SAP is headquartered in Walldorf, Germany, but North America is the “battleground” for its market, according to SAP NA President Lloyd Adams.
That’s because, as SAP continues to drive its customers toward the cloud and furthers its embrace of artificial intelligence (AI) amid its intention to become a leader in business AI worldwide, SAP is competing against the biggest names in enterprise technology, many of which are U.S.-based. This competitive landscape puts a premium on the customer experience and ensures that SAP customers grasp the extent of the business value they stand to unlock through partnering with SAP. The partnership aims to drive lasting change in their organizations.
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 currency—nearly one-third of the software giant’s revenue. The gathering momentum of cloud migration, alongside the landscape’s fascination with exploring the implications of generative AI on business operations, lends 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.
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 the annual ASUG 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, the role that SAP’s extensive partner ecosystem has to play in guiding customers to the cloud, and much more.
This interview has been edited and condensed.
ASUG: 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, right? I started officially on September 1 of 2022, so 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, if you will: internally, with all of our various teams across North America; out in the partner ecosystem; and, most importantly, with our customers. It’s a really exciting time to be stepping into a role like this, given where SAP is with its transformation. But I think, more importantly, given the challenge and the 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. And particularly in this North American theater, which arguably on a global level is the most competitive theater we have, there’s never a dull moment, to say the least. It’s a really exciting time.
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’ve been trying to drive to market from a messaging perspective around what we call our “case for cloud,” now that we're fully on the other side of the pandemic—knock on wood—and the degree to which organizations during that time of working almost exclusively remotely, the degree to which companies leaned in even harder to digitalization, which was pretty profound. And with that, the recognition that the need to move to the cloud in an accelerated fashion has become even more amplified.
As I think back on the whole arc of 2023, I'm really excited, because I think both globally and at the North American level, the year turned out to prove our promise of three years ago, which is that SAP is now without a doubt a cloud company and a growth company. This is validated by customer interaction and customer conversations. Last year, globally, we met or exceeded all of our ambitions. And we had, as you may have seen in our earnings results, record current cloud backlog, expanded by 27%, and 23% year-over-year growth from a cloud revenue perspective. Those are two critically important metrics by which the street measures us. As part of that, and based on where we see our customers in the market heading, we've also very recently and intentionally decided to make some investments to keep developing the right technology foundation and partner ecosystem so that we can help facilitate this shift that our clients need to be on, moving what are arguably some of the most complex ERP environments out there to the cloud. We said pretty boldly a couple of years ago that we were going to become a cloud company, and now we are.
In parallel to all of that, we’re seeing dynamically out in the market that cloud has become the default choice across all verticals. That wasn’t always the case. There were some pockets of the market, some industry spaces, that for their own host of reasons were a little bit hesitant several years back to make that leap, but it’s pretty pervasive across all spaces. That’s pretty profound and exciting. Here in North America, that’s what’s got us all so jazzed—and hyper-vigilant, if you will, that we’re competing against some of the biggest names in the tech world. This is the battleground for SAP globally. And I try very politely and kindly to remind our board members of that all the time; they know it, but it’s part of my responsibility to be the voice for that.
I’m proud of the team, because I think we're demonstrating through our results and through customer validation and feedback that we’re stronger and more relevant than ever. I think that's quite important now, with us entering this 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. And 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 remains to just get them to understand that the sooner that they can leverage the full potential of the cloud, the quicker they can get to that end-state and beyond.
ASUG: With the evolution of the RISE with SAP program 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?
It's a great question, now that we’re north of three years into the RISE motion, and it’s evolved quite considerably, right? If you were to ask me that question two years ago, my honest answer at the time would be, “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 certain verticals.” That's not my answer today.
My answer today is that, of course, there are still organizations where we’re deep in the throes of heavy-convincing mode, 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 some decisions and so forth. But I think the biggest difference right now, which is why I love the question, is that we do have critical mass across all verticals, all geographies, companies of all sizes. RISE is the de facto motion with which we lead for new client acquisition. If you’re a new organization that doesn’t have any SAP footprint, it’s the only thing 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.
Now, of course, it’s a bit of a different story, if you’re someone that’s been with us for quite a while, and you have an existing footprint. At some organizations, their environments are quite complex, and some organizations have—for reasons that are their own—heavily customized. Their path, from where they are now to where they ideally need to get to, looks a little different. Together with not only their force, but also the partners with whom they work, their hyperscaler of choice, and of course our team, we need to be in there and highly choreographed, bringing our best and brightest by way of our enterprise architects, by way of our enterprise cloud service delivery leads, and so forth, to put together the right roadmap and glide path to get them from A to B.
What’s exciting now is 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 get on for our organization, given our current state and our target end state.” So that’s really exciting, right? It requires a lot more choreography and thoughtful planning, with a multitude of people at the table. And I would say, as I say all the time, that the RACI is very important. In the early going with RISE, quite frankly, 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. It’s a really good time.
