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4/28/2010
12:19 PM
Bob Evans
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Global CIO: SAP's McDermott Slaps Back At Oracle And Refocuses On Customers

Just 10 weeks after becoming co-CEO, SAP's Bill McDermott has re-energized the company by focusing intensely on delivering great customer value.

On the issue of regaining customers' trust, McDermott said "an overwhelming number" of SAP customers are choosing the company's top-shelf enterprise support package, thereby showing their acceptance of a new annual-support approach that the company had allowed to become mangled and misunderstood over the past 18 months.

On SAP's top priority under him and Snabe: "We have put customer-centricity and innovation at the center of our business."

On SAP's more business-oriented approach: McDermott said the global sales team has been retooled to be able to sell not only to the CIOs who've always been SAP's primary customers and points of contact but also to LOB executives: "We have built a volume and value machine."

On the company's outlook: "We're feeling very good about our business--very good--and also feeling very good about our customers endorsing our integrated on-premise, on-demand, and on-device strategy."

On success in "focus" industries: retail sales up 31%, utilities up 14%, and financial services up 17%.

Those impressive successes in core industries run counter to a point made recently by Oracle CEO Larry Ellison, who said that Oracle will overtake SAP as the market leader in enterprise applications because of Oracle's superior industry-specific functionality. That sentiment was echoed last week by Oracle president Charles Phillips, who told me during an interview that SAP has "no story" in vertical applications:

"If the conversation shifts to anything other than financials—edge applications, vertical applications—we kill them (SAP)," Phillips said. "They don't have a story. And so we're just gonna keep doing that and grinding them down, and the more industries we add, the harder we're gonna hit."

I can only imagine what the response from the old SAP would have been to such a comment: a little throat-clearing, a tad of indignation, and then a lot of talk about the superiority of SAP's code base. But this is a new and very different SAP, and McDermott's response to the taunts from Oracle's top executives spells out SAP's new attitude very plainly:

"I can understand those comments and why they'd make them because of the very difficult position they're in," McDermott said, warming to the subject. "If I had gone through $50 billion in acquisitions but was still two times smaller than the industry leader, I'd probably have lots to say as well. For 30 years, SAP has sold the power of business processes and transactions and integration, and over that time grew significant expertise in 25 distinct industries.

"And that is a hallmark of the company. While others seek to acquire their way in and learn what's going on, we've been in all those industries all along and executing very well: retail up 31%, utilities up 14%, financial services up 17%.

"Let me just put it this way: the race in business software is ours to lose because of our industry-domain expertise."

Competition's a tremendous thing, and Bill McDermott has reawakened and reanimated SAP and its eagerness for customer-centric competition. That's a great thing for SAP and an even greater thing for the businesses who buy from SAP, Oracle, Salesforce.com, SuccessFactors, NetSuite, Workday, and others.

P.S. to McDermott: thanks for giving your company a high-energy wakeup call.

P.S. to Oracle: game on.

RECOMMENDED READING:

Global CIO: 10 Things SAP's Co-CEOs Should Focus On

Global CIO: Oracle President Phillips Says 22% Annual Fees Great For CIOs

Global CIO: Larry Ellison's Nightmare: 10 Ways SAP Can Beat Oracle

Global CIO: Oracle's Larry Ellison Declares War On IBM And SAP

Global CIO: IBM Sees Surge In Customers' Transformation Projects

Global CIO: Larry Ellison's New Acquisition Underscores Vertical Strategy

Global CIO: Oracle's Phillips Says Standardizing On Oracle Is IT Cure

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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