SAP is headquartered in Walldorf, Germany, but North America is the “battleground” for its market, according to Lloyd Adams, President, SAP North America.
SAP North America serves more than 160,000 customers, with more than 6,000 channel partners and distributors focused on the small and midsize enterprise market. Last year, SAP’s sales in the U.S. accounted for €10.49 billion (approximately $11.40 billion) in constant currencies—nearly one-third of the software giant’s revenue. The gathering momentum of cloud migration and the potential of generative AI for business operations both lend credence to Adams’ assertion that “it’s a really exciting time” to be overseeing the strategy, day-to-day operations, and overall customer success for SAP customers in the United States and Canada.
"We are demonstrating through our results and through customer validation and feedback that we’re stronger and more relevant than ever,” Adams recently told ASUG. “That's more critical than ever now that we're entering the era of business AI. Cloud and AI go hand-in-hand; cloud is the backbone for AI. What I now hear, increasingly, is that AI is really a large part of what’s driving our customers to the cloud.”
Adams first joined SAP in 1998. Before assuming the position of President of SAP North America on Sept. 1, 2022, he had progressed through various presales, inside sales, and marketing leadership roles in the U.S. and Asia-Pacific regions, including managing director of the East region of the U.S., director of SAP North America’s Utilities business, and chief operating officer of regulated industries.
With the 2024 results of ASUG’s annual Pulse of the SAP Customer Research officially unveiled, detailing the attitudes and outlooks of SAP customers throughout North America on topics including integration, the cloud, and AI, ASUG sat down with Adams to discuss his recent experiences in the North American market, the continuing evolution of the RISE with SAP program, and more.
This interview, conducted March 14, has been edited and condensed. It will be published in two installments.
You were appointed to lead SAP North America a year and a half ago. How have these first 18 months been for you?
It’s been the fastest year and a half of my life. I’m literally just over the 1.5-year mark, and it's been a whirlwind, but in a very positive way. Even though it's been 18 months, I very much feel like I'm still completing my listening tour: internally, with all of our various teams across North America; out in the partner ecosystem; and, most importantly, with our customers.
What I'm hearing is that there's a real challenge and opportunity that our clients have in front of them, whether that’s new client acquisition or our longstanding, installed-base customers grappling with how to move to SAP S/4HANA, how to get to the cloud, where do they go from here and how they keep innovating. That's particularly relevant in this North American theater, which arguably on a global level is the most competitive theater we have.
Though it’s a constant exercise, staying in touch with various stakeholders in the SAP ecosystem, how has your understanding of the customer base evolved in this time? What are you hearing from North American SAP customers about their priorities, challenges, and concerns?
It’s been a perfect intersection of what we call our “case for cloud" and the impact of the pandemic on the day-to-day operations of a business—for example, the degree to which organizations worked remotely or leaned in to digitalize more rapidly. This was profound, and through that experience, businesses are feeling the need to move to the cloud more quickly.
As I think back on the arc of 2023, both globally and at the North American level, we've delivered on our promise from October 2020. SAP is a leading cloud company and on a growth path. This is validated by customer interaction and conversations. Last year, globally, we met or exceeded all of our ambitions. And in our full-year earnings results, we reported record current cloud backlog, which expanded by 27%, and 23% year-over-year growth from a cloud revenue perspective. Those are two critically important metrics by which the financial markets measure us.
Based on where we see our customers in the market heading, we've also made investments to keep developing the right technology foundation and partner ecosystem, so that we can help facilitate this shift that our clients need to make, moving some of the most complex ERP environments to the cloud. We said boldly in 2020 that we were going to become a cloud company, and now we are.
In parallel, we’re seeing that cloud has become the default choice across all verticals. That wasn’t always the case. A few years ago, there were some pockets of the market that for their own host of reasons were hesitant to make that leap. Now, cloud is pervasive across all market categories. Here in North America, that’s what’s got us all so jazzed—and hyper-vigilant, as we’re competing against some of the biggest names in the tech world. This is the battleground for SAP globally, and it’s part of my responsibility to be the voice for that.
