SAP co-CEO Bill McDermott talked with SearchSAP.com about whether customers are confused over the in-memory appliance SAP HANA, the need for clearer communication with customers and the delayed release of SAP BusinessObjects 4.0.
A representative who works at one of your larger customers recently disclosed they looked at doing a HANA proof-of-concept project. But the company couldn’t come up with a compelling reason for its executives to support the investment, given the expected cost of HANA. What does this say about how the technology is being received by customers?
Bill McDermott: In terms of this particular customer, it’s hard to say without all the facts, but I can tell you that the adoption of HANA has been unbelievable. It’s exceeded our expectations in the pipeline. It’s massive. If there’s a particular situation where a customer is having a difficult time understanding the value of HANA, I assure you it has a lot less to do with the price point and a lot more to do with [the fact that] they haven’t looked at the business solution and what the impact could be on the shareholder value. Probably, we should spend some time with this customer.
Is there some confusion over finding great use cases for HANA?
McDermott: You have a brand-new technology. It’s only been generally available since July. It’s possible that somebody might have a question about the use case for HANA. Some of the best-run businesses like Nestle, Nongfu, Colgate and many others are putting their business on it, so they must like it.
SAP recently announced quarterly upgrades to the ERP Business Suite as a way to keep customers updated on new technologies and to minimize disruption. Isn’t this also a strategic decision to keep customers from straying to other vendors?
McDermott: I think any good company would want to keep their customers loyal. I don’t see any upside to the strategy that suggests you should have technology that causes customers to defect. In addition to the continuous innovation cycle that we believe in, we also wanted to make it clear to our customers that we want them to be our customers for life, which is why we made the commitment to this platform until 2020. That’s something none of our other competitors have done [for their platforms].
One customer SearchSAP.com spoke with said he was confused by what he perceived as SAP’s competing messages around cloud computing and HANA. Are there contradictions here?
McDermott: The fact is [that] when you think about SAP business software, we can provision that to on- premises, on-demand or device. HANA can support all three. You can have HANA anywhere, whether it’s in the cloud, or on-premises and provision business applications to the [mobile] device. The customers that I see want their workforce enabled on mobile. They want to be able to set up a dashboard of real-time information that keeps them informed on what their customers are doing, what their employees are doing, how their financial profile is evolving on any given day, month or quarter. All of this is completely reliant [on] a consistent core.
It seems like confusion is a constant undercurrent in the SAP user community. For example, a new UK user group survey that found a lack of clarity around SAP’s cloud portfolio. What is SAP doing across the board to address its customers’ need for clearer, more straightforward information?
McDermott: In terms of clearer roadmaps, I couldn’t agree with you more. Every industry deserves a clear roadmap. Certainly that can always be improved upon. It requires good communication, and we’re a large company. You always have to look for new and innovative ways to communicate with your customers. As you know, we’ve conducted these World Tours, so we could reach out and touch our customers. I think what you should expect from us is more communication and more clarity around the SAP cloud as we turn the corner into 2012.
Do you think SAP makes things too complicated when explaining things to customers?
McDermott: Yes. I think one of the things SAP needs to constantly remind itself is we have a lot of brilliant engineers, a lot of brilliant scientists, but [the more] you can keep those conversations clear and simple in business terms, you’re doing a better job. And we have to continuously work at that.
One of your executives told me that the release of BusinessObjects 4.0 was delayed because it went into ramp-up mode before it was ready. Did SAP make a miscalculation in balancing quality versus speed to market?
McDermott: The fact of the matter is that BI 4.0, or what we had code-named Aurora, is the most exquisite business analytics and technology platform in the history of the world. We had very strong demand from customers to get it out there as quickly as possible. [In hindsight] you can always [ask], ‘Should it have been delayed two months?’ But the fact of the matter is that it’s there, it’s the best.
Do you feel vindicated in the judge’s rejection of the jury’s $1.3 billion verdict in Oracle’s copyright infringement case against SAP?
McDermott: We never felt a fictitious licensing theory was an appropriate way to award damages, and in the end, the judge agreed with that, and now we are where we are. In terms of where we go from here, Oracle has the choice to accept $272 million [ what the judge reduced damages to] or go for a new trial. Whichever decision they prefer is one that we’ll certainly abide by. If they want the $272 [million], that’s fine, and if they want a new trial, that’s fine, too.