Software Leader SAP on their Changing Growth Strategy

Exclusive interview with SAP on their Growth Strategy

The German business software company, SAP, has experienced exponential growth since five system analysts first established it in 1972. David Payne, Vice President, Technology, discusses SAP’s expansion plans with The Growth Strategy Company. SAP is not only facing the challenge of altering its growth strategy, but also the speed in which this strategy needs to be put into effect. The rapidly changing marketplace is forcing the company to make business decisions and get new services or products to market more quickly than ever before. It only took 18 months from the day SAP acquired Sybase in-memory technology to the time new product was introduced—an all-time record. This necessitates being open to new opportunities in all areas of the business, some that were never considered in the past.

The Growth Strategy Company: When did SAP start changing its growth strategy?

David Payne: SAP always had a healthy attitude of growth. Up to about five years ago, our definition of growth was based on acquiring new small- to medium-sized customers of Business Suite to help them better run their companies. We then changed our approach and began to expand our product line. In 2007, we introduced Netweaver, which combines an application and integration platform that allows our customer’s IT systems to enable portals, collaboration, data management and development environments. We wanted to emphasize products that could be of immediate value to customers, especially for those who were struggling in the 2008 economic slowdown. In 2010, we also introduced 26 new industry-specific and line-of-business analytic applications. We saw that our customers were increasingly relying on large amounts of information from a variety of sources, or what is called “big data,” to analyze, improve and execute their operations. With our Sybase in-memory computing tool, companies can store and access this big data immediately when needed for analysis.

TGSCo.: Didn’t this also change your sales and marketing approach? Are you being more consultative and customer-centric?

DP: Now more than ever my role is to ensure that customers recognize the incremental value…Our customers require a clear explanation of how we can help them achieve growth, work smarter, and reduce business costs. A comprehensive go-to-market strategy can give them the tools they need to become successful. In a survey we conducted of customers, we found that the vast majority did know how to create a business case for new software. They had no management strategy for investment. So, we’re working more closely with our customers to build their case for the need of software. It’s always necessary to provide business value before customers will invest. For example, we use our analytics tools to help customers benchmark themselves against their industry peers. With SAP’s global database, retailer “A” can compare themselves to retailer “B,” to see if their organization is better or worse to and what they need to do to increase their competitive value.

TGSCo.: You’re growing your company by helping these small- and mid-sized customers define their own growth strategies. We recently read that SAP has set some really bold sales targets: Turnover of at least 20 billion Euros (£16.8 billion) by 2015, moving up considerably from its current 12.5 billion Euros (£10.5 billion), and your software to reach one billion users by 2015, as well.

DP: Right now, our software is only used by some company’s departments some of the time, for example HR or analytics. By changing our strategy, investing in new products, like mobile Internet and cloud solutions, we can reach millions more. Just look at China, there are more mobile users there than anywhere in the world. More Chinese access their Internet through mobile than the PC. Even a couple of years ago, the number of Chinese using mobile phones for Internet access was 277 million about of China’s total phone consumers. They are all carrying around computers in their pockets!

TGSCo.: How are you leveraging such changes?

DP: In 2010, we acquired Sybase Unwired to develop new types of business applications for mobile devices. Then in 2011, we acquired the Success Factors to get more into cloud computing, especially for certain lines of business such as HR, manufacturing and sales.

TGSCo.: What about partnerships?

DP: Our present management team is much less insular and more open to partnerships. We’re increasing our collaboration and innovation with other growth-focused organizations. Last year we partnered with Google. SAP Business Analytics is using Google Maps, so products come with geographic mapping capabilities that make it feasible to visualize data. Also, integrating Google Apps and our Business By Design we foster a developer community through Google App Engine and the Android operating system and give our customers the option to use Gmail and Google Docs in the SAP environment.

TGSCo.: Any additional growth strategies?

DP: We’re very successful in emerging markets. SAP is a very global organization. We have been recognized as a German company known for its innovation and business growth. Now we’re investing in joint ventures and supporting new companies like LinkedIn through SAP Ventures, which is a catalyst for growth-stage enterprise IT companies worldwide. We’re growing our business in China, Brazil, and Russia.

TGSCo.: External growth, alone, will not sustain a company. Is the SAP culture and management supporting innovation?

DP: SAP has greatly improved employee morale by empowering its people. It’s aiming for an 82 percent employee engagement index. Surveys show that employee participation has increased significantly over the past several years. We also rolled out mobile computing for our employees by purchasing 1,000 iPad tablets.

TGSCo.: What suggestions do you have for growth strategies for its small- and medium-sized companies and similar organizations that hope to grow successfully into the future?

DP: Similar to SAP, success can come by establishing partnerships with companies having similar growth strategies. Companies need to look at growth from many points of the compass—customers, trading partners, and suppliers, for example. Growth can take many different forms. Look at the entire ecosystem for possible growth and innovation directions. This need for collaboration and connectivity will only become more important as time goes on.

image credit: sap. com

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Wayne Simmons is an accomplished executive, innovator, value creator, and entrepreneur and co-author of GrowthThinking: Building the New Growth Enterprise. As CEO and Co-Founder of The Growth Strategy Company, Wayne leads the vision, strategy and growth of the company. He has worked for global advisory firms Ernst & Young, Deloitte Consulting, and has been a trusted advisor to C-level executives at Fortune 500 corporations, venture capital firms, and small and midsized companies. Wayne was trained in airborne reconnaissance for US Army Intelligence; and is an alumnus and Fellow of The Wharton School of the University of Pennsylvania.

Keary Crawford is a results-driven executive leader with extensive experience in operations, M&A and finance for start-up, entrepreneurial and middle-market companies. As co-founder and COO of The Growth Strategy Company, she manages the strategic growth and vision, and day-to-day operations; and is co-author of GrowthThinking: Building the New Growth Enterprise. Keary was trained in Behavioral and Social Sciences and is a Fellow and alumna of the Executive Development Program at the Wharton School of the University of Pennsylvania.