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.