SAP Betting Big on Simplicity and HANA in the Cloud

Bill McDermott says SAP's next winning move is subscription services in the cloud. "When we get in the elevator, we get out on the top floor."

NEW YORK—SAP is moving its core business to the cloud on its HANA cloud platform, SAP co-CEO Bill McDermott told investors at its Investor Symposium here and those watching a worldwide live feed of the Feb. 4 event.

"In 2010 we came up with a winning strategy, and it started with a winning dream: Make the world run better and improve people's live," McDermott said during his opening remarks.

The result was four consecutive years of double-digit, year-over-year growth, market share gains in all segments, revenue growth of more than 70 percent, a share price increase of more than 80 percent and the opportunity to triple SAP's addressable market, from 2010's $110 billion to $350 billion by 2020, McDermott explained.

"Now it is time to take our strategy to the next level. We feel that we are a beautifully positioned company. Because, if you look at this world we're in, it's a complex place. ... [Customers] are trying to get this complexity out of their lives, they're trying to simplify things so they can execute their plans," he continued.

"HANA is the greatest simplifier in the IT industry today. It radically simplifies the data stack. ... It radically reduces the data footprint, the need for hardware, and it simplifies the code—you don't need so much unnecessary stuff."

His New York accent coming through with his enthusiasm, McDermott added, "We're bringin' it. We're bringin' it with everything we have."

Simplifying Solutions

SAP also plans to simplify the way it sells and supports HANA, as well as the way customers experience SAP.

McDermott presented four categories in which SAP can simplify its offerings: Prospect ("We're going to give the customer one digital experience"); Sell ("One solution per business problem, one face to the customer"); Delivery ("We'll have one clear story. ... When the customer sees SAP, there'll be no lack of clarity or intent"); and Support ("There'll be one, single support experience").

HANA, by reducing the amount of required IT staff, also has the potential to shift customers' IT spending. Currently, 5 percent of customers' IT "wallet share" goes to SAP. "Why not 20 percent?" asked McDermott.

Additionally, SAP plans to more aggressively drill down into industries including financial services, retail, the public sector and health care.

"We have never been more passionate, more awake or more energetic than we are now," said McDermott.

SAP's pursuit of simplicity also extends to SAP Fiori, a collection of apps that support the most frequently used software functions and make them available across all devices in an attractive, consumerlike way.

Fiori, said Bernd Leukert, SAP's head of application innovation, "isn't a product name but a philosophy. It's a fundamental understanding of how the end users wants to interact with the system ... and what is the end result he or she wants to achieve."

Vishal Sikka, a member of SAP's executive board, called it a "principle of design thinking" and "purposeful, great innovation." Sikka added, "We believe we are better at this than anyone else in the world."

Over the course of the morning, SAP's key executive team repeatedly illustrated their vision of a gigantic company made nimble by the cloud.

Co-CEO Jim Hagemann Snabe told a story of speaking with a fashion company that was interested in SAP but unwilling to get on board because it had heard the transition would take 10 to 12 months. Hagemann Snabe circled the wagons around the project, and it was ultimately complete in "180 hours."

Similarly, customers who have found the upfront cost of SAP to be a barrier to entry now have the option of using HANA in cloud.

"We just took all of the objections to SAP off the table," grinned McDermott. "How many more transactions will we do as a result of [that]?"

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