Tom Kindermans, senior vice president, business solutions, SAP APJ was in Sydney for SuccessConnect 2012, and he spoke to Freya Purnell about the company’s newly defined cloud strategy, and how cloud will make organisations more agile.
FP: Why has the acquisition of SuccessFactors been so important for SAP?
TK: It’s fascinating times for cloud, and with one of the biggest gurus in cloud taking over control of the SAP cloud business, our strategy is evolving; it’s more precise, it’s more articulated.
As we announced at SAPPHIRE, first of all cloud will focus on the four areas of the business that matter most for our customers- employees, customers, suppliers and financials. All cloud products we launch will belong to one of these four categories.
Second, all these elements can be bought independently of each other. So it won’t be like in the ERP world anymore, where you have to start with financials and then you can build on top of that. The four areas are loosely coupled with the other components, which means that if you implement more than one component together, it has advantages but it’s definitely not essential.
The third element is that we will provide standard integration of the on-demand components within our Business Suite, with fixed cost, fixed functionality, fixed integration scenario, fixed time to value.
The fourth component is that we provide a platform to our customers and to the independent software vendor (ISV) community, NetWeaver Cloud, to build functionality applications. We are still in the phase of controlled availability for the moment for that, though later this summer it will get to general availability. That’s the story we have for large enterprises.
We also have an appealing story for the small and midsize enterprises and that’s based on Business ByDesign and Business One in the cloud. We believe there is a market out there for smaller companies who do not have an IT department and who decide to push a maximum number of applications to cloud.
FP: For large enterprises, what opportunities will having easier access to these on-demand components bring?
TK: We believe that the IT architecture of most of our customers will be a hybrid architecture, with some of the core processes continuing to run on-premise and with some line of business applications running in the cloud, using the same master data and seamlessly integrated. Because when we look at the core processes of the company like financials, logistics, and so on, companies do want to have a minimum of risk. In the lines of business, they are much more innovative. As long as the time to value is short, they are ready to take many more risks.
FP: Do you think the role of the ecosystem will change with this type of strategy?
TK: It will definitely attract a number of ISVs who will develop on top of our cloud platform. That’s actually a really big play because the adoption of our platform will mainly come through the third party companies developing on our platform. That’s a strategy which we push in all areas of the business. You might have heard the announcement at SAPPHIRE that the
development licences for HANA and mobility will be delivered for free; we are still figuring out what we do here with cloud, but attracting as many developers to our platforms is definitely a part of the role we believe the ecosystem needs to play.
FP: What does the new cloud business unit mean for SuccessFactors as an entity?
TK: Entity is the right word. We will create this separate business unit which will be the SuccessFactors employees plus the SAP employees who worked in our on-demand products.
We will develop a maximum of synergies and what is absolutely certain is that the activities of this unit will not be limited to HCM. We have several cloud products, and some of them are based on a different platform. The priority will be to build the same user experience and a single sign-on, without, in the first phase, changing all the platforms. It might be that some of the different components will run on different platforms, but
for the users, the customers, it will be seen as one consistent user interface with a single sign-on to all of these different applications.
FP: From customer feedback, are you hearing that the user interface is one of the appealing aspects of SuccessFactors solutions?
TK: Definitely. One of the pain points in our portfolio is the user interface. For on-premise solutions, a clear evolution will be that the user interface will change dramatically, and we will definitely learn from the best practice of SuccessFactors there.
What you will see is that we will offer choice in user interface for professional users and casual users. People who use SAP every day like our user interface because it’s fast and they know their way around. We are criticised by the casual users, and for them we will come up with a totally different user experience.
FP: You are presenting on agility at SuccessConnect. What do you see as the key components for creating agile organisations?
TK: A very important component when we talk about agility is time to value. In the past, we had these projects where whole armies of consultants marched into customers, and stayed there for as many years as possible. Those times are over. Time to value becomes a very important component. Companies are even ready to compromise on functionality as long as the time to value becomes shorter. Companies have evolved from ‘I need to have it 100 per cent the way I want it’, to ’90 per cent is OK as long as I have it fast’. That’s where the success of cloud kicks in.
FP: Will the way consultancies work on deploying SAP solutions change in response to this too?
TK: For sure. There is no fear that consultants will be without any work because there is still a shortage of SAP consultants in the world. How we can extend the consultant community is still a clear priority for us. So it’s not that all these people will all of a sudden be unemployed. But the role of the consultants will change, and the ratio of software to services for these projects will change. Where we have projects with a ratio of 1:3, 1:5, 1:10 at the moment, we believe in the future it will be 1:1, software to services.
FP: If companies are pursuing agility, choosing the right path is important. With so many new solutions and options as part of the SAP portfolio now, how can they cut through the confusion and make the right choices?
TK: It’s part of our strategy to offer choice to the customer. In contrary to other companies, we do not believe in a lockin strategy. We believe that choosing a vendor which is open and where you have all this choice is clearly an advantage for our customers. You call it confusion, we call it freedom. It is important to set the right priorities where you will spend your money first.
FP: What is your ultimate goal with cloud?
TK: Through the acquisition of SuccessFactors, we have 15.6 million users, which is the most users of any cloud company in the world. So we are market leader from a user point of view, but our goal is to be the number one cloud provider in revenue terms in 2015.
This article was first published in Inside SAP Winter 2012.