ASUG: The cloud movement has progressed further with upcoming deadlines for end of mainstream maintenance for SAP Business Suite 7. In addition, SAP has indicated that new cloud-only innovations will benefit those customers in terms of AI, sustainability, and so on…
Following our Q2 earnings call, in the July-August timeframe, we all saw Christian Klein and our board—very overtly—declare boldly to the market that we in essence want and need our clients to, for lack of a better phrase, 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. That’s where we're leaning, because we only have finite capacity within our product engineering teams, and we can’t continue to bring new innovations by way of AI and SAP Signavio and 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. But in terms of where we’re going to pour forthcoming energy around go-forward innovation, we have to do it there. And so intrinsically, as part of that, there too is where we’re going to try 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 benefit, more so than ours.
ASUG: According to the ASUG Pulse of the SAP Customer Research findings, 47% of recently surveyed ASUG Members are either already using SAP S/4HANA or currently starting the implementation process. Within two years, 69% of these SAP customers expect to have implemented SAP S/4HANA. At the same time, our members report that the top skill set missing or lacking at their organizations is SAP S/4HANA expertise. How is SAP moving to support customers in their implementations after go-live, given the skills-building opportunity that accompanies this digital transformation?
I’ll answer this on two fronts. Firstly, there’s what we’re thinking about and trying to bring to market, directly to the clients themselves, so that they can curate and enhance the skill set that is needed in their ranks, within their own organizations, because without a doubt, to your point, we need to meet the rapid pace of change and tech innovation. We need to help these organizations quickly gain new and future-proof skills.
The one place I would like to point out is the SAP Learning Hub, because at the end of the day, that really is the one-stop shop for upskilling, reskilling, and certifying SAP skills. Just this past January, at the beginning of this year, we announced to the market an enhanced certification program, with a whole redesigned SAP Learning Hub. Currently, it provides access to nearly 100 globally recognized role- and product-based certifications across our entire suite. SAP S/4HANA, SAP Business Technology Platform, SAP Customer Experience (CX), SAP Human Capital Management (HXM), SAP Intelligent Spend and Business Network (ISBN), you name it. Through this certification program, our customers can benefit in a variety of ways. It can either come in the form of digital live sessions or on demand, on hand, on-site practice sessions or advanced analytics—different learning management functionalities. We’re really excited about everything being poured into this, I think we need to keep upping the ante in terms of how we purvey what it provides to clients, perhaps in a more pronounced way. And that's a challenge I always lay out for my team because we’re excited about where it's heading, and it really does mark a major step in the evolution of our SAP Learning Portfolio.
That’s probably the first part of my answer, through the lens of us direct to our customers, what we’re trying to proliferate better. But you know us well, and we’re extremely reliant on our ecosystem, so we're trying to take that same intentional guide and direction to our existing suite of partners of all varieties. This supports some of the stats that you cited. It’s not just a matter of us having to go to our partners. I’m really encouraged by the fact that that many of our partners are coming to us with this same recognition and validation that a positive wave is here, and we all collectively need to get ready for it. There are a number of partners out in the ecosystem that I see increasingly double or triple down on their SAP capabilities.
I met with one of Cognizant’s leaders yesterday; they are looking at their SAP practice as one of the few mega-growth engines within their organization, and they're trying to partner with us to ask what they can do to enhance even further the capabilities that they have, and help attack the market together, perhaps in some key verticals, where some of the other players aren’t as pervasive. Similarly, DXC had a change of the guard across a multitude of key leadership roles, and as part of that a recognition is coming in that, similarly, SAP is a huge opportunity in the market, not just North America but globally, so they are going to expand their practice and their capabilities. Another one I’m incredibly excited about is KPMG. They, for the longest time, were our auditors, and as part of that couldn’t have a dedicated SAP practice in the way that so many other firms do. They wound down that engagement last year and, as part of that, now can step in some other zones. They’re looking at this with a complete beginner’s mindset of seeing this market opportunity in North America and globally as immense; they’re rushing, very thoughtfully, to help curate the capabilities and the qualifications we need to jump in this together.
And none of that need be threatening to some of the other names that we all know and love that compete in this space, because the opportunities are so numerous that there’s genuinely space for everybody. The customer base is going to need that expanded ecosystem, because of the volume of work and also because of the acute need for more skills. It reinforces your question, and that’s a really interesting lens to look at it through, because it’s through the lens of the ecosystem. It's validating the fact that skill development has never been more critical than it is right now.
ASUG: How can business and IT leaders most effectively make the case for change at their companies, broadly in terms of digital transformation and, more specifically, in terms of cloud migration? What advice would you give to leaders facing budget issues and integration challenges—identified through the 2024 ASUG Pulse of the SAP Customer Research as two of the top challenges our members face in cloud migration—about what to prioritize and how to proceed?
It’s a great question. And, no doubt, we see it in virtually every interaction that we have. The reality is that every customer’s situation is somewhat bespoke. That said, there are a lot of common denominators that can inform any number of clients’ path. What I’d say first to any client who feels that objection really acutely, as you laid out, would be that we’re here for you to work very thoughtfully and pragmatically around what your plan and your roadmap to the cloud ought to look like. But at the end of the day, you need a path.
