SAP looks to Cloud innovation for future growth

SAP has come out of a difficult year and is looking to innovation for growth, according to CEO Leo Apotheker – with Cloud applications a critical component of that.

“If you look at what drives the growth for a company like us, it is innovation. You can’t be an IT company; you can’t be a hi- tech company if you don't innovate,” declares Apotheker. “There is no other choice for us than to do this, and we want to do this as well as we can. We have implemented new organisational structure according to new principles that improves how we incorporate customer requirements into our innovation, and at the same time, accelerate the way how we develop, so that we can bring best-in- class innovation faster to the market. But innovation is much more than just having a cool great idea. Real innovation really means that you bring new ideas to the market on time in profits and actually brings value to the customer.”

SAP gets the Cloud, insists Apotheker. "We don’t think the Cloud is just a mythological phenomenon,” he says. “It is actually a real thing. But our answer regarding the Cloud is a little bit less hype and would like a little bit more hybrid, because at the end of the day our customers want to do hybrid. We believe in choice. We believe that customers should be able to choose between on-demand and on-premise, and we believe that we need to combine the best of these two worlds, and not segregate them. So we are going to give our customers choice and flexibility. They can choose between on-premise, on-demand, and a mix of both. We will enrich the Business Suite and SAP BusinessObjects with competitive on-demand extensions."

When Business ByDesign goes critical

But all eyes will be focused on the planned wider release of the Business ByDesign offering, a Cloud-based ERP suite aimed at the SME market. "Business ByDesign is volume-ready in 2010,” confirms Apotheker. “It will be the most complete on-demand suite in the industry, on the markets. It probably has an advance of a few years compared to any competitor. It is already in use by customers in six markets, Germany, the US, the UK, France, China, and India.

"We are bringing out new versions, which are significantly improved with additional functionality, fully multi-tenancy enabled. It has a rich new user interface. It will be available with real-time analytics, of course, with mobile support. It will enable partners or customers or both to extend it in easy fashion, so that we can have additional scale and reach. We are convinced that with ByDesign, we will change the markets and will actually create for SAP a whole new market."

The hybrid approach strategy reflects a changed set of end user requirements, explains Apotheker. "Software consumption and implementation patterns have changed," he says. "People want faster value, and they want to be able to quickly implement these solutions and extract the value out as fast as they can. We responded very quickly. We put into the market an expanded product portfolio. There were products that helped us to deliver very quick immediate ROI. We expanded our customer engagement model to provide customers with more choice, with more possibilities to buy or to use SAP software. We embarked on a lean transformation of the company, which is still undergoing and still underway, and implemented very efficient cost-cutting measures in order to support the margin.”

But economically, things are getting better slowly, reckons Apotheker. “The strong fourth quarter is a proof that we actually responded well to all of this. We had very strong regional execution, in particular in the Americas and Asia-Pacific,” he said. “Globally, the overall climate improved a little bit. Customers were less reluctant to buy software. People understand that in this kind of an environment, sooner or later, we have to do the right thing and that is to invest in some software. That is the best lever that you have in order to start rowing again. We captured these opportunities with a vengeance.”