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At Sapphire Now 2019, SAP committed to the public cloud and announced HANA Cloud Services, which is aimed at making the SAP HANA database more accessible and affordable. The message from SAP was clear: Companies need more flexibility than on-premises systems offer, and S/4HANA systems will now provide that kind of flexibility. Another major theme of this year's conference is that companies need to understand how their customers feel about products if they are going to thrive in the "experience economy."
In a wide-ranging interview, SAP co-founder Hasso Plattner discussed the state of the company, its ever-expanding product lines and why cloud is crucial to the company going forward. In the first part of a two-part Q&A, he detailed the evolution of the SAP HANA database and how it's now positioned as a generic database for applications other than SAP's.
Here, he discusses why the cloud is the best environment for the future growth for S/4HANA systems and the role that Qualtrics will play in helping the company develop better products. He also tells why the recent SAP restructuring that included layoffs and executive changes makes the company more dynamic.
Editor's note: This interview was edited for length and clarity.
Are you satisfied with the growth of SAP S/4HANA systems, particularly the cloud version?
Hasso Plattner: There are 3,500 productive S/4HANA systems now and something like 10,000 contracts, mainly on premises. Despite all of the advantages of the cloud and everybody talking about the cloud, [many companies] around the world are still on premises because they have trust issues. We have done the same combing of the public cloud version of S/4HANA that we did now for HANA Cloud Services [SAP HANA database]. We have scratched functions that we don't believe will be necessary for the next 10 years.
What are some of the differences between S/4HANA Cloud and the on-premises versions?
Plattner: Functionality in Materials Management has changed. S/4HANA in the public cloud will be the most modern system and the lead system from now on for all development. If we do something new, we'll do it there first and then it will drip down to the on-premises systems. The on-premises systems will be there five years from now. How many I don't know.
The cloud is totally superior because we can permanently update the system and we get feedback from the customers. It's set up for faster development, more precise development and more market relevant development, so the development will be much better. We have built some new products, including SAP Data Warehouse Cloud and HANA Cloud Services, and we have a development speed that we haven't had since the 1990s.
How can Qualtrics help SAP understand its customers better?
Plattner: We get feedback from customers every day, but with Qualtrics, we want to [work on that]. We have currently 82 feedback opportunities identified and work on three or four of them. That's 82 possible feedbacks we can gather with regards to products, to services and to our maintenance habits. And guess what? Software companies like us don't like feedback. Developers don't like to look in the mirror. I always suffered from that.
But I read blogs, and I read your comments even if I don't like them and check whatever the truth is. The truth is hard to digest for everybody, and if you have Qualtrics as a means to get anonymous feedback, we need this. We need this up to the top to [SAP CEO] Bill McDermott and down to the people who build the systems far underneath the development managers, that they have a feeling.
Can you provide an example of how knowing your customers' feelings about products is critical to a company's success?
Plattner: In the first 10 years of SAP, because we did development, sales and service in one person, I did all three of those. So everybody I had in development also installed systems, and some of us tried to sell systems, which gave us feedback automatically. But when you sit behind sales, presales and product management deep in some development organization, you have no real empathy for the customer because you don't know the customer.
I personally told the German automotive companies that if they want to sell in America, they needed coffee holders. And guess what? Porsche denied that it needed coffee holders until the very last minute; they denied that they had to make changes to the Porsche 911 so women can drive it. There were things in the Porsche that were not good for females. The door handles broke fingernails. The clutch was too hard because it was poorly designed. Their answer? Porsche is for men! I told them then you will have problems in America with just men. One year later, they were nearly bankrupt, but they brought in engineers from Toyota who found these shortcomings instantly.
Today, I think it's 30% are women buying Porsches in America. So I promise that, if it's the last thing I do at SAP, it's that we become a listening company -- and Qualtrics is the means for that.
Why was the recent SAP restructuring done, which included layoffs and executive changes?
Plattner: We are very happy with what we did and how we did it, but you can't do it perfectly. For example, in Germany, we asked people if they wanted to take a package and made it attractive so they'd say 'OK.' We had to make this offer to everybody, even the ones we wanted to keep because they have to have the privilege to say 'No' to the offer. So we lost people that we didn't want to lose because they took the package. We reduced the workforce to close to 5%, and there are disgruntled people. You can't avoid that. But we now have significant capacity to hire people. I can tell you that, in our development organization, the dynamic is completely different.
Executive editor David Essex contributed to this report.
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