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11/17/2010
07:25 AM
Bob Evans
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Global CIO: SAP's Striking Turnaround Triggered By Customer-Centric Strategy

The Year's Top Tech Stories: A year ago, SAP was rudderless and lost. Today, under new co-CEOs, innovation is back and frustrated customers are now excited and delighted. (#6 on our Top 10 list.)

"Knowing that former management had already squandered any such multi-year cushion, SAP co-CEOs McDermott and Hagemann Snabe have spent the past eight months remaking their sprawling company and its vast product lines from the inside out, shredding the traditional SAP approach that I think we could call 'Complexity as a Service' in favor of one that puts a premium on customer value, speed to value, and consumability.

"To understand the scope of SAP's transformation that co-CEOs Hagemann Snabe and McDermott have undertaken since assuming control of SAP eight months ago, consider these comments from a very recent phone conversation I had with Snabe:

--'Large enterprises have begun to prefer simplicity to perfection—that was not the case before the global economic crisis.'

--'We knew we needed to simplify the consumption of our on-premise offering.'

--'On-demand has become more popular not because customers want to consume software over the Internet but rather because they wanted quicker time to value.'

--'For Business ByDesign, we want to build up a channel that is low-touch: customers are not interested in adding a lot of services to something that's already simple.'

--'Instead of building software for companies, which SAP has always done, we are now designing software for people' (end of excerpt).

Here's one more highly revealing excerpt from that conversation with Hagemann Snabe—and while pithy comments are no substitute for sustained execution, they sure can go a long way in inspiring customers and employees who beforehand were rapidly losing confidence in SAP.

"And he says SAP's 'central planning' model is largely to blame:

" 'As we spend more time with our customers and users, we notice that while competitiveness of products used to be all about features and functions, it is now focused very much on consumability, consistency, and usability,' said Snabe in one of his first interviews since taking the co-CEO job in February.

" 'We had become too bureaucratic, with too many boundary conditions—now, instead of trying to force all of our work through central planning, we are allocating people to strategic issues, which yields iteration and speed of innovation that's significantly different: our developers can now spend more time doing rather than planning.' "

While Hagemann Snabe's responsibilities require him to focus a lot of his energy inside the company to drive that customer-centric philosophy, you'll see that his thinking meshes precisely with that of McDermott, who heads up SAP's global field operations. Here's an excerpt from a column several months ago called Global CIO: The CEO Of The Year Is SAP's Bill McDermott:

"Those views haven't changed in my 25 years in the IT industry, and today customer innovation is the Number 1 factor for us in determining real customer value: can we help them run their business differently and better, can we help them access new markets, can we help them motivate their people, can we help them build and extend business networks, and can we help them create real opportunities."

And SAP's new aspirations are not limited to achieving those results for only large corporations, McDermott said in that late-July conversation:

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