SAP’s annual sales kick-off meeting season, FKOM, is under way, with the North American and European versions kicking off this week. FKOM is where the new strategies, products, alliances, and services are all pressure-tested on the that thin, white-shirted line of sales people who have the unenviable job of syncing the year’s marketing strategy with the desperate desires of SAP’s customers, and then getting them to actually write a check. It’s a mating ritual that is equal parts science and art, and its quarterly execution is one of the software industry’s greatest and most mystical natural wonders.
SAP is marching into FKOM in great shape, having pre-announced a top notch quarter and riding high on its raft of cloud purchases. It’s also marching into FKOM with a lot of change in the air, change that began with the abrupt resignation of Vishal Sikka last spring and continues with the absorption of another massive acquisition, Concur, as well as a raft of management changes, plans for a suite to succeed R/3, dubbed s-innovations, and a new focus, called One Service, for SAP’s increasingly critical Services group.
But nothing is ever simple, or completely as it may seem, in the software world, and SAP’s 2015 is going to be another year of running, jumping, shooting, pivoting, and head fakes as CEO Bill McDermott tries to keep up the momentum in an almost too dynamic market.
Job number one, as it always is for companies of SAP’s size, is internal: keep the myriad centers of power and influence inside SAP focused on the singular goal of cranking out great quarters like the most recent one. SAP’s sheer size makes this a daunting task, and it’s only gotten harder over the years. But this need for a single lodestar to focus on, a singular target to point the arrow at, one that makes sense to its partners and customers, has never been more essential. And if there is one issue that both exemplifies this internal challenge, and at the same time holds the keys to success, it’s interplay between SAP the German company, SAP the US company, and SAP the global company.
It’s hard to sugar coat it, but the fact is that SAP continues to struggle with reconciling its German roots with the American and international branches now flourishing around the world. Evidence of the balancing act is everywhere: on the one hand there’s CEO Bill McDermott’s very public statement about living in Germany, and on the other hand his hiring of Quentin Clark to be the new CTO based in Palo Alto, a move clearly intended to shore up the company’s Silicon Valley cred. On the one hand SAP the German company is being asked by Chancellor Merkel’s government to be as German as possible when it comes to data privacy – an understandable request considering the divergence in law and practice between the US and Europe on these issues. And on the other hand, SAP the US company is being asked, not by the government but by the financial markets – one of our proxy governments, to be sure – to be as American as possible, which means entrepreneurial, consumer-like, all-cloud, low-margin and low-cost, and to be as open as possible to the wave of new technologies and business practices that mean mining the exabytes of data of the world in the service of commerce. Which of course sets up a perfect collision-course with its German/European data privacy mandate.
The cultural issue goes even deeper: the problem with cultural stereotypes is not that they tend to be insultingly false but that they can’t help –at times – to be shockingly true. Germans are control freaks, Americans are sloppy and miss the details. Germans take too much time making decisions, Americans jump in too soon without due consideration. Germans think it’s all about great engineering, Americans think it’s all about getting a product out as fast as possible. Germans think it’s about profitability, Americans think it’s about market share. Germans think the technologist knows best, Americans think the customer knows best. Germans think no product should be released before it’s ready, Americans think it’s okay to release buggy “beta” software as GA. The list goes on and on….
Adding to the cultural issue is that this isn’t just about the US/German divide, though that appears to be the biggest culture gap in the company. SAP is also an Indian company, a Chinese company, an Israeli company, a Brazilian company, an Argentinian company, a French company – and on and on. And as any student of world cultures will tell you, or anyone who’s seen the UN in action, this cultural bouillabaisse isn’t as easy to digest as its culinary namesake. Getting all these different people to work together takes a Herculean effort. And don’t forget that when Hercules wasn’t running around performing his labors he was running around Greece stark-raving mad. Which means it helps to be a little crazy too if you’re going to play the hero.
But wait, there’s more. SAP is also a federation of business cultures, the result of an aggressive acquisitions strategy that has been marred, to be blunt, by a haphazard merger strategy. By this I mean that SAP has been pretty good at buying companies (leaving out the issue how much they paid for some of their recent acquisitions) but not as good at bringing them into the fold. While two of the founders of the latest acquisition, Concur, have basically made one of the speediest founders’ exit in the history of SAP’s acquisitions, the standard has been to maintain the acquired company’s autonomy (and it’s executive leadership) well beyond what would appear to be a reasonable shelf-life.
And so we’ve seen the Business Objects culture war, the Sybase culture war, the SuccessFactors culture war, the Ariba culture war – in each case there’s been no shortage of smart, well-connected people inside SAP who, judging by how the acquired company comports itself, have wondered whether SAP was the acquirer or the acquired. And while there’s some hope that Concur will be the smoothest acquisition of all –perhaps because at least two of the founders aren’t trying to squeeze their round start-up souls into SAP’s square management culture – the fact that Concur, Ariba, SuccessFactors, Fieldglass, and hybris, among other assets, will be lumped into a single massive “cloud” business that will be a huge part of SAP’s “American culture” strategy will make the job of whoever takes the helm of the cloud business daunting to say the least.
