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3/16/2010
07:20 PM
Bob Evans
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Global CIO: 10 Things SAP's Co-CEOs Should Focus On

Annual maintenance fees, the 80/20 trap, rebuilding customer trust, raising employee morale, the truth about Oracle, the truth about SAP, and much more.

5) Redefine What SAP Is. Over the past 25 years, SAP became a fabulously successful global corporation by bringing order and predictability to the chaotic worlds of manufacturing, supply chains, disparate financial systems, and scatter-brained HR record-keeping. Lots of companies still need that kind of help, but not so many as in the past. What, then, is the SAP strategic position for the next 25 years? Or even the next 5 years? Snabe and McDermott should have talked about what, exactly, customers and prospects can come to expect from SAP in years to come: innovation or efficiency? Productivity or predictive analytics? Speed or precision? Or all of those, some of those, or something entirely different?

6) Embrace The Cloud. Yes, there was a lot of talk about getting Business ByDesign out this year; as my colleague Charlie Babcock wrote, the co-CEOs emphasized that the "new SAP is about producing on-demand as well as on-premises applications," with Snabe adding that "There will be a significant advance in on-demand applications this year." But to today's CIOs, the cloud means more—much more—than just that. Snabe and McDermott should have given a broad roadmap of SAP's cloud intentions, achievements, and capabilities, punctuating all that with some examples of real-life success stories. If such stories aren't ready to be told yet, however, then CIOs have every right to wonder just how "significant" an advance SAP has in fact made with anything beyond its on-premises applications.

7) Develop A Customer Bill Of Rights. One way Snabe and McDermott could have helped move the dial on regaining customer trust was to outline a new "SAP Customer Bill Or Rights" that doesn't undercut the legal rigor required in enterprise-software contracts but at least advances the conversation beyond something more than long list of infractions customers can make for which the redress is fire and brimstone, hordes of lawyers, or somewhere in between.

8) Launch 'SAP App & Expertise Warehouse.' SAP is rightly proud of being the software engine behind Apple's iTunes and AppStore, so Snabe and McDermott should leverage what they've learned from Apple's experience and open up the SAP App & Expertise Warehouse. The objective would be to make SAP customers and prospects and partners aware of the vast array of SAP-compatible tools, apps, add-ons, services, partners, consultants, and more. Such an idea would have been unfathomable to the old SAP—will Snabe's and McDermott's new SAP have the courage and confidence to make such a leap?

9) Reaffirm Stable, Predictable Pricing. Until recently, SAP's pricing policies were so varied and complex that comprehending them was itself a full-time job. The company has recently taken some steps to clarify that pricing mess but after years of generating confusion and questions, SAP and its co-CEOs should have offered some simple and straightforward comments about the company's commitment to simplifying the pricing evaluation process for customers. This is particularly important as SAP moves toward its stated intent to offer a range of on-demand products: in that world, the nearly indecipherable terms, codicils, riders, and provisions that were standard in SAP on-premises contracts will be of zero value.

9) Speak Proudly About SAP. Yes, SAP's bumbled and stumbled badly in the past year or two and has had to endure some very public airings of those missteps. At the same time, the company has some great things to talk about, primarily with some of its biggest global customers and how SAP has been an indispensable partner in their growth, innovation, and success. SAP has said that more about two-thirds of the world's business transactions in some way run through SAP systems—if that's true, Snabe and McDermott should drive that home and expand on that achievement to articulate the current and future value SAP is delivering and will deliver to its customers in every industry in every market around the world.

10) Speak Honestly About Oracle. Oracle is growing; SAP has been shrinking. Yes, it's true that Oracle has grown through acquisitions—but it's equally true that SAP's revenue decline has been slowed by acquisitions. So the occasional comments from SAP executives about how its acquisitions are "strategic" whereas Oracle's are something else: Tactical? Foolish? Disastrous? The truth is that Oracle's operating margins have climbed steadily over the past several years as it has made several of its largest acquisitions—PeopleSoft, Siebel, Hyperion, BEA, and now Sun—and the by comparison, SAP's financial performance can't hold a candle to Oracle's. So it rang rather hollow when McDermott tried to take potshots at Oracle's use of acquisitions by claiming that customers want to buy from an "open, independent software company" with good relations with all manner of hardware vendors that can "give them what they want," as a mercurynews.com article put it. I'm not suggesting that Snabe and McDermott should gush when they talk about Oracle; quite the opposite. But I am recommending that they drop the lightweight snipping at Oracle's acquisition strategy and instead zero in on some specific areas in which SAP beats the pants off Oracle and provides demonstrably greater levels of business value to customers.

SAP's a very strong company with great potential value for CIOs in today's turbulent and tech-driven global economy. If the new SAP is going to be truly different than the old SAP, then its leaders have to find more-effective ways to articulate all that potential value in ways that put SAP's customers—and not SAP itself—at the center of the discussion.

RECOMMENDED READING:

Global CIO: An Open Letter To SAP Chairman Hasso Plattner

Global CIO: SAP's Last Chance: It's The Customers, Stupid!

Global CIO: SAP Blows Huge Opportunity With Timid Support Changes

Global CIO: Why SAP Won't Match Oracle's 22% Maintenance Fees

Global CIO: Where Do Oracle's Profits Come From?

Global CIO: SAP Is Testing Flat-Rate Pricing For Large Enterprises

Global CIO: An Open Letter To SAP CEO Leo Apotheker

Global CIO: Will Oracle Or SAP Blink First On 22% Maintenance Fees?

Global CIO: SAP Eliminates All-Up-Front Payment Requirements

Global CIO: SAP's Weakness Is Customer Execution

GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at bevans@techweb.com.

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