I’m proud of the team, because we're demonstrating through our results and through customer validation that we’re stronger and more relevant than ever. That's more critical than ever now that we're entering the era of business AI. Cloud and AI go hand-in-hand; cloud is the backbone for AI. What I now hear, increasingly, is that AI is really a large part of what’s driving our customers to the cloud.
It’s a huge honor and responsibility for us, because we cannot and do not take lightly the degree to which we have to help future-proof our customers’ businesses, help them drive continuous innovation, and help them drive sustainable growth. The cloud is ultimately the only mechanism through which organizations can viably do that. Our mission right now is focused on helping customers see that the sooner that they can leverage the full potential of the cloud, the sooner they can get to that end-state and beyond.
With the evolution of RISE with SAP over the past year, specifically with the launch of the RISE with SAP Migration and Modernization program last fall, what impact has that program had on customer adoption of cloud solutions and services, particularly for those more tentative customers or those in on-premises environments still struggling to figure out how to take that step, even how to build a business case to do so?
Since RISE was launched in January 2021, it’s evolved quite considerably. If you were to ask me that question two years ago, my honest answer at the time would have been, “It’s still somewhat nascent. We’ve had some success on the front of early adopters, but we still do see—somewhat pervasively—pockets of resistance in certain geographies and verticals.” That's not my answer today.
Today, of course, there are still organizations we need to convince, which is why our case for cloud is still at the forefront of much of what we do. And that is, frankly, why we’ve come forward with the transformation incentives that we have out there, to accelerate decisions. The biggest difference right now is that we do have critical mass across all verticals, all geographies, companies of all sizes.
RISE is the de facto motion for new client acquisition. If you’re a new organization that doesn’t have any SAP footprint, it’s what we lead with. Frankly, we never hear from any potential net-new clients, “Hey, tell us about your on-premises offering,” which makes sense, given where the market’s heading.
It’s a bit of a different story if you’re someone that has an existing footprint. At some organizations, their environments are quite complex, and some organizations have—for reasons that are their own—heavily customized environments. Their path, from where they are now to where they ideally need to get to, looks different. Together with their workforce, their partners, their hyperscaler of choice, and our team, we need to be completely aligned across the enterprise architecture to achieve the right roadmap to get them from A to B.
That seems to be the crux of all the conversations that we're having. It's not, “No, we’re not interested.” Now, it’s, “We know we need to get there. Let’s talk about the artful and pragmatic path that we need to blaze, given our current state and our target end state.” It requires a lot more coordination and thoughtful planning, with a multitude of people at the table. In the early going with RISE, that wasn’t as evident to us as it should have been. However, with three-plus years under our belt, and thousands of organizations who have either made the move or are in flight right now, we have a lot of lessons learned. And we just keep improving the offering.
And that cloud movement has progressed further with upcoming deadlines for end of mainstream maintenance for SAP Business Suite 7, in addition to SAP indicating that new cloud-only innovations will benefit those customers in terms of AI, sustainability, and so on…
In July 2023, we all heard Christian Klein and our board declare boldly to the market that we need our clients to pick a lane. And the lane that we’re helping them pick is cloud, for very good reasons, both for the customer as well as for ourselves.
We only have finite capacity within our product engineering teams, and we can’t continue to bring innovations by way of AI, SAP Signavio, the SAP green ledger, and sustainability both in the cloud and across a multitude of other on-premises environments.
We’re never going to abandon our on-premises customers. In terms of where we’re going to focus energy into innovation, we have to do it in the cloud. And so intrinsically, as part of that, that’s where we’re going to lead our clients—on the right timeframe. We’re not saying you need to get there today, immediately, but we are guiding them to get into that lane because, at some point in time, they need to take that off-ramp. We’re trying to catalyze, encourage, and entice some of that to happen sooner than later, for their long-term benefit.
Stay tuned for next week’s edition of ASUG First Five for the second half of our conversation with Lloyd Adams, President, SAP North America, in which he details how SAP is moving to support customers with SAP S/4HANA skills-building and reflects on the road ahead for SAP’s embrace of business AI innovation in the cloud.