Global CIO: SAP's Last Chance: It's The Customers, Stupid!
SAP will fix its technology, but its entire future depends on whether it can fix how it views and treats its customers.
1) Plattner and other SAP executives view their customers with a stilted perspective straight out of the SAP glory days of the mid-1990s. Twice, Plattner referred to "SAP customers" as one entity and the employees of those customers as a totally separate entity. Now, that's a vision straight out of the bosses-and-drones corporate hierarchy of 25-30 years ago, and Plattner seemed to be emphasizing that the needs and concerns of "the customer" and the needs and concerns of "the SAP user" were unrelated and detached. No wonder he says his company has lost the trust of customers.
2) Plattner and other SAP executives have had spectacular and long-term success with some of the world's largest companies, which have each invested at least many tens and often many hundreds of millions of dollars with SAP. And Plattner and SAP have every right to be enormously proud of those relationships and those outstanding achievements. But their myopic mistake has been to project the mindset of those top 100 accounts toward SAP across the wildly diverse universe of 90,000 SAP customers worldwide. Plattner said that at a conference with those top 100 customers, they all expressed nothing but unfettered joy and happiness at SAP's maintenance fees and quality. So SAP based its disastrous decision to announce significant maintenance hikes for all of its customers on the input from those 100. How could that happen? More important, how can SAP change the mindset and culture that allowed such narrow and amateurish thinking to prevail?
3) SAP's actions will speak far louder than Plattner's words, to be sure, so perhaps I'm putting too much stock in this third point—but, in the context of the two doozies above, I think it helps to paint a picture of a company that is dangerously out of touch with what its customers do and want and need, and with how those customers rate and reward IT vendors in these days where it's essential to do a great deal more with a whole lot less. Speaking in broad strokes about trust and the need to rebuild it, Plattner said this: "What SAP has to re-establish is that we have trust between all involved parties: the [SAP] Supervisory Board, [SAP] Executive Board, the co-CEOs, the management team, the employees, the works council, the partners, the customers, and the employees working for our customers." Setting aside that bizarre customer/customer-employee split, look at where customers rank in the great chain of being constructed by Plattner: dead last. Almost an afterthought. What good does it do SAP to have gushers of harmonic convergence among its own employees if the company's customers feel alienated, unfairly treated, and unwilling to trust anything SAP says? I just don't get that—again it's a degree of tone-deafness that is hard to fathom.
So to help you gauge first-hand Plattner's positions on various key elements of his plans for SAP, here's a quick selection of some revealing comments he made in his prepared remarks and then during the Q&A session yesterday:
--A Plea For Patience. "I have to say a great big thank-you to our customers who are tremendously generous in helping SAP accelerate to the next new technology breakthroughs. And also a message to their end-users: please trust SAP—we have not forgotten you. But the many many successfully installed systems—4.6, 4.7, ERP 6.0—cannot be easily changed overnight."
--But You Customers Are So Darned Demanding! "We have thousands and thousands of applications up and running in place at customers' sites and we have to guarantee to those customers that we keep them up and running and do whatever we can without disrupting their installations. It would be wonderful to be a startup company without any history—it would be wonderful--fortunately, we're in a situation where we have a large customer base and so we have to maintain and innovate and the company will do both."
--Be Happy. "A final statement: we are a public company, and profit is everything. But in order to be profitable, it needs to be a happy company. I will do everything possible to make SAP a happy company again." How many chairmen of global corporations pledge themselves to making their employees happy, unless they're unhappy to start with? Check out Plattner's unsuccessful attempt at spin control:
--What Made SAP Employees Unhappy? "When I said we want to make a happy customer and a happy company, please don't turn it around that we are unhappy then—take it then we have to be 'happier.' Only when you are happy . . . happy companies are ones that enjoy their success, their strategies, and are marching forward at the highest possible speed without complaining on issues left and right and center." Hmm—seems to me that Plattner's inclusion of the line about dispensing with "complaining on issues left and right and center" probably didn't just come out of thin air.
I give Plattner a lot of credit for jumping back in and taking responsibility for turning around the company he founded. Of SAP's multiple challenges, the one I'm most confident they'll overcome is the technology side—CTO Vishal Sikka, now promoted to the Executive Board, is a brilliant guy who sees beyond the SAP world and really gets what customers want and need.
But that's the trouble spot for so many others at SAP: understanding and truly caring about what customers want and need. Relative to its nutty approach to customer engagements, SAP's technology problems are almost mundane.
So the big challenge seems to be on the shoulders of president of global field operations and newly named co-CEO Bill McDermott to change all that. For the past year, we've had an open invitation out to McDermott to share with us his impressions of the market, his views about customers' business strategy and how SAP fits into that, and more. The invitation's still open, and we hope to be able to connect all of you with McDermott soon—given his new role and Plattner's candid admission about the glaring absence of customer trust, it should prove to be a fascinating discussion.