SAP CEO Seeking 'Clarity' With Customers

Leo Apotheker is intent on balancing the demand for lower prices and more value on one side, and shareholders anxious over declining profits and revenue on the other.

Next week, Leo Apotheker becomes the sole CEO at SAP during one of the most difficult times in the software company's history.

SAP sits in the middle of a recessionary tug-of-war, with customers demanding lower prices and more value on one side, and shareholders anxious over declining profits and revenue on the other.

So who will win? Apotheker, in a sit-down interview with InformationWeek on Tuesday during the company's annual Sapphire Conference, said he's intent on balancing the needs of his constituents. He spoke about the need to evolve SAP's culture to get closer to customers, which stems from his nontechnical background in marketing and sales.

He'll also apply at SAP a best practice known as lean software development, which is intended to make the company operate more efficiently and get employees working closer with customers.

"What we're trying to do is make sure SAP goes to the next level of its evolution," Apotheker said. "If you look back in time, we started out in automating back-office functions. I think SAP today is all about enabling clarity and enabling transformation of business, which takes us into a whole different category of applications."

On that word "clarity," Apotheker was following script. Clarity is central to a new marketing slogan at SAP that goes something like this: Customers that use SAP technologies get clarity about what's happening in their businesses.

On the product side, clarity translates into a new offering for enterprise search and business intelligence that SAP announced Tuesday, called SAP Business Objects Explorer. It's designed to let nontechnical employees search large amounts of data within their organizations using natural-language questions and keywords, and get results back within a few seconds. They can then view that data, and compare it with other rapidly retrieved data, using bar graphs and pie charts.

The product is a combination of the Polestar user interface developed by SAP's Business Objects business; SAP's in-memory database, BW Accelerator; and the SAP-developed T-Rex search engine.

SAP is working with IBM, Hewlett-Packard, Dell, and Fujitsu to optimize hardware systems for the BI-search offering and will start selling Explorer this summer. SAP will offer a cloud-based testing environment, where customers can use their own data and try the product with no commitment to purchase.

However, the first version will work only with SAP NetWeaver Business Warehouse. SAP plans support for other databases and data warehouses, but that won't happen for a year or two. So unless customers only use SAP as their data source, it will be some time before they can realize enterprise search in the "lightning fast" way Apotheker described.

"The way people are capable of interacting with the data is going to be revolutionized along the way we showed this morning," Apotheker said. "BI used to be the domain of experts. Analytics used to be domain of experts. That's over."

Reactions to Explorer varied widely at the show. IT managers from Molson Coors and Sara Lee, early testers of the product, bubbled with enthusiasm about their experiences, saying their executives using it have begged them not to end the pilot projects. Some CIOs interviewed separately thought it was "cool," and something they might consider at a later date. Others were skeptical about how much work might be required on their part to get the product to search for topics and words in the context of their own data sources.

Apotheker also talked about the need to update SAP's culture, evoking the popular business-school quote about how "culture eats strategy for breakfast." In other words, strategies fail if the culture isn't right.

"I happen to believe that's true," Apotheker said. "I would love to see SAP's culture to evolve to be even more agile, more responsive, and more customer-centric."

As part of that, Apotheker says SAP will adopt lean software development, a methodology that the broader software community has translated from Toyota's lean manufacturing principles.

"It's about designing software, on day one, with important input and collaboration with the people going to use it," Apotheker said. "Lean says you have your customer as a focal point and [ignore] anything that doesn't add value."

Apotheker rejected the idea that the German-based company could be losing traction in the United States, with sales in this region foundering in recent quarters, an increasingly vocal competitor in Oracle, and a new crop of U.S. competitors promoting alternative approaches to traditional ERP software licensing and maintenance.

Noting that SAP has 10,000 U.S. employees and a large lab in Palo Alto, Calif., Apotheker suggested taking a comparative look at its competitors. "Oracle is based in India," he quipped, adding that SAP continues to add more software developers to its U.S. workforce.

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