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7/30/2010
11:26 AM
Bob Evans
Bob Evans
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Global CIO: The CEO Of The Year Is SAP's Bill McDermott

With co-CEO Jim Snabe, McDermott's set a vibrant new strategy, restored growth and profitability, and exorcised some wicked demons and ghosts.

  • Revenue up 16%, with strength in all geographies and across all product lines

  • Earnings up nicely for the second quarter in a row

  • Solid growth in new enterprise licenses

  • Continued strong preference for SAP's highest-end version of support and maintenance.
  • And let's toss in a few strategic achievements as well:

  • The momentum-building Sybase acquisition, showing SAP's a player again and not just spectator hoping not to get rained on

  • The formation of a cohesive companywide strategy that connects SAP's current strength with its future potential: on-premise, on-demand, and on-device

  • The company's intense commitments to being the industry's technology leader in delivering what it calls real real-time business with it's in-memory technology advances.

  • And Snabe and McDermott's leadership in SAP's premise that mobility doesn't represent the future for the enterprise, but actually the present—right here, right now—and that SAP is the best partner to get you there.
  • On top of that, consider a couple of other factors that McDermott highlighted in a phone interview with Global CIO Tuesday afternoon, including the addition of 5,500 new customers in the quarter: "In 2005, we had a total of 30,000 customers, and we laid out a very ambitious goal of increasing that to 100,000 by 2010—it was one of those 'send a man to the moon and bring him back safely' kinds of goals," McDermott said.

    "We've always loved the Fortune 1000 and we still love them today and we always will love them, but we realized there was one thing problematic with that Fortune 1000: there are only 1,000 of them," he said with a chuckle. "So we said if we're gonna go and be a real market leader in the world, we have to expand—we also have to reach medium-sized businesses and small businesses."

    And McDermott said SAP's done just that: with 5,500 new customers in the quarter, SAP now has a total of 102,500 companies running its products around the world. "And we're seeing this in big theaters like North America as well as the BRIC and tier-2 emerging markets," McDermott said.

    So 5,500 new customers in one quarter—about 91 days—translates to about 60 new customers per day, including Saturdays and Sundays, in April, May and June. There were times in 2009 during SAP's year of discontent when you had to wonder if SAP could land 60 new customers in a single quarter, let alone rake in 60 new ones every single day for 91 straight days.

    That's some very powerful momentum, and it shows confidence in the company's ability to deliver not just within the big global companies where it's always been so strong, but also within mid-sized companies and even emerging enterprises.

    "In fact," McDermott said, "74% of our revenues now come from small and medium-sized customers."

    Most telling, SAP's old bogeyman of annual maintenance fees, or what the company calls "software support and software-related services," were up 14% in the first half (McDermott and Snabe took over on Feb. 7 of this year), right in step with the 14% first-half revenue increase from sales of software licenses. In 2009, that was an explosive issue that SAP bungled repeatedly, and was surely a big factor in causing many companies last year to pull back on their SAP spending and question whether SAP still had what it takes to run high-velocity global businesses here in 2010.

    In addition, the company's long-awaited on-demand product, Business ByDesign, is now on track and ready for rollout within the next week in six different countries. You might say that it's a few years late, and that's true. But it's also true that McDermott (and Snabe) have managed, in just five months, to turn Business ByDesign from what had been under Apotheker SAP's own private-label version of Banquo's ghost into a much-anticipated and indispensable element in SAP's newly articulated strategy of on-premise, on-demand, and on-device. And it will play strongly into the SME momentum SAP's already building.

    Here's another and equally daunting ghost McDermott has flushed from the psychic halls of SAP: Oracle. Or, Oracle and Larry Ellison. Or, Oracle and Ellison's not-infrequent and very public taunting of SAP. Just a couple of quarters ago, Ellison during an Oracle earnings call was razzing SAP by pretending to praise it for having lowered the rate of its revenue decline—and Ellison then went on to articulate in detail how he and Oracle would displace SAP as the world leader in enterprise applications.

    Here's an example of the sharply pointed commentary that SAP's earlier floundering inspired at Oracle:

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