line between positive spin and misplaced over-confidence, so hopefully, in private, he recognizes the challenges he faces. Still, I’d like to see more willingness to accept that SAP doesn’t have all the answers and to get advice from outside the organisation, to help it become customer-centric instead of sales-transaction-centric

Both CEOs want to talk only about new revenue opportunities: increasing SAP’s addressable market, the potential of new on demand products including Business ByDesign, and mobile solutions based on the proposed Sybase acquisition. I asked Hagemann Snabe to explain how he’d improve the value for money that existing customers will get for their maintenance revenue. He mentioned the introduction of customer choice between the Enterprise and Standard support offerings, although that isn’t much of a choice since CPI increases on the latter make it cost almost as much as the former. He also stressed the importance of the ‘Innovation without disruption’ enhancement pack system, which will now be delivered in one simultaneous release each year, across all product lines. 

Another interesting insight was a response to a question about the impact of SAP’s hybrid on-demand/on-premise strategy on its partner ecosystem. Hagemann Snabe made it very clear that systems integrators (SIs) were largely to blame for SAP implementations being too expensive and taking too long. He said that the SIs must implement best practices, not legacy practices based on lucrative customization, and wants them to limit tailoring to a thin layer on top of SAP’s stable core. That will be welcome news to companies considering wide SAP roll-outs.

Lastly, I asked Hagemann Snabe about SAP’s sales incentives and its focus on immediately recognizable revenue over long-term customer satisfaction. He told me that sales reps are now rewarded equally for subscription and perpetual revenue, and the former will grow organically as SAP delivers more on-demand products and large enterprise subscription deals. While it appears that SAP will still be mainly deal-focused in the short term, it appears that Hagemann Snabe recognizes the fundamental change to the commercial relationship with customers that on-demand models will bring to SAP.