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SAP Shakeup: McDermott Speaks Out

After an exec shuffle, SAP co-CEO Bill McDermott insists the company's priorities have not changed and it is not backing off on Hana.

McDermott: The CEOs that I talk to don't ask about the cloud or the deployment methodology. But they are incredibly interested in their consumers and how they can have a real-time understanding of their preferences. They're also interested in offering predictive recommendations to consumers based on their prior experiences on the web, on social networks, and in their interactions with these companies.

What these CEOs want is a real-time, omni-channel relationship with the consumer because they're coming in through various channels. The customer is the ultimate goal for all CEOs, and that logically takes you to the in-memory conversation because it's a much faster way of doing things. As you get beyond that you get to the radical simplification of IT, and this is the part were Hana gets underplayed. We have situations where we're using 90% less hardware because of Hana's compression technology. We used to run SAP on an 8-terabyte system, and now we're somewhere around 1 terabyte.

We're talking about radical improvements in speed and understanding of what's going on with the customer, and wiping out indexes and aggregates when it comes to financial reporting. You can look at data any way you want, sorting by region, segment, customer, demographics. I can ask any question I want. That's the Holy Grail in these enterprises.

[Want more on the management moves? Read SAP Management Shakeup: Hana Mastermind Leaves.]

IW: "Radical simplification" is something we have yet to hear about from any big company other than SAP. In some cases, Business Warehouse customers are holding off on migrations because they have to rewrite their queries for Hana. When are we going to hear from big companies that can attest to "radical simplification without disruption"?

McDermott: We will show you examples at Sapphire that prove the idea of radical simplification and a complete rethink of business processes, especially around the Internet of Things, sensorization, and real-time information provided to knowledge and line workers. You'll see different business models evolving because of Hana, including radical simplification of the IT stack. Most importantly, you'll see unprecedented access to the customer and service to the customer. You'll also see rethinking of service-business models -- the ideas of machine-to-machine, frictionless commerce, and the power of the networked economy. These examples are extending the Hana vision and promise to the world, so, yes, you will see this at Sapphire in living color.

IW: On omni-channel engagement, we've seen a lot of investment by Oracle and Salesforce.com in customer experience and digital marketing. SAP has a partnership with Adobe, but do you have any deeper plans on this front?

McDermott: We made our move acquiring Hybris on the omni-channel e-commerce side. We're differentiating on just that -- any channel, any touch point, and having complete clarity around any consumer. You can make real-time, predictive offers, close e-commerce transactions, fulfill, and keep customers loyal for life. With Hana, the speed at which you can do all this is something no other company can offer.

You are right on the marketing-automation side, and we're very hopeful that the partnership with Adobe, as it matures, will help us do big things together. I think what we've seen from the others is not that big of a deal when I look at sending email blasts to 2.5 million consumers when nobody wants email blasts anymore. I give them credit for whatever it is they think they've done. But SAP is going to be able to tell you stories around a landslide in win rates in omni-channel e-commerce. We're not only winning against companies like Salesforce.com, we're replacing them.

IW: Competitors are saying "SAP's got nothing in the cloud until 2020," to quote Oracle CEO Larry Ellison. Of course SAP has so-called edge apps in the cloud, like Ariba, Hybris, and SuccessFactors, but core-app efforts like Business ByDesign have been sidetracked. How do you respond to that criticism?

McDermott: We're putting the entire corporation in the cloud. One example is Nestle, where they're going to run the entire company in the Hana Enterprise Cloud, which means the entire Business Suite on Hana in the SAP Cloud. We have many, many customers that have migrated to the Hana Enterprise Cloud or the SAP Cloud. Those competitor assertions are simply untrue. On the line-of-business cloud, we're up to 35 million users -- more users in the cloud than any other company. We remain the fastest-growing mega-cap IT company in the cloud. In the last quarter we reported 38% [growth].

The facts will be on SAP's side as it relates to SAP's momentum in the cloud, whether you want to run your whole enterprise, a piece of your enterprise, or you want to run a hybrid cloud. We also get underrepresented on the number of companies that partner with SAP to put Hana in their cloud. Examples would include HP and many smaller cloud providers. I don't think those competitor claims are fair or accurate.

IW: I think these competitors are talking about next-generation applications that were developed for cloud delivery, like Oracle Fusion and Workday, as opposed to SAP's managed-services hosting of Business Suite.

McDermott: What we're seeing here is history repeating itself. Back before the dotcom bust, there were a whole bunch of companies that had a best-of-breed story. At the time they may have been the best, in terms of functionality, but they certainly didn't breed. The enterprises I walk into today are not interested in having 150 best-of-breed cloud applications that don't integrate. That's why the momentum in these stocks is slowing. They're turning over because there's a reprioritization towards earnings per share and real profits in the shareholder world. In the customer world, there's this whole idea of the integrated enterprise, which is going to be the battleground again in the cloud. We won in the last generation of this argument, and we're going to win in this generation as well.

Can the trendy tech strategy of DevOps really bring peace between developers and IT operations -- and deliver faster, more reliable app creation and delivery? Also in the DevOps Challenge issue of InformationWeek: Execs charting digital business strategies can't afford to take Internet connectivity for granted.