At SAP Sapphire, co-CEO McDermott plays ball with customers

It's a B2B2C world we're living in, SAP co-CEO Bill McDermott says. Live from the company's Sapphire Now conference in Orlando.
Written by Andrew Nusca, Contributor

ORLANDO—Bill McDermott walked onto the expansive stage as if he were ready to play ball.

He bounced a little, from the knees. He grinned. He held his palms out. It's the kind of demeanor you expect from a basketball buddy who just sunk a three-point shot over your outstretched hands.

You know I got skills, right? Your ball, buddy.

The SAP co-chief executive was in good spirits. Before him were 20,000 faces in shadow, here for the opening keynote of the German enterprise software company's annual Sapphire Now conference. Minutes earlier, someone had told him that there were upwards of 80,000 people watching online. And tucked away backstage were CBS sportscaster James Brown, National Basketball Association deputy commissioner Adam Silver, San Francisco 49ers CEO Jed York and Under Armour CEO Kevin Plank, who were on hand for a sports-related segment later in the presentation.

For an avowed sports fan like McDermott—his grandfather is a prominent member of the NBA Hall of Fame, and he happily recalls watching ballgames in Shea Stadium as a youth—this backing was better than any pep talk. And it showed, as he comfortably peppered his business-focused presentation with the kind of exclamations ("My goodness!"), questions ("Am I right?") and softened consonants heard in banter between age-old friends.

Only this time, he had more friends than typically attend a nearby Orlando Magic basketball game.

But McDermott's job here wasn't to chat; it was to convince his customers that their customers are critical to every technology decision they make. 

"SAP is now a business-to-business-to-consumer software market leader," he said. "The customer and customer alone determines whether or not we win or lose."

Core that proposition is HANA, the in-memory database technology that the company announced last year. HANA represents "the intellectual renewal of SAP," McDermott said, and has become the company's "fastest-growing software product."

"We knew big data would be big business," he said, adding that his company has "30 million users in the SAP cloud, more than any other cloud company."

But McDermott wasn't here to talk technology; that subject would be addressed in chairman Hasso Plattner's presentation later this week. McDermott wanted to talk people.

Specifically, Millennials.

The next generation

The generation of people that are younger than 35 today "represent the biggest target market on Earth," McDermott said. And that's critical for businesses to understand.

"They are different, no doubt about it," he said. Why? Because they don't use technology to reflect who they are, but rather to achieve who they want to be, he said. "I think of them as the empowered generation. They are individuals with a capital 'I.'"

McDermott would know; he has a 20-year-old son.

"If you think of them as a segment of one, you can have a very compelling relationship with them."

Why does that matter for SAP? Because for this socially-conscious generation, "social is the new dial tone," and Millennials are "the only generation born into the mobile device." SAP has staked its future success on helping businesses be more social and mobile. In truth, it's following the market.

"These two billion consumers are not just are future," McDermott said, "they are here today."

Which means the businesses that serve this group of customers will be different.

The business model of TOMS Shoes promises one donated pair of shoes for every pair purchased. In four years, the company scaled to a million shoe sales.

For the fast fashion so in vogue today—think H&M, Zara, Forever 21—that means that a 180-day runway to get outsourced clothing from manufacturer to consumer is no longer acceptable. Today, we need "real-time supply chains with automated manufacturing near the customer," McDermott said. 

And in personal electronics, mobile devices are quickly becoming thinner and lighter and yes, wearable—making data more critical than ever but changing the use case completely.

"This is the wave. This is where it's going," he said. "I want it my way."

And that's where SAP's HANA pitch comes in. HANA professes to shed light on the "dark data" locked away in companies' vaults, turning it into a competitive advantage. Or, given the future McDermott outlined, a way to merely keep up.

"It's no longer about analyzing the past," he said. "We're now in the era where you have to be real-time, predicting the future."

That applies to companies of all sizes. At the larger end, the U.S. healthcare industry could reduce the tremendous amount of waste in that system by doing a better job with the data it already has. In the middle, a bank could detect fraud before any damage is done. At the smaller end, a microbrewery or bar could put sensors on kegs to monitor how much beer is coming out of the tap.

"Maybe the bartender over-pours. Maybe he's giving it away. Maybe he's skimming off the top. Maybe he's drinking on the job," McDermott said. "Maybe it might be time to get a new bartender. But now you know."

He added: "Slow kills companies fast. Really fast."

The phrase hung in the air like a trey at the buzzer.

Play to win

Moments later, Brown, Silver, York and Plank joined McDermott onstage to discuss, in a round-table format, how this all applied to professional sports.

"Technology helps [our teams] win," Silver said. How do you bring a basketball game to a fan each day? "Only a small percentage sees our games in person," he said. The rest? Watching digitally, increasingly using tablet computers.

"We're trying to replicate that arena experience through social media," Silver said.

"You now have the intent of the crowd," McDermott added. "Trust is the ultimate human currency."

The same phenomenon applies to the National Football League, York said. "Sixty-eight thousand people come to game. Tens of millions watch. You want to make sure you have a stadium that individualizes 68,000 experiences."

In San Francisco, the 49ers are looking at outfitting their facility with 4K cameras—"You'll be able to zoom in on a picture and see everything without the pixels looking displaced"—ticket-less and cash-less infrastructure, and the ability to order up food and beverages without getting up from your seat, York said.

"Everybody has different experiences," he said. "You want to create the story, and let people take that story where they want it to go."

And let's not forget, in this Moneyball era, scouting for new talent. "We're not looking for the best players, we're looking for the best players for the 49ers," York said. Technology helps that. "The more you can analyze data, the better decisions you can make."

For sports apparel maker Under Armour, getting a handle on its data helped the 17-year-old company scale to dizzying sales heights when it suddenly began to take off in 2005. 

"There's actually an end to the Excel spreadsheet," Plank joked. "There's not a 6Z."

Now that the company has a handle on its growth, it's planning to transform its use of data from a back-office function to a product feature. The new Armour39 "is the world's first biometric measurement device embedded in athletes' clothing," Plank said. "It will measure an athlete's willpower," so they are not measuring sweat stains to understand their workout performance.

It all comes back to the customer, McDermott said.

"Leaders owe their companies a clear vision," he said. "That vision should be based on what customers need."

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