As senior vice president of SAP Business One and Business ByDesign Group, Rainer Zinow oversees product management for SAP in its small- and mid-sized businesses worldwide. Zinow, who previously led development teams, education, and alliance management, acknowledges the high-growth potential for SAP in the small- and mid-sized business sectors.
In a recent interview with ASUG, Zinow said organizations in this sector need to shift to the cloud—if they haven’t already done so—and must embrace a robust e-commerce strategy and engines.
This is an edited version of the interview.
Question: Given that the cross-industry, mid-market sector is important for SAP and ASUG to grow, what have you seen recently, in terms of the business challenges, for companies in this sector?
Answer: Number one, they had to survive the COVID-19 global pandemic. I know a lot of companies that went out of business simply because they were not able to keep their business running. They had only been able to run their businesses from offices. Also, I’ve had quite a few conversations with customers who said, "We are so lucky that we adopted a cloud strategy a year ago or two years ago. Without that, we would be toast now." Companies that survived, all say, "We need to be able to run our businesses from home." So, that's the first thing.
The second thing they tell me is, "Before the crisis we thought that having a webpage where we advertise what we are doing was good enough. Coming out of the crisis, we know that we need a robust e-commerce and omni-channel, and we need that now." These are the two key things I hear from companies that survived the last two years. When I ask them, "Where do you want to put your priorities?" Those that are still on on-premise solutions, say, "We need to accelerate our effort to get off the solution that we manage on our own. We started to understand that the risk to have the box in-house is unacceptably high."
Companies are really scared of ransomware attacks. There have been a number of quite visible attacks in the U.S. And the number in the background—that we don't see—is probably skyrocketing. It's a ransomware industry that is growing very fast. As a small- to mid-size company, you can try to hire somebody who can harden out your networks. If you find that person, the salary will be higher than the CEO, but you most likely won't even find them. So that's the motivation why companies say, "I need to address that risk. I'd rather switch over to a cloud service, somebody who can convince me that they can manage a robust environment."
The next wave is all about a point where companies say, "For security reasons and for sustainability reasons, we can't afford long supply chains anymore.” So, I foresee for the U.S., basically a re-industrialization. I’m watching a couple of indicators in industrial areas, also in the Midwest. They are growing. I think even cities like Detroit or others, 10 years from now, may look completely different than today.
The whole story around supply chain management: how do I organize a resilient supply chain so that I have multiple suppliers for critical supplies, and so that I can switch between them? These are topics on everybody's agenda moving forward.
Q: Are there specific technology themes that you're hearing from customers?
A: Customers, for example, ask me, "What have you done regarding artificial intelligence and machine learning with Business One and Business ByDesign?" I rattle down a long list of amazing things we’ve done. And they say, "That's very comforting." And I ask, "When will you start to implement these capabilities?" And they say, "Not now." So, for them, it is important to know that basically when they feel ready to adopt these capabilities, we have them available for them.
The second part is more that I try to bake these new technologies into the applications in ways the companies don't even see it. I'll give you an example. In Business ByDesign and Business One, with your cell phone, you can take a picture of a supplier's invoice and the system will process it for you. In the background, there's a huge AI engine running, which looks at the picture, identifies the content, takes the content, calls the web services of Business One, and sends the recognized supplier invoice for final approval into the Business One system. When the customers see it, they don't recognize it as AI. They say, "Yeah. That's normal. That's how we are working today. We take a picture of something and then we process it." So, I try to make sure that we are using all these technologies, but put a business purpose to it, because otherwise, my customers wouldn't be interested.
The same thing is happening on the big data and data science side. If I say, "Hey, let's talk about predictive analytics capabilities," my customers fall asleep after 20 seconds. If I say, "I can give you a capability that shows you—for all of your opportunities— which ones you will win and which ones you better stop immediately," they say, "Now we are talking." Yes, I'm using the big predictive analytics library of the HANA database in the background, but honestly, my customers don't care.
Q: They just want to understand what it will deliver to their business?
A: Yes. They say, “The thing about the opportunities, that tells me which opportunities to double down on, that's what I'm interested in." And they don't always see that it's two sides of the same coin. I think on the technology side, as much as we at SAP love to talk about technology, in the mid-market most of my customers don't have a CIO. That's my world. The large enterprise world is completely different.
Q: What else might you bring to the Midmarket conversation?
A: So the topic I will bring to the conversation is SAP HANA public cloud. I want to basically say, "On whichever SAP solution you are on now, you cannot outgrow our portfolio. We will show you if you grow beyond the capabilities of Business One and Business ByDesign—be it because you need new business capabilities, which are not included in the products, or you simply process data volumes that go beyond what the two solutions can do—the way forward is S/4HANA public cloud." For the years to come, S/4HANA public cloud, like in the large enterprise market, will be our flagship product—at least for the upper mid-market.
The other thing I will mention is the SAP Business Technology Platform (BTP). That should be relevant, especially to the partners. They start asking me, "Hey, If I build an extension and if I buy into your idea that SAP has Business One, Business ByDesign, and S/4HANA, does this mean I have to build everything three times?" And my answer is, "In the past, yes, but since we have the BTP, you can build applications now once and use them with any ERP back end that SAP brings to the table."
Q: Do you think there's awareness on that? Is it understood?
A: No. We are in the early days, but if I learned something about the mid-market, it’s that I need to say everything three times in a row and I need to say it three years in a row. And then in the fourth year, they will claim that they've never heard it before, but then it will start. And I don't want any of my customers to be caught by surprise. So, I highly appreciate that ASUG is organizing events with a mid-market spin. I understand that not every message that resonates with a large SAP enterprise necessarily adds value to a mid-market company.
Q: As you look forward, can you share insights as to what the mid-market audience can expect from SAP in 2023-2024?
A: What I've also done this year at the innovations summits was mostly talk about capabilities that are available in the current releases. So instead of speculating what might come in 2023 and especially in the current economic environment with the cyber threats, my predictions on the roadmap may not be reliable. For example, in the Business One world, I wanted to focus only on the topic of web client but had to re-allocate resources to work on security topics to harden out Business One even more. I can talk about the roadmap and where we are taking the solutions, but I will also spend time on the capabilities available. I want to tell my customers, "And how about for a change, you adopt these and get the value? Because this is something that you are paying for and you have it, so how about using it?"
Q: That sounds like the mission at ASUG, to help our members gain optimum value from their SAP investments.
A: I’ve been working with ASUG for many, many years now. I try to amplify that message. I say, "Look, the future will be great. Don't worry about that. SAP will always have amazing technology. Don't worry about that either. But let's talk about the real business challenges at the moment, and what you can do with the tools that you have at hand right now."
Q: Can your summarize what you want to share with customers in this sector?
A: Number one, you can't outgrow the SAP portfolio. If you want, you are with us for the rest of your life. Number two, you will always need extensions. SAP is always incomplete. Consider the BTP as your instrument of choice to build these extensions. And number three, simply stay engaged with us. Scream. Shout. Yell at us. Show us what we need to do to make you successful. It is something different if a customer tells me, "Look, I'm trying to do this and this with my business and I can't do it," because then I can shape that input. So stay connected. Stay engaged via ASUG and via the different channels that we have.