If there are some budgetary concerns, our urging will be, if you can’t do everything, where are the places that we can start? How can we think along the lines of walking before we get you running, but to not continually push things out, especially in light of where we’re taking things from an innovation perspective within our product portfolio. The earlier you get moving, obviously, the earlier you get access to what’s coming by way of business AI.
We’re excited on that front, because we’re already bringing this vision to life, from a business AI perspective, across nearly 300 million cloud users, across every single aspect of our product portfolio, powered by the cloud and SAP BTP. We see this huge opportunity. We had a similar survey of our clients here in North America last year; we polled over 400 of our top customers, and we learned that, while 96% of that base already has adopted some form of generative AI, only 3% of them are actually seeing any tangible returns on those AI investments. That's important to note, because we see generative AI is perhaps the greatest opportunity for SAP since the rise of the cloud, and we’re doing our best to move as quickly as possible from hype to execution.
I think it underscores your question, because we do hear all the time that organizations think of AI almost as a diet pill insomuch as, “The more we lean into it, the more it might eliminate someone’s job.” And others are thinking bigger-picture and longer-term in realizing it’s not so much a diet pill to eliminate jobs as a muscle builder to free up someone to perhaps have to focus less on certain more mundane, menial things and to be able to focus on much more higher-powered, transformational things. As she achieves more, it allows the organization to bring in someone else alongside her and work on even more of that. It need not be thought of as a diet pill, but almost more of a muscle builder. I bring that up, because, given where we're heading with our portfolio, if people don't start down the path, their ability to get to some of those end states elongates, and we want to prevent that. It comes back to thinking about trade-offs and decisions that need to be made in the face of those challenges. Let’s do it in a way where we get this on some sort of roadmap and glide path, not to keep pushing it back.
ASUG: That connects back to the reskilling and upskilling question we discussed earlier, which concerns the ways these cloud-only innovations can create new opportunities for employees to align with their businesses’ evolving tech stack.
100 percent. If your roadmap needs to come in waves, inevitably, in some of the earlier waves, there will be learnings that will allow us to inform some of the subsequent waves and perhaps compress the time they'll take to run and implement and derive value.
ASUG: You previously oversaw SAP’s Utilities business in North America. What challenges do customers in that space face that are notably distinct from other industries, and how did that experience prepare you for your current role?
I’ve been here 26 years now, but in my career in this market-facing business development type of leadership role, that was my first time when I directly oversaw a unit, if you will, that was vertically integrated and within our four walls operated as a unit all the way from product engineering through support. And that, for me personally, was a really important set of learnings, coupled with what I didn't anticipate before stepping into the role, which is how closely-knit that customer community is, and how impactful and influential they were as a unit out in the market for us and back into our extended organization in terms of future requirements, where we take our portfolio, and the ecosystem that coalesces around all of that.
I love the question, because that really has informed my approach to other roles that I've taken since. Back when I ran the northeast for North America, and certainly now in my current role, I’ve thought about the criticality of industry. For me, personally, I think it's the number one lens through which our clients view themselves. Within the organization and out in the ecosystem, that tends to be even more of a driver in terms of how I try and move the types of things that we do forward, so that everything that comes out does so as best we can through that lens.
Our next frontier on that front is business AI. In the earlier going, I don't want to say it's nascent, because it's not, but a lot of what you’re seeing from us is predominantly horizontal across our portfolio. I think the next wave needs to be much more pervasive, industry-centric AI use cases. Sticking with the utilities example, think call centers, back-office accounting, field service management, and things of that nature to make the lives of those working within those utilities in service to their customers be even more optimized, and therefore the value they derive from our solutions becomes even more pronounced.
I'm always pressing with some of our colleagues who have some sort of industry lens to say we always need to make sure that that “I” is as capital as possible. It’s the primary dimension through which our customers view their relationship with us. And it's not to say folks don't look outside of their vertical for other good practices; they indeed do. More often than not, at the end of the day, the “birds of a feather” concept is very true. And as they benchmark themselves against peers, it's typically against industry peers first and foremost.
The utility space is a very special space, and one I could talk about for hours. That’s why I'm always, even though I'm not in the role anymore, crashing the SAP for Utilities, Presented by ASUG conference, because it's a very special group.
ASUG: It was a pleasure to see you in Chicago for last fall’s conference for the SAP utilities community. Fingers crossed that you’ll be back for this year’s conference?
I’m pretty sure I am. Where is it this year? I can’t remember.
ASUG: Miami.
Oh, yeah, I’ll be there. Yeah. [laughs]
ASUG: What if I’d said Alaska?
[laughs] Well, I probably still would go, but I maybe wouldn't have been as enthusiastic. No, I will be there. Count on it.
For more from Lloyd Adams, please read the first half of the conversation here, detailing Adams' recent experiences in the North American market, the evolution of the RISE with SAP program, and the accelerating case for cloud. And don't forget to sign up for the ASUG Utilities newsletter and register for the SAP for Utilities, Presented by ASUG conference (Sept. 9–11; in Miami, FL).