On the heels of SAP’s less-than-stellar Q3 2020 earnings report, ASUG CEO Geoff Scott held a candid, one-on-one conversation with SAP CEO Christian Klein about the concerns of many North American customers. In an hour-long virtual setting, they discussed everything from the current customer mindset to how SAP is taking the customer’s voice to heart. Klein also shared insights into SAP’s strategy and his vision for the company in the next two to five years.

North American SAP Customers Brought Their Questions

Scott asked about a number of SAP customer concerns, and the floor was open to audience participation. This was a no-holds-barred conversation focused not only on shedding light on some of the common unknowns, but also to reassure customers that SAP has a plan and that it is keeping customers in mind while executing that plan. Scott wasted no time in asking about the recent Q3 earnings report and what it means for North American customers.

“In the last six months,” Klein noted, “we turned SAP from left to right. We did a massive reorganization. We had to make a tough decision of changing our financial ambitions.”

“This was not going to be positive news to our investors in the short term, but as the CEO of SAP, I have to think about my customers first,” Klein continued. “I have to think about the employees. And I have to think about the long-term success of this company. And that is what we did, and I am feeling more confident than ever that now we have the foundation to move forward together with our customers.”

Here are the five key takeaways from the conversation.

1. SAP Product Strategy and What It Means for Customers

From ASUG’s point of view, the number-one question it receives from members is about product strategy. Scott emphasized that it’s not only a focal point for customers, but for Klein as well, acknowledging, “I know the SAP portfolio is tremendously diverse, but can you share your thoughts on the current state of the portfolio?”

Klein zeroed in on providing an end-to-end experience for customers, which is, not surprisingly, infused with intelligent technologies. “This is signaling what we are about,” he said. He provided two examples in light of the pandemic, with procure-to-pay and spend management solutions, as well as an intelligent supply-chain solution. Both examples he shared highlighted how the solutions helped businesses meet their customers’ demands by doing so more effectively during a time when they needed it most. “It not only improved the customer experience, but it also optimized the processes,” Klein said.

Coming back to two major principles of product strategy, Klein said he has told product and engineering teams within SAP that integration is a must-have—as is innovation. “Across the portfolio, we take the topics of data, AI, and analytics very seriously, because this is also where you can see the power of SAP,” he stated. “You see that we are more than a platform or a few services, but really having the power to transform our customers into intelligent enterprises.”

2. How SAP Defines the Cloud and What Customers Should Focus On

Under Klein’s direction, SAP has made a big push to the cloud. During the most recent earnings call, Klein noted that SAP will accelerate the transition to the cloud, targeting more than $26 billion in cloud revenue by 2025.

But what does that ultimately mean for customers, and where should they steer their attention?

“When you look at our portfolio,” Klein stated, “all of the LoB solutions are in the cloud. There is only one solution left and that is our ERP.” Klein noted that although COVID-19 has accelerated the move to the cloud for many organizations, what SAP is focusing on is meeting customers where they’re at and working with them to make those transformations.

While some customers can easily make these moves because they have standardized processes already in place, others have a more complex landscape and need different options. “We give our customers a choice,” he said. “They can choose a hyperscaler, or they can run it on the SAP infrastructure. Some might even opt to stay on-premise, and they can do that.”

As for how SAP will meet its 2025 ambition of increased cloud revenue, Klein believes that, even if some organizations choose to stay on-premise, the vast majority of new cloud business will come from the ERP customer base. “Compared to the times of [SAP] R/3, we have never seen a faster migration in any ERP version as we are seeing with SAP S/4HANA.”

Other areas he wants customers and partners to focus are in using the SAP Business Technology Platform to build extensions and to innovate, and to use SAP Industry Cloud for industry-specific capabilities and solutions. The third path toward accelerated cloud revenue is through experience management and Qualtrics. “Despite the news of the IPO, we are betting big on experience management and we will soon infuse it into our operational applications,” he stated. “There is a lot to come.”

3. Diving into the Current State of SAP S/4HANA Migrations

According to Klein, SAP S/4HANA Cloud is one of the biggest growth drivers in cloud revenues for the company. He stated that there are currently more than 3,000 SAP S/4HANA Cloud customers, and that 70% of these customers are already live.

“I am really happy with the progress we are making,” he said. “But if I think about what we can do better, I need to think about the biggest challenge for our customers. In times of transformation, the biggest challenge is not about how to apply the technology, but about how to redesign business processes and how to standardize. It’s how to change the way people work.”

Klein said as they move forward and think about SAP S/4HANA migrations, the goal is to work with the services side to help support customers in making these changes. “I want to have more solution architects from SAP helping customers from the processes, to the system, to the data, to really make this work and show the massive benefits of moving to SAP S/4HANA.”

Providing services is one thing, but Scott asked what SAP is doing to make adoption easier—whether it’s from a financial perspective or by making implementation easier. Klein noted the SAP S/4HANA Move program is available to help with migration. “We’re also working with the hyperscalers to make integration easier,” he said. “But beyond that, we will soon announce a new offering where SAP will analyze and benchmark business processes that will show customers where they can do better and gain productivity, and then translate that into business configuration for the customer.”

4. Integration, Integration, Integration: What About It?

Since becoming CEO, Klein has talked a lot about how integrating SAP and non-SAP systems is critical for the software company. Scott noted that this is the most costly and time-consuming aspect for ASUG members’ technology portfolios, and asked, “What is SAP’s go-forward integration strategy, and how are you looking to help customers get to easier and more out-of-the-box integration?”

Klein addressed this question from two angles. First, looking at SAP-to-SAP integration, he noted, the company has already made tremendous progress, but that there is room to do more. “We can still do better in harmonizing the user experience,” he said. “Next year, we will prioritize that in addition to other deliverables—including integration to on-premise systems—by exposing more APIs for the mission-critical capabilities to be integrated with the LoB solutions.”

As for SAP-to-non-SAP integration, Klein said he knows that SAP needs to have an open platform. “We are working on new APIs to open our applications because as much we would love to have everyone on only SAP applications, we know that sometimes reality is different. We are working on this so that you can really configure these APIs in a fast way and integrate with third-party applications.”

5. The Customer Has a Seat at the Table with SAP

Since taking lead as sole CEO of SAP, Klein has put an emphasis on customers and making sure that none feel left behind. Scott noted that many of the CIOs he has recently spoken to have indicated an appreciation for Klein’s commitment to customers, but Scott asked how Klein is incorporating the customer voice and their needs into his strategies.

“This is indeed a topic which I not only want to talk about, but also prove it with real actions,” Klein said. “Especially with the customers from North America.” He noted that a priority right now is helping customers get through this crisis, whether it’s helping migrate to the cloud or transforming their business, but also listening to how SAP can adjust its road maps to better fit their needs.

“Helping customers, as well as partners,” Klein said, “means that we are also reaching out with a helping hand. I don’t want to run this company for the short term. I want to build relationships for the long term. This is the time a company like SAP can show that we have a heart and that we’re making sure our customers are with us.” Klein added, “My promise to customers is that we are doubling down and going with them in that last mile to also make sure that they see the outcome of their investment into SAP.”

ASUG members can watch the full conversation between the two CEOs on demand. Keep an eye out on asug.com and in ASUG First Five to get answers to the unanswered customer questions in a follow-up to this article. You can also register for an ASUG Express on Demystifying SAP’s Integration Solutions and Strategy on Nov. 16 at 12 p.m. CT.

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