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.
SAP co-CEOs Jim Hagemann Snabe and Bill McDermott met with a couple dozen reporters and analysts in the Bay Area yesterday and by all accounts presented a unified front and expressed an optimistic outlook for the future.
The "new SAP is about producing on-demand as well as on-premises applications; it is about adding intelligence to those applications through analytics; and it is about orchestrating the use of business software for better business processes and more efficiently running enterprises."
Excellent start: focused, tight, to the point. And while it's easy to understand why both Snabe and McDermott wanted to avoid rehashing SAP's recent past, there are still lots of unanswered questions swirling in the minds of SAP's customers and prospects, and yesterday's coming-out chat session could have been an ideal place to begin addressing those.
In fact, co-CEOs Snabe and McDermott should have made it a point to address these 10 specific issues in order to demonstrate to customers that the right issues are being addressed, the essential problems are being solved, and the top priorities are receiving the most attention.
1) Address Enterprise Support. Also known as annual maintenance fees, some SAP folks say that only the media care this issue and that customers really don't have any problems with it. Well, that's utter nonsense—it has been, is, and will continue to be a hugely important matter for customers as they look to create an overall IT strategy that lets them push more of their precious IT dollars away from internal costs and toward external, growth-oriented projects. Snabe and McDermott should have reiterated that SAP has learned from its recent experiences and looks forward to continuing to work with customers of all shapes and sizes to develop support plans that are beneficial to both customers and SAP. This is a message that SAP cannot possibly overstate, in part because it has bungled it so badly in the past.
2) Address The 80/20 Challenge. Whether you call it 80/20 or maintenance/innovation or run/build, this is the biggest, heaviest, and most-challenging issue CIOs face today. If they can't lower the cost of "keeping the lights on," then there's never going to be enough money to fund customer-facing growth projects. And if there's not enough money to fund customer-facing growth projects, the CEO is going to keep firing the CIO until he finds one who attacks the 80/20 trap. SAP's applications and vertical-market expertise can be a huge ally for CIOs on this front, and Snabe and McDermott should have hammered home that point.
3) Rebuild Customer Trust. Again, it's perfectly understandable why the co-CEOs would want to focus on the future instead of reworking the past. But just six weeks ago, chairman Hasso Plattner made a very public and very specific admission that SAP's behavior and policies had caused customers to lose trust in SAP. So what, now, are the company's co-CEOs planning to do to regain that trust? What flawed policies and misguided behaviors are being tossed overboard, and what new approaches are taking their places? For an enterprise software company to admit that it had squandered the trust of its customers is a stunning admission, and one that planted deep seeds of doubt in the minds of customers and prospects. What, precisely, are Snabe and McDermott doing to rebuild that trust?
4) Rebuild Employee Morale. This uncomfortable subject was also raised by Plattner in his public comments early last month, and while the co-CEOs can be forgiven for wanting to pretend those remarks were never made, the fact is that Plattner went to great lengths to talk about the need for SAP to make its employees happy again. That happiness, he said, was the key to innovation, to sustaining and increasing profitability, to regaining the lost trust of customers, and to reinvigorating a company whose processes and approaches had fallen woefully out of step with its customers and prospects. Snabe and McDermott should have outlined how, exactly, they were going to fulfill Plattner's specific commitment to making SAP employees happy again. And toward the next big issue, which is this: what is SAP now, and what is its future?