03:01 PM

Two On One With SAP America's Bill McDermott

A lot can happen in six months. Just ask SAP America president and CEO Bill McDermott, just six months on the job. He faces a world startlingly different from any dealt with by his processors. McDermott met with InformationWeek editors John Foley and Jennifer Zaino to discuss what he's accomplished so far and what his plans are. Below is an edited account of their discussion.

InformationWeek: What are some of the most important moves you've made in the last few months?

McDermott: Just this week March 24 we're announcing that we've hired John Nugent, former senior VP at Oracle's U.S. business in the $1 billion account market, as executive VP, SAP America's sales. He has a 16-year track record at Oracle and is highly regarded. This is a very big hire for us; it's a move I've been working on now for six months. This exec had to understand the customer, enterprise apps, and had to be a person that fit into our culture--a person who valued the customer. I like to say I'm quite obsessed with the customer.


SAP America President And CEO Bill McDermott
The good news is that Ed Lang, the current EVP of sales, takes on the function of executive VP SAP America to work with our biggest customers and biggest customer opportunities in the U.S. and Canada.

This is all about increasing our bandwidth and building a dream team in the software industry today. There's tremendous focus on teamwork. We've been breaking down the silos here. There's an unbelievable sense of accountability now that hasn't been here in a long time.

InformationWeek: Why shake things up?

McDermott: We needed a perspective from the external community that I did not think was here. We needed people who understand strategy and have strong leadership traits who are excellent executives.

InformationWeek: What are SAP's key strategies?

McDermott: What's new is that we're getting very focused in our message for specific applications for specific customer requirements.

We'll still go to market in 22 industry verticals. We have not changed that, but what we have done is built an infrastructure on a geographic basis. We're getting our sales team physically closer to customers. For instance, where consumer packaged goods was no longer handled by one leader in the southern U.S. last year, now we have consumer packaged goods--still a discrete industry--go to market through our sales-deployment teams in various locations. The customer gets the best of both worlds--someone who understands their business and cares about their business at the local level.

InformationWeek: How is SAP changing as a company?

McDermott: I can absolutely, unequivocally assure you that SAP America is a much more aggressive company. We want to break the seasonality paradigm of software buying, where you have a good Q4 and then roll along for a few quarters, and then pick up the hockey stick again at the end of 3Q to achieve your operating plan objectives. Now there are longer-term arrangements, phased arrangements--we're sensitive to the customer requirements. But on a management basis, we're focused on quarterly execution. That is a big change. We've aligned compensation around attainment of management and quarterly goals.

We're focused on how customers want to do business. Customers are choosing to do business with fewer players. They're quite risk averse and not doing anything without an impact on total cost of ownership or clear ROI. They understand our industry is maturing and consolidating, so there's a flight to quality. The industry has moved from best of breed to best of suite. They want companies to be honest in terms of their deliverables today, to work as a trusted adviser, and they're willing to wait for a trusted partner to deliver new capabilities versus making a bet on a best-of-breed player.

If the customer has a longer-term vision and a broader vision, we're very comfortable in scheduling arrangements over a longer period of time. Here's the vision, let's put it together in pieces, and the commercial terms can be put together like Lego blocks over time.

InformationWeek: What are some of your goals in the next six to 12 months?

McDermott: In Q4, we sold more CRM applications software than Siebel, but we have yet to really execute in CRM. This is our year to execute on CRM. In the late '90s, we had to slug it out on a best-of-breed basis. When you get our best of suite now we are battle-hardened. Our apps can stand tall in the best-of-breed face-off. That paradigm is new, and we have momentum in the CRM space.

We're going to continue to round out our leadership team. We're not done yet. You will see us get very aggressive in the small- and medium-business market with more resellers of higher caliber, more feet on the street. We'll redouble our focus on the installed base to expand our relationship footprint.

InformationWeek: What's changing about your customers?

McDermott: Customers at the "C" level realize they have to be bold again. They have to innovate if they're going to change the rules of the game. Their business processes have to be faster--to bring products to market quicker, they have to be more efficient and more effective.

For more about SAP's strategy, see Small Steps, Big Plans.

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