The problem with the culture wars at SAP is not that they will never go away, because they won’t and shouldn’t. While SAP needs to be refocused to ensure that it doesn’t consume itself in internecine battles, creating a monoculture SAP would be a huge mistake. While it’s clear that the infighting, elbowing, and stereotyping needs to disappear, the “dynamic tension” that is endemic to a multi-cultural company like SAP is actually a huge asset that, while already in play across the SAP empire, should be embraced and nurtured even more.
SAP can no more afford to have a single, predominant culture than it can afford to have a single product line or sales channel. The branding needs to be universal, but like SAP customer Nestle’s uber-brand, Nescafe, the packaging, the taste, and even the manufacturing, must be as local as possible. This can only happen in a multi-cultural company selling into a global world culture: to pretend that there could be a single culture selling to a single world market is to be ignorant or utopian. Either way, it’s a sure path to failure.
How can SAP fix this? Nothing is ever simple, as I just said a few paragraphs ago. Keeping the best of the cultural dynamic tension while losing the worst of the internecine fighting isn’t going to be easy. Some of what needs to happen is window-dressing – like having Bill McDermott take up residence in Germany, and some of it is about real cultural sensitivity – like banning the use of any language during internal SAP conference calls that isn’t spoken by all the people who are on the call. (As someone who lives in a multi-lingual extended family, I can assure you that, while it’s easy to lapse into one’s native language without intending to be exclusionary, it’s even easier to feel excluded when the conversation shifts to a language one can’t understand.)
Perhaps most importantly, SAP has to build that single lodestar point of reference for the company and make it stick. Run Simple is a good start, but it doesn’t yet have the cache of an Intel Inside or the IBM On Demand slogan that Sam Palmisano used to resurrect IBM following its crash in 2002. Run Simple simply hasn’t been embraced by all of SAP – nowhere near the embrace that HANA has had – and, more importantly, the SAP ecosystem and customer base hasn’t gotten on board with Run Simple either. The importance of a lodestar cannot be overemphasized: Palmisano’s use of On Demand as IBM’s lodestar was the main reason he was able to turn the company around after the crash. IBM’s successful resurrection in the beginning of the century is a powerful example of what a focused internal campaign can do for a company’s external execution.
The reason that SAP still isn’t as simple as it would like sets up a discussion of the second big issue facing SAP in 2015 and beyond: how do customers, partners, and the rest of the world engage with SAP? The answer, right now, doesn’t come in under the rubric Run Simple.
As Run Simple has evolved there’s been some clarifications and a better sense that, with Fiori, s-innovations, and other new capabilities on the way, SAP and Simple may not turn out to be mutually exclusive at all, which was definitely how many customers and influencers felt following the debut of Run Simple at last year’s SAPPHIRE. The early s-innovations certainly look a whole lot simpler to use, though using them will require running the HANA platform, which for many customers will entail a migration and/or upgrade that won’t be at all simple.
Regardless, the bottom line is that SAP needs Simple to be a slogan not just for its products, but for its interactions and interfaces to its ecosystem and the myriad developers, programmers, and startups that SAP wants, no, desperately needs, to embrace its HANA platform and associated technologies. Because, today, Simple is not the way to describe how SAP engages with the partner and customer world around it. The main, glaring problem is that there isn’t a single, Simple answer to the question: “If I want to engage with SAP, whether it is to build a killer app or service for the SAP market, or buy SAP’s products and services, where do I start?”
While SAP has made great strides in fixing these problems, the fact remains that the external face of SAP is too complex, with too many points of interaction for would-be partners and too many potential barriers along the way. Coupled with the continued perception, even among SAP’s most loyal customers, that the internal SAP journey is also too complex, means that Run Simple is simultaneously a helluva of a good idea and a helluva big challenge for SAP.
My understanding is that a lot of what FKOM will focus on this year are the new ideas, products, and services that will attempt to address this Run Simple problem. One key lodestar that I believe will be broadly transformative for SAP is One Service, which will be rolled out at FKOM and to the world this week. One Service basically makes all of SAP’s myriad services, from implementation to support to cloud and mobile services, as well as education and training, available from a single sales and support organization. This is part of an effort to close the complexity door on the services side, and, frankly, make the customers’ interactions with Services as Simple as possible.
I think One Service is an excellent beginning for SAP, not just because it solves the problem of not-very-simple engagement with SAP, but also because it could serve as a model for providing that single lodestar that can both transcend the culture wars and provide a focal point that can help SAP leverage the cultural diversity that is simultaneously one of its biggest problems, as well as one of its most important legacies and most powerful weapons in the dynamic, global business world of today.
A certain Karl Marx, not known necessarily for his love of capitalism, once said that “a second language is a weapon in the war of life.” I’m pretty sure he didn’t mean to provide a rationale for embracing multiculturalism in the 21st century global economy, but his words were a prescient reminder that life, like business, whether we like it or not, can be a fight. Being armed with the tools to transcend one’s own culture and succeed in battle should be high on the must-have list of every executive and global citizen of today.
SAP is lucky that is has these weapons at its disposal. The trick is to make sure to minimize the “friendly fire” and maximize the synergy that a German/American/Global company can provide. If SAP can do this, and put the focus on simplicity and single points of contact like One Service, it’s going to have a helluva good year.