informa
/
4 min read
article

Global CIO: SAP 2.0 Promises Business Value Over Products: Can It Deliver?

If SAP can deliver on the vision of its Chief Value Officer, it will make available to CIOs best practices, benchmark metrics, and breakthrough thinking and innovation.
"We decided that no SAP engagement will be allowed to go forward without SAP's analysis and input. This is because it's a marriage, right? And in a marriage you never leave. Most consultants, they complete a certain project and then they leave. But that often puts the customer in a tough spot about what to do next. But we're going to be different—we are different—because we don't leave."

Now we've all experienced The Guest Who'll Never Leave, but if it turns out that customers don't want the SAP value team to leave, it will likely be because of the customer-experience database SAP's creating.

Bouhdary described that database as jammed with ROI metrics and results from across multiple industries; benchmarks around more than 20 business processes, industry-specific cuts of those data, and about a dozen KPIs that SAP asked key customers to help it develop. This, he said, is the rich knowledge set that SAP feels no competitor or combination of competitors can match. But at the outset, the picture wasn't so rosy.

"I have to say that at first it was a nightmare," Bouhdary said with a laugh, although he surely wasn't laughing when in the first year only 35 companies agreed to share their data. (Bouhdary emphasized the security and privacy safeguards SAP has put in place to ensure that company-specific data cannot be accessed and that only aggregate data can be seen.

"But now we have 4,000 companies in that database, and we're adding 25 or more per week in 7 languages and across multiple industries," he said, noting that, as always, customer innovation has been stunning.

"We are finding that if we are able upfront to orient our new customers around the best practices and other insights we have in our database, they always develop capabilities and ideas that go way beyond what SAP recommended. " Those examples of breakthough performance will continue across multiple industries for three reasons, he said:

1) The complete globalization of companies with widely dispersed networks of suppliers, partners, outsourcers, customers, and different regulations from country to country. SAP, he said, can deliver the much-needed coordination and integration of all those processes and data flows.

2) The need for businesses to understand customer behavior more intimately will drive a greater focus on data: "For example, Walmart needs to understand more about the behavior of its customers in their stores. The only way to get that is by having more customer data—so that's going to explode."

3) The "Internet-ing" of everything. With everything going digital and streaming out massive volumes of data, business will need to be able to capture, manage, and integrate all that data, he said.

This is surely in part a play by SAP to create new revenue opportunities for itself via professional services and consulting, which makes a great deal of sense since sales of new software licenses have been down for some time.

"This new world has led to a lot of cost-restructuring and it's sustainable, and we're going to see leading companies emerge with 30% or 40% G&A advantages," Bouhdary said. "It's going to lead to a massive transformation in a lot of industries as leading small companies will buy much bigger competitors that just couldn't make the change."

If that plays out, SAP wants to be sure it's able to offer more than just software in a world that's going to see a great deal of consolidating. It will be very interesting to see if Bouhdary and his team can indeed help SAP "go beyond products" and redefine the value proposition for enterprise-software companies.

"Right now, one of the big things SAP can do for its customers is to manage a lot of their complexity," he said. "At the same time, as we manage that complexity for them, we also make demands on them: we force people to look at their businesses in a way that's more disciplined, more focused on business outcomes, more focused on value."

Value: it's right there in Bouhdary's title of Chief Value Officer, and it's going to be very interesting to watch as SAP tries to convince CIOs that this intensely product-centric company is truly serious about transcending its lofty software—and that it's willing to support the talk with action.

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 [email protected].