Global CIO: SAP's Striking Turnaround Triggered By Customer-Centric Strategy

The Year's Top Tech Stories: A year ago, SAP was rudderless and lost. Today, under new co-CEOs, innovation is back and frustrated customers are now excited and delighted. (#6 on our Top 10 list.)

Bob Evans, Contributor

November 17, 2010

4 Min Read

"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' " (end of excerpt).

And has SAP hit its man-on-the-moon goal of 100,000 customers by 2010? The current total is about 103,500, McDermott said.

In concluding this overview of SAP's striking 2010 turnaround that's been centered on the primacy of customer results, I'd be remiss if I didn't highlight the eye-popping results achieved by SAP customer Airgas, which I covered in detail in a column called Global CIO: SAP Stunner: ERP Deal Boosts Customer Profit $100M Per Year. Here's an excerpt:

"4) The Happy CEO! From Airgas CEO Peter McCausland, here's the type of IT-afterglow in which every CIO would love to bask: 'In response to Air Products' offer to acquire Airgas, we have consistently stated that it is all about value, and we believe the substantial economic benefits of our robust, customized SAP system should be reflected in any valuation of the company. We expect this system to further optimize the power of the Airgas platform, and are excited about the game-changing potential of this enhancement to our business."

"5) The Promise of Raising Operating Profits by $100 Million per Year. Here's the math, which Airgas billed as 'incremental annualized operating income upon full implementation': from accelerated sales growth, between $25 million and $50 million per year; from price management, between $40 million and $60 million per year; and from administrative and operating efficiencies, between $10 million and $15 million per year. Add 'em up and that comes out to between $75 million and $125 million in additional operating profits per year for Airgas.

"Lest there by any doubt about Airgas's confidence in the ROI on this SAP deal, here's one more comment that underscores the company's unwavering optimism and conviction: 'Airgas is highly confident that by the end of calendar 2013, the benefits detailed in this announcement will be achieved and will constitute a minimum of $75 million in aggregate annual run-rate benefits in operating income, with a strong likelihood that these benefits will reach or exceed $125 million in the aggregate' " (end of excerpt).

RECOMMENDED READING:

Global CIO: Top 10 Most Influential IT Vendors, Part 2 (Microsoft And HP?)

Global CIO: SAP's Sweeping Turnaround: Exclusive Co-CEO Interview

Global CIO: The CEO Of The Year Is SAP's Bill McDermott

Global CIO: How SAP Is Leading The Mobile-Enterprise Revolution

Global CIO: SAP's Last Chance: It's The Customers, Stupid!

Global CIO: An Open Letter To SAP Chairman Hasso Plattner

Global CIO: Larry Ellison Declares War On IBM And SAP

Global CIO: SAP's McDermott Slaps Back At Oracle And Refocuses On Customers

Global CIO: Inside SAP: 10 Factors Behind Its Dramatic Turnaround

Global CIO: SAP's Top 10 Priorities To Become Undisputed #1

Global CIO: SAP: The Top 10 Reasons We'll Beat Oracle In Applications